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This month, the Tanzanian government sent the army. The deployment was not intended to repel an invasion force or to repress a terrorist threat. The instructions of the army were clear: buy cashews.
The intervention, which resulted in higher world cashew prices, aimed to resolve a dispute between unprocessed nut buyers and farmers. John Magafuli, president of Tanzania and an African Hugo Chávez in the making, reacted to a fall in prices. Due to an exceptional crop in West Africa, prices of raw cashew nuts have dropped worldwide. Tanzania, the world's seventh largest producer, is a favorite snack swing provider of talkative classes. After requisitioning the entire offer of the East African country, prices have gone up.
This is not the first time that Mr. Magafuli has been involved in global commodity markets. Last year, he accused Acacia Mining – majority owned by Barrick Gold – of heavily underestimating the level of minerals in its gold and copper exports. Acacia had been operating in the country for years, making good profits and generously paying its leaders, noted Mr. Magafuli. But he had somehow avoided paying a lot of taxes in Tanzania.
In retaliation, he banned exports of unrefined gold and imposed on Acacia improper taxes and fines of an incredible $ 190 billion. Acacia vigorously denies the allegations of wrongdoing, although Barrick has agreed to pay a "good faith" payment of $ 300 million and to surrender a 16% interest in each of Acacia's three mines in Tanzania.
Mr. Magafuli is a completely nasty man. Its policy on freedom of expression, teenage pregnancy and gay rights is reactionary, that's the least we can say. Like Venezuelan President Chavez, his resource-based nationalism is likely to end badly. Companies will hardly be in line to invest in Tanzania.
But like populist leaders around the world, Mr. Magafuli draws on something real. Tanzanian farmers receive far too little for their cashews. Just compare the lives of people who eat this delicacy with their product, many of whom can not afford to send their children to school or pay for rudimentary health care. This is the case of those who produce most agricultural products in poor countries, from coffee and cocoa tea to vanilla.
What is true of commodities is even more true of difficult ones, such as gold, copper, diamonds and cobalt. In much of Africa, miners who dig up these materials are living short and brutal lives. They are often threatened by violence and degradation of the environment. Meanwhile, those who benefit – including people with a beautiful wedding ring, iPhone, or indoor plumbing – live longer and more comfortably.
The products on which we rely for our modern existence are all too often the result of collusion between unscrupulous businesses and unsavory politicians. The people of the countries that produce this wealth – whether in the Democratic Republic of the Congo or in Tanzania – do not share much of their national heritage.
There is another perspective for looking at the issue: the national accounts. Africa – as well as many other theoretically poor countries, from Papua New Guinea to Peru – plays a much larger role in the world economy than is suggested by the production or trade figures. Although Africans make up 16% of the world's population, their conventional national accounts account for less than 3% of the world's nominal gross domestic product.
Yet this greatly underestimates Africa's real participation in the global economy. GDP measures value added. But Africa exports most of its products, including inshell cashews, at prices heavily influenced by powerful companies with tax experts, price assistants, and more. transfer and lawyers. Most of the added value comes from outside the continent. Capital Economics' John Ashbourne calculates that Bangladesh earns as much by exporting clothing as all of Africa exporting precious metals.
This staggering anomaly is exacerbated by the fact that, on the African side, negotiators are often themselves dependent. Although Mr. Magafuli's approach is unlikely to work, his fundamental instinct to try to restore balance is correct. Unfortunately for Tanzanians, scaling is not the answer. Africans will benefit only when nations install physical and, in particular, institutional infrastructure in order to gain more value.
For centuries, the world's most advanced economies have used African slaves to pick cotton and harvest sugar in places like the United States and the Caribbean. Slavery has been banned. The West would now prefer to leave these workers where they are to produce what the world needs. Power relations remain essentially unchanged.
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