Sunday, March 13, 2011

The Hot Cocoa Belt Around the World -- Part IV

There is generally no platform which allows the women or children to escape and fight for their civil and human rights in African nations of the Cocoa Belt.

In the absence of organized labour and unions, non-profit groups dealing with this and other peripheral issues are taking a stand. Some include: http://www.laborrights.org/stop-child-labor/cocoa-campaign an organization advocating on an international level for labor rights worldwide.

Such groups, large and small, working to put an end to human trafficking, are among the groups of growing force, raising awareness of such issues in and outside of Africa, in the U.S. and abroad. Archived stories and scholarly research abound about the atrocities of child labor and human trafficking associated with Cocoa production: http://gvnet.com/humantrafficking/CoteD%27Ivoire.htm.

However in the countries in question, often grassroots, start-ups and Non-Government Organizations, (NGOs), particularily those of an by indigenious groups of the area, are a burgeoning force also speaking out  which can become even stronger advocates for the people directly effected.

One such organization is the Green Village Foundation, http://greenvillagefoundation.com/. Founded in 2009 by Dr. Theo Vodounou, Green Village Foundation is a grassroots, non-government organization (NGO) which includes in its cause, bringing help to victims of labor abuses in their emancipation by promoting education in rural societies, providing micro-finance opportunities to small businesses, as well as protecting women and children against myriad forms of domestic violence, the tactic most commonly used to force children into labour.

In a recent interview, a spokesperson for the organization and son of the foundation's founder, Thierry Vodounou spoke about the implications of the current political strife and how the organization plans to achieve its goal of affecting real changes. 


Valerie's Vignettes Question: What are the specific activities the Green Village Foundation is conducting?
Green Village Foundation's Answer: Green Village Foundation (GVF) is a non-governmental and non-profit organization which partners with African communities for the betterment of the people's lives through sustainable development.  GVF's method is to empower the least privileged by teaching them to take care of themselves.  Our projects have included providing potable water, promoting girls' literacy, providing micro-finance loans to small businesses, donating machinery to farmers in order to improve productivity, and reducing desertification.

Q: What is your experience with these issues?
A: Having lived in and traveled to several African countries, I have seen that poor health and education conditions contribute to poor economic development.  When people do not know how to escape their situations, they will learn to be content with it.  That's why I believe that providing the proper resources to communities is the first steps to contribute to their sustainable development.  However, this assistance must be done in a partnership and not by patronizing the communities.  I have also learned that it is important to teach someone how to fish instead of them giving a meal constantly.

Q: What type of resistance does your organization face in Africa?
A: The first resistance is political: no organization can succeed in Africa without working closely with governmental agencies.  But with the level of corruption in the governments, one has to develop reliable connections.  Other resistances include people's fear of changes for psychological or traditional reasons.  

Q: What are the latest developments in the political situation and Cocoa Industry in the Ivory Coast?
A: Currently, the Ivory Coast is in an unusual post-electoral situation where the two presidential candidates declared themselves winners, and therefore are governing with two separate cabinets.  However, the incumbent Laurent Gbagbo, who, according to the official results acknowledged by the UN and the international community, lost the election, is the one who controls the national army.  The official winner Allassane Ouattara also has a smaller army on his side.  The two groups have lately been engaging in military conflicts, which hurt the civilians.  In addition to the economic embargo on oil, cocoa and cafe, one of the strategies employed by Ouattara to push Gbagbo out of power is to asphyxiate him economically.  If Gbagbo is no longer able to afford paying the state workers and the military backing him, he will be pushed out eventually.  Thus, Ouattara has banned the export of cocoa out of the country since January 23rd.  This is significant to the world cocoa markets as the Ivory Coast is the world top producer with 40% of the global production.  If the stalemate continues, the cocoa price will continue to trend higher.  Today the cocoa futures for May delivery rose to $3,858 a metric ton.  This commodity price has surged over 28% since the November 2010 election.  In addition, there are major concerns of cocoa smuggling across the borders into Ghana in order to sell the product. 

Q: Please explain what a nationalized Cocoa industry will do for Ivory Coast and the Region of exporters?
A: With all the uncertainty around the cocoa markets it's hard to predict exactly what will happen with this recent decision by the incumbent president Gbagbo to nationalize all cocoa trade activities.  There is no indication of how Gbagbo's government will finance those buy-sell transactions, since his government is not officially recognized globally.  Essentially, the state will carry the trades that were done by the multinationals. The cocoa industry is a $4.5 bln one in the Ivory Coast.  It will be challenging for the incumbent's government play the role of a vibrant private sector.   Will traders on the other side be sanctioned for doing business with his government?  We know that this decision will not stop the increase of the cocoa prices in financial markets.  In the meantime, cocoa is being traded in other producing countries in the Cocoa Belt.

Q: As a financial analyst and treasurer of your organization, what are your thoughts on current and future impact the cocoa embargo will have on development in the area?
A: Farmers in the Ivory Coast are negatively affected as they are not able to liquidate their crops.  Traders and observers are concerned that if the embargo lasts into the next harvest season which begins in May, there will be higher risk and volatility in the cocoa markets worldwide.  I believe that the cocoa export ban will increase trade volumes in Ghana, which borders the Ivory Coast.  However, they will be increased smuggling of cocoa across borders.  The global cocoa industry is suffering from this crisis as major chocolate processors are affected by the 32 year-high in the cocoa price.  Further, the crisis will benefit neighboring countries as the two major Ivorian ports, San Pedro and Abidjan banned from trading activities.  The ports in Ghana, Togo and Benin will continue to see increased volume in business and thus help the respective economies.

Q: What agribusinesses exist in Africa?
A: The agribusiness is developed in Africa, but it is dominated by multinational corporations, mainly American, European and Asian ones.  The African players are not strong enough to impose themselves or move the markets.  Some African-owned firms include Emvest of South Africa, Wilbahi Investments Ltd of Nigeria, Export Trading Company Ltd. of Kenya and Giwa Farms Ltd. of Nigeria.  The large corporations like Nestle, Cargill and Kraft dominate the agribusiness in Africa.  

Q: More, how do you think the issue will shape regional and global politics in the immediate future?
A: Traders will continue to speculate on the prices of the cocoa commodities securities as the crisis persists.  International buyers will change their strategies to hedge their losses.  This could mean executing commodity risk management strategies, buying cocoa from other countries with less political risks.  That would also affect revenues and production if buyers have to modify their chocolate processing based on the types and quality of beans they were inputting before the crisis.  However, the Ivory Coast has enough stock of cocoa for probably the rest of the year, and that could be sold once the export ban ends.  Politically, the Ivory Coast is in a difficult position as it has in a way isolated itself.  Neighboring countries are treading carefully as they are afraid to take sides given vis-√†-vis the two presidents, even though the African Union has officially recognized Ouattara and asked Gbagbo to step down.  In this crisis, the Ivorian economy has lost at least 10 years of development since the crisis started in 2000.  This political instability puts the country, which has always been a respectable economic power in the region, in a place where other regional nations will question its political power and relevance.  Some African leaders are quiet of the matter because they see themselves as potential usurpers of power, just like Gbagbo.  On the global scale, the international community includes the E.U. and the U.S. have clearly shown their supports for Ouattara.  Bilateral affairs with the countries will be halted until the crisis ends, i.e. Gbagbo is ousted.  Given that the Ivory Coast is a significant partner in the region and in the world, the foreign ties will be restored adequately after the crisis.

Q: How does the issue and current situation in Egypt and Libya impact the cocoa issue?
A: I think that current political situations in Tunisia, Egypt and Libya have shown the world and Africans in particular, that the people can shift political power with their voices.  We have yet to see if the energy seen in Northern Africa can be seen in countries like Ivory Coast, where people take on their oppressing governments regardless of the violence and abuse exercised on them.

Q: Why hasn't more attention been paid in the U.S. to this issue, in your opinion?
A: I think the U.S. takes position based on its political and economic interests around the world.  More attention has been devoted toward the Northern African crises because of the U.S. ties to the Middle East in the case of Tunisia and Egypt, and because of the oil and Qadaffi in Libya.  Of course the Ivorian crisis is one of concern to the U.S. because of its impact in the region, but its significance is not like that of the Northern African situations.

Q: There are by and large few if any African Companies involved in the actual business of chocolate manufacture.
A: That is correct.  Most of the chocolate manufacturers are based in South Africa, but others are in West Africa.  However, they are not large corporations like multinationals.

Q: What is the presence of African based agribusiness in West Africa?
A: There are some small to mid-size companies in the Ivory Coast like Sidcao, ETS Nouriat, Cabinsi; in Ghana like Afua Kds Enterprise; others in Benin and Togo.  Most of those companies make candies, cocoa butter and cocoa cakes.  Few of them make chocolate like the large multinational firms.


(c) 2011 Valerie Williams-Sanchez. All rights reserved.

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