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Country Commercial Guides for FY 2000: Cote d'Ivoire Report prepared by U.S. Embassy Abidjan, released July 1999

CHAPTER IV:   MARKETING U.S. PRODUCTS AND SERVICES

1.   Distribution and Sales Channels

In Côte d'Ivoire, there are 16.4 million people. The ten major population centers are: Abidjan (2.6 million), Daloa (1 million), Man (957,706), Bouake (816,945), Korhogo (732,390), San Pedro (644,805), Dimbokro (556,565), Bouafle (538,824), Bondoukou (513,220), Divo (505,478), Agboville (440,995), Yamoussoukro (365,522), Seguela (353,659), Aboisso (328,165), Abengourou (298,566), and Odienne (169,433). Many banks, insurance companies, wholesale distributors and supermarkets maintain branch operations in these centers. Inter-city buses service these cities through a modern road network. Most financial transactions are undertaken in these urban centers through the banking network and postal service.

The principal methods of selling are: wholesale and/or retail outlets (either in the local market or an established chain), a direct sales force, an agent or distributor, selling through established wholesalers or dealers, and selling direct to the government, cooperatives, and other indigenous organizations. The common forms of business organizations adopted in Côte d'Ivoire are discussed in Section 6 below. Exporter should consider the requirements of the product and its potential market when choosing a distribution channel.

2.   Use of Agents/Distributors; Finding a Partner

There are no laws requiring the retention of a local agent or distributor for a foreign company exporting to Côte d'Ivoire. However, it is strongly suggested that a company attempting to penetrate the market retain a person or persons resident in Côte d'Ivoire. The exporter should be aware that in many sectors of the economy, there are one or two large distributors, manufacturers or agents which supply a majority of the market, while several much smaller agents vie for small niche markets. The exporter would be wise to assess the sales potential of all the potential partners in the market segment before settling on one.

An agent or distributor should possess a thorough understanding of the economy and be fluent in French. Both parties should agree on sales support (if any) to be provided as well as sales expectations. If the exported product requires servicing, qualified personnel and a reasonable inventory of spare parts must be considered. Exporters should be aware that agents and distributors commonly represent several product lines. There are no legal regulations which mandate that agreements be exclusive. The exporter should provide appropriate literature and documentation in French for better communication with potential customers. European competitors inevitably market their geographic proximity as a competitive advantage; they are often able to provide a technician or part on a short notice. Failure to adequately address the issue of after-sales support has limited U.S. marketing success in Côte d'Ivoire.

A common problem for U. S. exporters is the failure to clarify terms and conditions for agents and distributors selling U.S. products. Written agreements clearly noting geographic regions to be covered, type of relationship (distributor or agent), exclusivity, payment terms for products or commissions, currency of payments, actions taken to address currency fluctuations, renewals of the agreement including specific parameters for performance and promotional activity, provisions for termination of the relationship, licensing or reserving of intellectual property rights, and provisions for dispute settlement are some of the key factors which should be addressed in a written agreement.

Before committing to a long-term relationship, exporters should visit Côte d'Ivoire to gain first-hand knowledge of the country. The U.S. Commercial Service can help exporters locate agents and distributors through its Agent Distributor Service (ADS) and Gold Key programs. Information regarding these programs is available through the Commercial Service Export Assistance Centers located in all 50 states and Puerto Rico.

3.   Franchising

Franchising is not commonly practiced, except for car rental agencies and a few non-name brand fast food restaurants. Generally, the lack of financing available to the Ivorian commercial market and the limited understanding of the concept of franchising, has stymied sales in this market. Nevertheless, among Ivorian consumers, there is a strong interest in well-known American brands, many of which are maintained through franchises. As Ivorian sellers seek to supply consumer demand for U.S. or U.S.-like product, the potential for franchising arrangements is growing rapidly. Concerning business-to-business franchises, the Ivorian economy, in many sectors, is organized with a few large manufacturing or trading businesses and many very small businesses poorly capitalized providing poor quality products and services. According to the largest Ivorian industrial association, the Federation Nationale des Industries de Côte d'Ivoire, there is a lack of medium-sized companies providing quality services to these larger businesses. In general, these larger companies are looking for other medium/small enterprises to enter the market and provide reliable and quality assured sub-contracting and business services allowing the largest companies to focus on their core businesses. Many U.S. franchise operations which provide services to other businesses could find this an active market after some initial education is undertaken.

However, serious attention to the economics of each venture is still important as the targeted markets for many consumer service and product franchises are small.

4.   Direct Marketing: Wholesalers and Retailers

There are several exporting trade companies, some of which are oligopolies. Examples are found in the following areas: tobacco products, pharmaceuticals, rice, wheat and flour. Most wholesale establishments and modern retail outlets are concentrated in major cities like Abidjan and Bouake. These establishments include company headquarters, regional offices, banking branches and insurance operations, brand-name supermarkets, car dealerships and specialty stores. With the booming Ivorian economy, the number of wholesalers and retailers has increased significantly, particularly in Abidjan and major cities in the country. Most owners of small shops and retailers are sole-proprietor operations with limited management capability. The "general store" concept has been enlarged to include any commercial activity supported by wholesale operations. Still dominating the retail business, the Lebanese community is more connected to the countrywide wholesale network.

5.   Joint-ventures/Licensing (See section 6 below)

6.   Steps to establishing an office

Since 1995, the Ivorian investment promotion center, (Centre de Promotion des Investissements en Cote d'Ivoire, or CEPICI) has been very active in promoting joint-venture operations and investment in Côte d'Ivoire. As a one-stop shop, CEPICI seeks to guide foreign investors and reduce the amount of time required for local business registration and administrative paperwork. CEPICI's activities include the necessary formalities of registering, incorporating, and modifying or dissolving a local company. Currently, CEPICI provides fast track services for registration as "a de facto" notary free of charge. However, companies must pay directly the funds to incorporate the company to the notary after CEPICI's work. Over the last three years, CEPICI has assisted the Ivorian government in monitoring the privatization program for state companies.

Prior to establishing a business entity in Côte d'Ivoire, it is advisable to consult a local attorney. There are four common forms adopted by businesses in Côte d'Ivoire. In any of these forms, the non-Ivorian may hold 51 percent or more of the company's assets. Exceptions to a non-Ivorian holding occur on an ad hoc basis and are usually mandated by government decree. The four common forms adopted by businesses are:

Joint Venture (Association et Participation): Joint ventures are allowed in Côte d'Ivoire and may take any of the forms listed below.

Branch of a Foreign Company (Succursale): Branches of foreign companies may not be established until they are registered with the Tribunal de Premiere Instance. Once registered, the branch is regarded as an Ivorian judicial entity and is legally independent of the parent company.

Limited Liability Company (Société à Responsabilité Limitée - SARL): All SARLs must have a minimum capital of CFA/F 1,000,000 (approximately USD 1,600) and at least one shareholder. No share certificates are issued.

Stock Corporations (Société Anonyme - SA): Prior to the adoption of the OHADA regulations (see section VI. 13, below), a stock corporation was required to have seven shareholders; this number has now been reduced to just one. Each share must have a nominal value of at least CFA/F 10,000 (approximately USD 16) and there is a minimum capital requirement of CFA/F 10,000,000 (approximately USD 16,000) for closely-held SAs, and CFA/F 100,000,000 for publicly traded companies. Directors' meetings are required on a regular basis. If a corporation has share capital below CFA/F 2.5 billion (approximately USD 4 million), there is a stock registration tax of six-tenths of one percent of the value of the stock for the company. For corporations with capital valued above CFA/F 2.5 billion, the registration tax rate is reduced.

Other business forms include regional offices, sole proprietorships, local agency or distributorship arrangements, various entities which are similar to limited and general partnerships, and state-owned or partially government-owned companies.

All business entities must register with the Commercial Registry within 30 days of commencement of activity. If the SARL or SA is the chosen form, the following must be filed with the Commercial Registry: a copy of the company by-laws, the minutes authorizing the establishment of the company (SA form only), and the name of the manager (SARL) or director (SA). Companies must submit an annual balance sheet and profit and loss accounts to the Ministry of Economy and Finance. Other periodic filings are required as is publication of specific information in the local press.

Business entities must file a Declaration of Commencement of Business with the Tax Department of the Ministry of Finance and the Economy, the Labor Department and the National Social Security Fund. If the entity contemplates the importation or exportation of goods or materials, it must register as an importer or exporter with the Department of External Trade of the Ministry of Commerce and Industry.

7.   Selling Factors/Techniques

Côte d'Ivoire maintains strong historical, cultural and economic links with France and Europe in general. The Ivorian attitude toward conducting business with U.S. firms is best described as tentative, mostly due to language and cultural barriers. It is critical, therefore, that U.S. companies establish and maintain a high level of personal contact within Côte d'Ivoire; it is generally not possible to mount a successful enterprise via telephone or fax contact alone. Yet despite a differing business style, Ivorians appreciate the role the United States plays in world affairs, welcome U.S. products and wish to encourage U.S. investment in Côte d'Ivoire. There is a clear desire, however, for business to be conducted with Ivorian partnership in mind, as there is still some residual suspicion of large foreign businesses which is rooted in the excesses of the colonial and neo-colonial past. Increasingly, young Ivorians are now considering an U.S. university education versus a European one. Young generations are exposed to American culture (sports, films, technology, general consumer goods, and business). Exposure of the future workforce to U.S. culture, business and English will help to further U.S. business interests in the near term.

Ivorian values are more traditional than those of Americans. This tendency extends to business dealings as well. People are extremely polite; it is customary to greet everyone you meet. Even a long-term partner or business contact is usually greeted with an exchange of pleasantries, followed by a handshake and inquiries about one's health, family and relatives. While coming to the point directly is admired in American culture, Ivorians, tend to be more laid-back and patient and in fact may find the aggressive "American style" disturbing. Ivorians prefer regular, face-to-face contact; in fact, personal visits are warmly welcomed. While visits may not be the most efficient or inexpensive method, it is generally regarded as the most effective method of handling new trade initiatives. For Ivorians, trust in a business relationship is paramount and cannot be achieved sight unseen. The cornerstone of a successful business relationship is to adapt to a pace of business and life that is more moderate than in the United States

The Lebanese community plays an important role in Ivorian business. They are receptive to U.S. products and company representatives and are generally more conversant in English. However, French is still their preferred language for business transactions.

8.   Advertising/Trade Promotion

With Cote d'Ivoire as a major commercial hub in Sub-Sahara Africa, many advertising agencies and companies have positioned themselves in the Ivorian market. Advertising agencies offer a wide variety of services including publicity and sales promotion. Advertising sales revenues, which have started to pick up, are expected to grow over the next two years with newcomers and new joint-ventures or partnerships. Major advertising agencies include Lintas, Nelson McCann Erickson, Young and Rubicam, Olgivy. Some agencies offer marketing research and video production services as well. There are three major regulatory bodies, which govern the media and advertising sector. The first is the Conseil National pour la Communication Audiovisuelle (CNCA), a regulatory body which supervises all issues pertaining to ethics in audio-visuals, particularly on advertising and message issues. The services of this regulatory body will be required during political elections in year 2000. The second regulatory body is the Conseil National pour la Presse (CNP), an institution in charge of all issues related to all kinds of media and press. The third body is the Conseil Superieur de la Publicite (CSP), the national council for advertising, which has been in existence for more than ten years. This body focuses on advertising issues from all media including newspapers, audio-visuals. Last year, CSP was given the authority to examine all applications for foreign advertising companies interested in doing advertising in Cote d'Ivoire.

Advertising has increased in recent years, with a diversity of advertising products and services including large billboards for advertising messages, films, and video productions. Fee for cable TV stations such as Canal+ Horizons, TV5, and TVRO antenna-broadcast programs (CNN, CFI, and others) are also available in the Ivorian market with advertising messages. This year, the Ivorian government plans to privatize the second TV channel, TV2, which covers only Abidjan's geographical area. Advertising messages in radio programs have also increased. In the past two years, the Ivorian government has given operating licenses to several FM radio stations including nearby and rural stations. Ivorian radio listeners have come to expect radio commercials with more sophistication and professionalism. Although the number of newspapers and weeklies has increased in recent years, sales revenues from newspaper advertising is not growing as quickly as the sales revenues from radio and TV commercials. Currently, more than twenty regular daily and weekly news publications circulate in Côte d'Ivoire. Among them, the most widely-read daily papers are "Fraternite Matin," controlled by the Ivorian government and "Le Jour," controlled by private interests. Although precise information is not available, "Notre Voie," "Soir Info," and "Ivoir Soir" have roughly the same circulation and battle for third place behind "Fraternite Matin" and "Le Jour." Other international magazines published in French include "Jeune Afrique," "Jeune Afrique Economie," "l'Autre Afrique," and for female readers, "Amina." There is little readership for English-language international magazines or weeklies.

Ivorians own more than 3 million television sets and 7 million radios. They are accustomed to consumer-oriented commercials and advertising and public service announcements. Contact information for Ivorian media (print, radio, and TV) is listed in the Appendix E: Section 2.

Suppliers of imported products are expected to provide advertising and promotional support, particularly if it is a new product or brand. Radio and TV commercials are commonly used, as are posters, point of sales displays, coupons and billboards. Prior to showing a film, many local cinemas run promotional short films; typically promoting automobiles and tobacco products. Commercials for TV are made locally, but there is a significant number of commercials produced by company headquarters. Over the past two years, the Ivorian government and the private sector have organized international trade fairs and exhibitions, primarily at Hotel Ivoire's convention center or at the Palais des Sports. Smaller exhibitions are held in small convention centers in Abidjan or in major cities throughout the country. Companies participating in these trade events have the opportunity to promote their products and services to the general public. Ivorian officials are planning to build an international convention center to host major international trade fairs and exhibitions.

Packaging is important to the Ivorian consumer. Colorful designs, blister packs and small, reusable containers appeal to the consumer. Extended shelf life in a humid climate is also an important requirement.

U.S. companies are invited to visit the country and meet with officials from government agencies in charge of projects to market their expertise and services.

9.   Product Pricing and Credit

U.S. exporters will find that pricing in French Francs, especially repeat sales for deliveries over a six to 12 month period, will provide a substantial commercial advantage over quoting prices in U.S. dollars. (Major U.S. banks can provide foreign exchange services allowing the exporter to purchase forward options in order to effectively remove foreign exchange risk from the transaction.) CIF quotations to an Ivorian port are more useful to Ivorian buyers than Ex-Works quotations. When calculating selling prices, U.S. businesses should compare their prices to competitors, and build into their cost structure an allowance for additional costs that often arise when selling into a developing market.

Payment via confirmed irrevocable letter or credit is very desirable for U.S. exporters, particularly at the beginning of a commercial relationship. However, insistence on L/C payment terms may limit market penetration of the U.S. firm and may not provide for aggressive market growth vis-à-vis the competition. European suppliers effectively use buyer financing in the Ivorian market to accommodate customers and capture market share. Competitive credit terms are an important factor in purchasing decisions and may be part of an effective marketing strategy in the Côte d'Ivoire.

Foreign competition often grants credits of 60 to 90 days for consumer goods and 24 months for machinery and equipment. European banks often quote liberal terms and may discount paper for their exporters who are pursuing long-term credits.

U.S. exporters may offer competitive terms to buyers while effectively mitigating commercial and country risk by insuring foreign receivables. The Export Import Bank of the United States (Ex-Im Bank) will extend coverage for qualified buyers in the private sector of Côte d'Ivoire. Firms should contact the Ex-Im Bank or the nearest Export Assistance Center of the U.S. Department of Commerce to obtain information on financing of short- and medium-term transactions. Finance costs, based on U.S. rates, can usually be folded into the sale price and passed on to the buyer. Financing at U.S. rates is attractive to buyers in Côte d'Ivoire who would have to pay much higher rates to obtain commercial credit locally. Many private firms offer insurance policies for foreign receivables in addition to Ex-Im Bank.

The Commercial Service can help exporters formulate sound credit policies applicable to local markets and credit information on individual Ivorian firms through the International Company Profile (ICP) program. Information regarding this program is available through the Commercial Service Export Assistance Centers. The cost of one report is USD 100. Each report includes credit information on the foreign buyer and recommendations of the Commercial Service concerning the suitability of the firm for sound business relationships.

10.   Sales Service/Customer Support

Lack of after-sales support and service have been a principal reason for limited U.S. marketing success in Côte d'Ivoire. It is especially critical for high-tech or heavy industrial equipment such as: computer hardware and software, telecommunications equipment, photocopiers, automobiles, and air conditioning/refrigeration units. A central service telephone number and radio-dispatched technicians are commonly used by local firms. French-language service manuals, frequent personnel training and a reasonable inventory of spare parts are also crucial.

11.   Selling to the Government

The Ivorian Government periodically issues procurement tenders that are published in local newspapers and sometimes in international magazines and newspapers. The implementing agency is usually the responsible ministry making the request. The Bureau National d'Etudes Techniques et de Developpement (BNETD) has usually acted as a "super ministry" on behalf of other ministries for World Bank and the African Development Bank (AfDB) -financed projects. Procurement is typically financed by a multilateral lending institution such as the World Bank or the AfDB. There is a charge to purchase the bid documents, which are normally in French. Commercial Service Abidjan has been providing "Fast Track Bidding Services" to reduce the time for U.S. bidders to obtain bidding documents. Over the past two years, the Ivorian government has launched an international call for bids for a dozen major projects to be financed on a Build, Operate, and Transfer (BOT) basis. The government's privatization program is not yet completed, and several state companies are scheduled for privatization within the next several months. Payment by the government is now centralized through a one stop paying agency, the Caisse Autonome d'Amortissement (CAA), a government agency which acts like the government's bank.

12.   Protecting Your Product from Intellectual Property Rights Infringement

See section VII. 7, below.

13.   Need for a Local Attorney

It is advisable to consult a local attorney to ensure that the company is following all of the appropriate laws and procedures with regards to employment and other matters. Lawyers, "huissiers," and "notaires" are part of the judicial system and often are utilized for commercial matters.

The Ivorian legal system originates directly from the French system. Pursuant to article 76 of the Ivorian Constitution, enacted by Law No. 60-204 of November 3, 1960, all legislation in effect in Côte d'Ivoire during the colonial period remained in effect in the new republic to the extent that it was not inconsistent with the provisions of the Constitution. Nevertheless, if there has been subsequent legislation passed in Côte d'Ivoire, then the French law in question is no longer applicable. French treaties, legal articles, and books are instructive and informative on general principles of law and are often used as a reference to determine points of Ivorian law.

All official documents, papers, contracts, court papers, corporate documents, must be in the French language.

The labor laws in Côte d'Ivoire are even more burdensome than those which a U.S. employer may be accustomed to facing in the United States. For example, expatriate labor contracts must be registered with the labor authorities and approved before such employees can be hired. The law defines expatriate employees as any non-Ivorians. In addition, all employees accrue, during the time with the company in question, certain statutory benefits and entitlements which may not be waived by contract. The Ivorian courts historically have been viewed as favoring the employee in labor disputes. Recent decisions, however, have demonstrated a retreat from harsh judgments against the employer.

While there have been some changes in the legislation, (such as the recently established right of a married woman to carry on a commercial operation without the approval of her husband), the commercial and corporate laws of Côte d'Ivoire are for the most part those that were in force in France prior to independence in 1960. Establishing a presence in Côte d'Ivoire for an American company is generally a more costly and involved procedure compared to costs in the United States. In addition, the law requires a business to provide certain corporate information on all its papers, letterheads, invoices, etc. Again, it is advisable to consult a local attorney regarding these matters.