Africa’s cotton markets could help to boost continental growth
Africa’s cotton sector could become a major export revenue source for the continent and boost continental growth, African Business said in a report.
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.
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.