How Africa’s cotton markets could help to boost continent’s growth
Africa’s reputation as a resource-rich powerhouse is well-known. The continent is famously abundant in a wide variety of sought-after natural resources that are produced for international export, from coffee and cacao to diamonds and the rare materials that power modern smartphones and electric batteries.
Can Africa’s cotton sector also become a major export revenue source for the continent and boost continental growth?
Recent trends are discouraging – Africa’s global exports of cotton products have decreased by 12% between 2017 and 2021, while its global imports, and therefore its exposure to fluctuations in global prices, have increased by 37%. Yet, if the cotton sector can overcome a set of historical challenges which have served to constrain its growth, it has substantial potential to contribute to widespread economic growth and opportunity.
In the early decades of African independence, cost inefficiencies and political interference in the management of cotton companies stifled the growth of the sector.
Likewise, Africa’s leading cotton producers, the “Cotton 4” of Benin, Burkina Faso, Chad, and Mali, remain hamstrung by subsidies granted by the largest cotton trade players in the world, namely the United States, European Union, and China, which African economies are unable to compete with on even terms, an issue that has not been properly remedied despite a cotton initiative under the WTO.
However, as a new study produced by AKADEMIYA2063 and the International Food Policy Research Institute (IFPRI) shows, Africa’s cotton value chains nonetheless hold significant potential to become Africa’s next major export commodity, delivering growth, improved livelihoods, and opportunities for the continent at large.
The potential of domestic production
To transform this potential into reality for millions of Africans across the continent, governments must take a range of targeted actions to support the growth and expansion of the cotton sector.
To begin with, cotton can become the next major commodity for Africa by focusing on increased domestic production.
Despite the potential inherent in Africa’s cotton value chains, African governments must overcome the challenges of low labor productivity, a lack of technology, and other climatic challenges.
For instance, cotton production has a major water footprint, at a time when Africa’s water sources are under increasing stress from climate change. Global average water use for cotton production stands at some 3,644 cubic metres per tonne, compared to other crops such as sugar (197) or vegetables (322).
African governments should therefore seek to provide further technical and financial support to smallholder farmers, boosting and climate-proofing their harvests for processing or export by equipping them with the tools, technologies, and advice needed to boost production at the farm level. This is no small feat but is a necessary first step in order to boost production to meet domestic demand, while transforming the livelihoods of millions of farmers and their communities across the continent.
Read full article at African Business