The Hindu : Opinion / News Analysis : Africa must form cartels

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Thursday, Jun 30, 2005

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Opinion - News Analysis

Africa must form cartels

Cameron Duodu

African countries must band together and set up cartels that lay aside money to acquire the means of adding value to their raw materials before export.

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. Why has it not been done before now? The answer is that African Governments have, in the past, been short-sighted and self-centred to a degree that borders on stupidity.

Our governments may speak to the West in polite, diplomatic terms. But 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 unspoilt 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. Before OPEC flexed its muscles in the 1970s, petroleum was selling for under $3 a barrel. Today, it is selling for $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. 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.

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 tariffs. But the climate of opinion in the West is shifting against such practices, and African governments must enlist the support of the peoples in the West to force their governments to dismantle such tariffs. —

(Cameron Duodo is a Ghanaian novelist and journalist.)

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