Thoughts on South African and international politics and culture

Friday, June 10, 2005

African trade
Leading up to the G8 meeting, with it's all important focus on Africa, it's critical to remember what African primary producers are up against. Ghanian journalist Cameron Duodu writes in the Independent of an example of Etheopian coffee export:
What does Ethiopia gain by trying to satisfy the alluring, but deceptive, export market? I found the answer in a heart-rending tale by a Ugandan coffee entrepreneur, Andrew Rugasira, He revealed that: "One needs approximately five grams of roasted and ground beans to make a cup of coffee that sells [in the UK] for £2, so one kilogram can make 200 cups, worth £400. Green coffee beans are bought [in the coffee growing countries] for an average price of 70p per kilogram. In other words, less than 0.2 per cent of the value of processed coffee is retained by the growers."

Where does the remaining 99.8 per cent of the coffee price go? Mostly to the transnational corporations that roast coffee and sell it to the supermarkets and smart coffee shops of the West.

Fiscal conservatives will no doubt say that it's their fault, they should be moving further up the value chain and exporting roasted coffee, but in my view, that's unfair and in most cases, naive. What is required is Western companies investing in Ethiopia and assisting in establishing roasting factories, as most of these producers in Africa are so poor in relation to their Western counterparts, that there is simply no avenue for them to pursue. They cannot afford to import critical technologies that would allow them to compete with transational companies, and if they were to do so, those transationals would undoubtedly and rapidly crush them in a price war.

Then there's the obvious injustice of agricultural subsidies, which probably does more to keep Africa poor than any other economic structure. As the Western leadership so often gesticulates, whilst they berate African countries for holding on to trade barriers, trade has the benefit of increasing export revenues and growth. Interesting that their barriers are still up then. Finally, there's the need for more stringent anti-dumping laws, where again Africa takes a beating.

All of these elements require constant pressure on Western governments, and it is up to us to maintain that pressure. Read up here and get involved.


Although her leanings are often more left than mine, Naomi Klein writes a sage article in the Guardian regarding this very topic.

This is what keeps Africa poor: not a lack of political will but the tremendous profitability of the current arrangement. Sub-Saharan Africa, the poorest place on earth, is also its most profitable investment destination. It offers, according to the World Bank's 2003 Global Development Finance report, "the highest returns on foreign direct investment of any region in the world". Africa is poor because its investors and its creditors are so unspeakably rich.