But, under pressure from the international financial institutions, the Ivory Coast is to free up the internal marketing of cocoa this year, a move which is expected to result in extensive consolidation among traders. The changes will have far-reaching consequences. The new, larger, trading companies are likely to look abroad for some of their financing, reducing the involvement of local banks. The consolidation will also make it harder for Ivorian financiers to spread their risk, at a time when the Western African central bank is expected to tighten up rules on sound prudential lending. Although the problem of bad debts is not new, and not specifically linked to liberalisation, the banks are now looking to clean up their books before the change is completed.
Ivorian banks are at a crossroads.
The liberalisation will change the way they do business. Although the worst of the bad debts is over, we have to assess the profitability of these banks. But Jean-Luc Bedie, managing director of Hudson Finance, believes that the changes are for the good. He played down the extent to which the liberalisation of the internal market would fundamentally alter the credit risk taken by banks, although he said that they would focus more closely on balance sheets than on the size of stocks. Nevertheless, it is widely believed that consolidation will hurt profits.