Editor’s Note: June 12, 2019

Africa’s resource exporters have much to gain from collaboration

Ghana and Côte d’Ivoire, the world’s two biggest cocoa producers,have suspended sales of the crop for the 2020/2021 season, pending an agreement on a minimum price with buyers.

The countries want to set the floor price at $2,600 per ton, part of efforts to improve coordination on production and marketing. First announced in April 2017, this is aimed at reducing their vulnerability to price volatility.

It’s an overdue move. 

Africa accounts for for up to 75% of global cocoa production, yet wields little to no influence on prices. A dip in 2016/2017, which saw them slump a ten-year low, hit the likes of Ghana and Côte d’Ivoire hard. Despite sharing a physical border, collaboration between the two has long been virtually non-existent.

The decision to suspend sales is an attempt to bring their collective bargaining power to bear on global markets. If successful the OPEC-like collaboration could set a useful example for other African resource exporters, outside of the oil sector, who often find themselves on the margins of their respective value chains.

Organizations like OPEC clearly demonstrate the potential power of coordination between resource producers. Whether collaboration in other sectors can be as effective is debatable, but it’s hard to see a downside to trying.

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