Africa should form its own cartels
China Daily  Updated: 2005-07-02 06:58

The West is not, out of altruism, going to reverse the system of trade that impoverishes Africa. It is Africa that must fight politically to force the change.

Africans who know the true causes of their continent's poverty consider the West to be part of the problem. They are not interested in palliatives such as aid, and the humiliation of becoming "highly indebted poor countries" reliant on charity; they demand economic justice.

African countries must band together and form cartels that lay aside money to acquire the means of adding value to their raw materials before export. Goods that are processed can better be held back from sale when prices are low. OPEC (and before OPEC, the giant oil companies) has proved that economic power comes through cartels. But you cannot form viable cartels using raw cocoa, coffee beans or tea leaves. Unlike oil, which can stay unspoiled underground, food commodities are perishable.

However, coffee is the second most important commodity traded in the world yielding first place only to oil. So if Africa could bite significantly into that market, it could earn enormous sums. Even if Africa could only influence rather than control the prices of its exports, it would not need anyone's assistance to end its poverty.

But at present Africa is a "price taker," and the value of its exports is determined not by their final price in Western sales outlets, but by the initial price offered at the farm gate. So the insulting statement is often made that "Africa contributes to less than 3 per cent of world trade." Were account to be taken of the actual volume of raw materials shipped to the West by Africa, plus the huge tonnages with which African products enrich Western shipping companies, freight handlers and insurance brokers, it would be realized that the West owes Africa a great deal of money.

But African governments are failing to fight their corner. Africa still shrinks from the next step: forming its own cartels to control commodity exports.

If Ghana and its neighbour Cote d'Ivoire, say, could pool resources to produce chocolates for export, instead of selling cocoa beans inviting Nigeria, Equatorial Guinea and Cameroon to join all could vastly increase their earnings. Kenya, Tanzania, Ethiopia and Uganda could similarly band together and place processed coffee in Western supermarkets. Ghana and South Africa could co-operate to export gold jewellery, instead of gold bullion. Sierra Leone, Ghana, Botswana and South Africa could buy technology to challenge the diamond polishers of Antwerp, Paris, Tel Aviv and New York.

Before OPEC flexed its muscles in the 70s, petroleum was selling for under US$3 a barrel. Today, it is selling for US$58. African governments must take a leaf out of the OPEC book. They have already produced an economic programme called the New Economic Partnership for Africa's Development (NEPAD). But NEPAD relies heavily on expected inflows of foreign investment, whereas foreign entrepreneurs cannot, by definition, be interested in what Africa really needs namely, to vertically integrate the continent's industries.

Vertically integrated industries are not popular with foreign investors because they can be "nationalised." Even if that fear were removed, it is not very sensible, if you are drowning in a river, to expect a crocodile to offer you its tail to ferry you safely ashore.

If Africa is able to accumulate enough capital to change its inherited production patterns and earn more from its products, these products will still be faced with punitive tariff walls. But the climate of opinion in the West is shifting against such practices, and it is for African governments to enlist the support of the peoples of the West to force Western governments to dismantle such tariffs.

It is unrealistic to expect the G8 to act to meet Africa's true needs. Only a real people-to-people message can meet the challenge.

(China Daily 07/02/2005 page4)

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