Sun, Dec 04, 2011 - Page 9 News List

Chocolate-fueled growth

Africa needs a new agribusiness development strategy to support its shift from being a supplier of bulk products like cocoa to more value-added, agro-industrial manufactured products, like chocolate

By Kandeh Yumkella

Illustration: Tania Chou

As an African, my dream for the next decade is to see the continent producing and selling chocolate to 300 million Chinese, instead of exporting raw commodities like cocoa. Several weeks ago, at the China-Africa Symposium in Xiamen, China, I tested this vision on the audience, and the 2,000-plus delegates responded with resounding applause. Business and government leaders are evidently ready to see Africa introduce structural change aimed at creating manufacturing-based national economies.

While many have touted Africa’s success in maintaining a 5 percent to 6 percent average GDP growth rate over the past decade, this masks the reality that by 2005, sub-Saharan Africa was little better off than it was a quarter-of-a-century earlier: It was still the world’s poorest region, with more than half of its population living on less than US$1.25 a day in purchasing parity terms. The region’s countries are on a poverty treadmill, running fast just to remain in the same position.

This needs to change. The orthodox agriculture-led growth strategy of the 1960s, the favored antidote to five decades of the “happy peasant” aid doctrine, must be replaced with an agribusiness development strategy whereby policymakers, donors and entrepreneurs target the entire value chain to support a shift from bulk products to value-added, agro-industrial manufactured products.

Several years ago, the late World Bank president James Wolfensohn describing a new international order, talked of a “four-speed world”: the affluent, the converging, the struggling and the poor. Converging countries are closing the gap with the affluent Organisation for Economic Co-operation and Development (OECD) countries; struggling countries have failed to progress from middle-income status; and poor countries — most of them in Africa — are mired in extreme poverty.

FEWER POOR COUNTRIES

The good news is that since the 1990s, the number of poor countries in Africa has fallen from 35 to 21 and the number of converging economies has increased from two to 17. However, 13 of the latter are either dependent on oil exports (Angola, Chad, Equatorial Guinea, Nigeria and Sudan), or mineral exports (Botswana, Ghana, Mozambique, Namibia, Sierra Leone, South Africa and Tanzania).

Moreover, the new realities of the unfolding global economic crisis that started in 2008 suggest that the North-South flow of capital, aid and finance of the past 50 years will not continue.

However, it is also clear that by 2030, today’s emerging markets will account for 60 percent of global GDP and 40 percent of the world’s consumer spending. World Bank chief economist Justin Lin (林毅夫) speaking recently in Mozambique, encouraged African countries to take advantage of the “emergence of large middle-income countries such as China, India and Brazil.” They should position themselves to capture from China “100 million labor-intensive manufacturing jobs, enough to more than quadruple manufacturing employment in low-income countries.”

Can Africa position itself in the global economy to produce and sell finished goods, especially processed foods and agricultural products? Can the continent break the North-South commodity-based pattern of trade and inaugurate a pattern of South-North-South triangular trade based on

higher-value products?

Working with leading experts like Tony Hawkins of the University of Zimbabwe Graduate School Of Business, the UN Industrial Development Organization has formulated a roadmap to accelerate Africa’s agribusiness revolution. It calls for the enhancing agricultural productivity; upgrading value chains; exploiting local, regional and international demand; strengthening technological effort and innovation capabilities; promoting effective and innovative financing; stimulating private participation; and improving infrastructure and energy access.

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