Eric N’guessan, Partner, EY Cote d’Ivoire

MACIG Connect Series

EY has selected Abidjan, Cote d’Ivoire, as its regional mining hub for West Africa.

How has EY’s presence in Cote d’Ivoire evolved since its establishment here in 1958?

EY Cote d’Ivoire positioned itself in Abidjan as the center point between Canada and Australia because a great deal of foreign direct investment comes from those two mining powerhouses. Globally, EY has nine world mining partners, and in West Africa, EY Cote d’Ivoire is the hub for the region. From Abidjan, we cover Togo, Mali, Burkina Faso, Niger, and Benin—a majority of our mining activity takes places in Mali and Burkina Faso. Our success is a matter of specialization, as we have a handful of people that specialize in mining tax, due to the complex particularities that are very unique to the industry. The smallest decimal points can make a difference when drafting mining business plans or making the calculations of productivity.

Around 2010, before Cote d’Ivoire’s elections, we saw a very tense, adverse situation between the government and international stakeholders, especially concerning the legal framework and the role the state should play in mining operations. EY began discussions with the Chamber of Mines to help better understand what changes should be made to create the foundation for a sustainable sector. When the government tried to add greater taxation on profits, which is against all reasonable economics, EY was involved in putting this legislation to a halt. We were also involved in negotiations for the drafting of the new mining code; hence we have developed an expertise that you cannot find from any of the other big four in the region. Each year we have a report that is dedicated to the top ten risks that the sector faces—such as stability, tax uncertainties, risk of war, price volatility, etc.—so we can inform our clients, potential investors, and prove our credibility in being prepared to navigate the challenges.

What are your predictions for how risky Cote d’Ivoire will be in the coming years?

We only predict up until the next elections, because that is always a volatile time for any African country, but in my opinion we will have at least four more years of stability. What is most important right now is accessibility to energy, and even though we have a deficit, Cote d’Ivoire has the greatest capacity in the region. We have three power plants already in existence and there are more in construction. Electricity services are effective, and we are trying to close the gap in terms of old infrastructure and new projects. Mining sites themselves may need further infrastructural development in order to get their product to market and those operating in steel would be a prime example. Some stakeholders have been attempting for years to build a railroad from their site to the port of San Pedro, and no one is predicting that will be complete within the next few years. Cote d’Ivoire’s road network, however, is probably the best in West and Francophone West Africa. One can travel from the South to the North in five hours, and we have an internal airline that services many necessary destinations for mining activity. The time needed to introduce a company here is reducing; they are introducing new technology to speed up processes for the government. I would also argue that security is improving, if we are looking at the general framework of doing business. Cote d’Ivoire has moved up five spots on the World Bank’s Doing Business index in the past two years.

You mentioned that most of EY’s mining related work takes place in Mali and Burkina Faso, but what are your expectations for mining activity in Cote d’Ivoire?

Cote d’Ivoire is still in its promotional phase as a nation. We have some important stakeholders that can vouch for the ease of operations here. The new mining code is universally judged as favorable, especially by the major mining companies, and the clauses that would have been detrimental have been extracted in its revisions. Randgold’s managing director, who is a major voice for West Africa, has said that Cote d’Ivoire has evolved to be very favorable, and when anyone genuinely makes a benchmark between our country and those that surround us, they will reach the same conclusion. Taxation rates are lower, the clauses of the code are clearer, but the local administration has formally and clearly said that the community integration clauses of the code are not properly applied. WAEMU, the eight countries that make up the West African Economic and Monetary Union, has its own mining code, which should prevail over country codes. What is unclear is how these codes apply for both contractors and subcontractors when there is a difference in rates. Implementation is completed by the tax authorities and GGM, and sometimes they do not understand which clauses are relevant to their particular situation. Complex operations, particularly in mining, such as indirect acquisition of shares made by offshore companies, complicate in-country implications.

Do you have an example of how EY has helped multinationals expand across borders from Cote d’Ivoire and create a larger footprint for themselves in West Africa?

We help those multinationals that wish to operate in Africa remotely with a primary objective of connecting them with local suppliers. EY has a program called PAS (People Advisory Service), where we help people obtain the proper working permits with entry visas, etc. Our second main service is tax advisory, as navigating sales from Canada with an office in Australia but operations in Cote d’Ivoire can get quite complicated.

In 2009, EY also organized a very important event “EY West African Mining Tax forum” including all of the mining companies in Côte d’Ivoire and in the sub region. Our teams also attended the Africa Down Under Conference in Perth, the Indaba in South Africa and PDAC in Canada, to spread awareness about our services and how we can better ease the transition into West Africa.

What would be your advice to those looking at West Africa as a mining investment destination?

I encourage all investors to come to Cote d’Ivoire due to the plethora of opportunities here. The Minister has now changed for the better and the President is responding to the wishes of the international community to modify the ambiance of the sector here. There are not many local content laws in place at present, which is one less obstacle to entry for businesses. This might change down the road, but right now the flexibility and the promising resources we have under the ground prove to be important incentives for coming here now.

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