A look at Four Promising SMEs in Rwanda

By Sara Leedom

This week, as investors and policy leaders land in Rwanda for the annual World Economic Forum on Africa, the spotlight will be on the hundreds of Rwandan entrepreneurs who are contributing to the East African nation’s rapid and sustained economic growth.

Kigali

Across the globe, small and medium enterprises (SMEs) are the lead drivers of job creation and economic development. In Rwanda, the statistics are on par. According to the Rwandan Ministry of Trade and Industry, 98% of businesses are considered SMEs, contributing 41% of all private sector jobs in the nation.
Rwanda’s government has created a supportive environment for these SMEs to thrive. Often cited are Rwanda’s policies which speed entrepreneurs through an online formal business registration at a record four hours. Protections for investors, practically non-existent corruption, infrastructure for online payments, access to energy, and an increasingly educated workforce are all hallmarks of a nation that is both smart and serious about economic development.

Yet, we know that small business growth is downright hard. Businesses fail. Entrepreneurs fail. Ideas fail. But, by overwhelming majority, the spirit of innovation and tenacity is practically baked into the Rwandan attitude towards business growth as a key to national transformation.

My company, African Entrepreneur Collective (AEC), works with dozens of young entrepreneurs in Rwanda who are taking big risks to see their ideas come to life. In Rwanda the business development community is largely split between investing in agriculture, the primary base of Rwanda’s economy and the largest driver of new jobs, and the ICT sector, which holds the promise for modernisation and lifestyle improvements for millions.

At AEC, we work with both. Here are some of the Rwandan entrepreneurs who inspire us:

Shekina Enterprise
Nearly ten years ago, Rwandan women traders in the local market threw away the cassava leaves they were not able to sell each day, as the plant spoils quickly. Pierre Damien experimented with methods of drying cassava leaves for improved storage, and his curiosity led to an innovative dried cassava leaf product that retained the nutritional value of the fresh leaves and was at least four times faster to cook.
Today Shekina employs over 100 permanent staff and works with more than 1,000 farmer suppliers – both groups are approximately 70% women – to produce a dried cassava product for domestic and export markets. Isombe is a staple food of East Africa, and the dried and instant cassava product not only brings higher value for the farmers and jobs for processors, but it saves thousands of hours of time for Rwandan women cooking for their families.

Hollanda FairFoods
Pascal Murasira, co-founded Hollanda FairFoods and its signature brand Winnaz crisps in 2014 with initial capital investments from IFDC. Hollanda purchases and processes Rwandan-grown Irish potatoes to sell as potato chips. By using a contractual farming approach to engage with farmers and cooperatives, Hollanda now is a profitable Rwandan company, with a strong domestic and export market.
Hollanda’s presence in East African markets is growing, as sales for snack foods in Kenya in 2010 reached US$44.4m, growing at an average rate of 8% annually. In Rwanda, packaging is one of the more expensive elements for the company, as Rwandan law prohibits the use of plastic bags. So the special Winnaz package not only is full of awesome chips, but it’s environmentally sound as well.

Academic Bridge
In the ICT realm, we’re checking out the young and promising Academic Bridge, an ed-tech company connecting parents to teachers for the benefit of communication about student progress. From tracking school fees to exam marks, the team at Academic Bridge has assembled an inspiring package of features, recently recognised by Tigo’s Reach for Change programme.
Academic Bridge’s CTO, Christian Ikuzwe, has been previously awarded accolades by the World Bank and the Bill & Melinda Gates Foundation for his SanMob app. Other team members, including Miriam Muganga and Yves Iradukunda, are serial entrepreneurs bringing networks from Nigerian start-ups and Rwandan ecosystems to build an app that is sure to succeed.

SafeMotos
And no conversation about Rwandan tech is complete without a nod to SafeMotos, the ”Uber” for motorcycle taxis in Kigali. With 5,000 users on their Android and iPhone apps, co-founders Peter Kariuki and Barrett Nash have created a taxi-hailing app that not only delivers convenience and mobile payment options, but also allows customers to select drivers based on ratings of driver quality. The SafeMotos team has been securing accolades across the continent – from a feature in the Economist last week to awards from Pivot East, the team has created serious traction with less than $200,000 investment.
We believe it’s a special combination of a positive enabling environment, practical hands-on support from partners like AEC, and a thriving entrepreneurial spirit that make Rwanda’s SME scene a trendsetter for the continent.

Sara Leedom is the co-founder of the African Entrepreneur Collective, a network of business incubators and accelerators with the mission of creating jobs through private sector development.

Source: How We Made in Africa

Why Formal Trade in Africa lags, while Informal Prospers

A local market in Accra. ©EnterpriseAfrik

 While Africa’s trade with the rest of the world – such as with China and India – has been on the rise in recent years, trade between African countries still lags, especially when compared to other regions in the world. 

In an article published last month by Dr Álvaro Sobrinho, a leading business figure in Angola and chairman of emerging bank Banco Valor, intra-Africa trade today is at roughly 12%, around half the share 15 years ago. This compares to Europe where trade between regional borders is estimated at 70%, and Asia at 50%.

It has been argued that one reason behind low intra-regional trade in Africa is poor transport and logistics infrastructure, and the resulting high cost to transport goods. However, according to Edward George, head of soft commodities research at Ecobank, while formal trade flows between African nations might lag, informal intra-regional trade is more advanced than one might expect.

“I was just recently in Nigeria talking to rice traders – 1.5m tons of rice goes into Benin and then makes its way across the border into Nigeria, through Benin or Niger, basically to avoid taxes. So that is, you know, half the country’s consumption of rice,” George told an audience at the Africa Trade Finance Week in Cape Town last week.

“So informal flows are extraordinarily developed and actually very good at getting to market.”

Why does formal trade lag?

The potential for regional trade not being adequately captured can be seen in Ghana’s exports to Côte d’Ivoire.

According to George, Ghana’s official exports to Côte d’Ivoire last year were less than 1% of its total exports. Considering that Côte d’Ivoire is Ghana’s largest neighbouring economy, this is a meager percentage.

He added that a large reason for this is that the two countries have different legal and monetary systems, currencies and languages.

Ngozi Okonkwo, chief legal officer at Oando, agrees. “I can say, from my experience, one major challenge that we have had is trading with countries that have very stringent requirements. It is understandable that there are local content type laws in most countries in Africa but sometimes it can be a challenge trying to work within the framework of those laws, especially where it would not be [giving] opportunities to make the quantum of investments that you would want to make and have the degree of control that somebody would want to have in that country.”

She added that the language barrier between English and French-speaking countries is a particular challenge.

“It’s a lot easier when you speak the same language … and we need to understand the local language in some of the countries because that is where the trust is built, if you are speaking the same language. If you don’t speak the same language then clearly there is a significant complication involved and you have to rely on interpreters; it’s just not the same,” continued Okonkwo.

“And then, sometimes between the two trading companies, one will have to sort of make more concessions than the other because you can’t have two different applicable laws in the same contract. It has to be one law. These are different issues that keep coming up.”

George added that the East African Community has been successful in terms of this integration of laws and regulations, alongside the Southern African Customs Union.

“So the models are out there. I think the real key is how do we get the CFA franc zone and the West African monetary zone to be doing more trade together,” highlighted George. “That’s the biggest headache.

Source: How We Made It in Africa

Shea Butter nourishes Opportunities for African Women

The Shea Butter Trade Industry held its first-ever conference in North America in May 2013. The occasion was an opportunity for African producers to mix with cosmetics industry giants such as L’Oréal and the Body Shop. The demand for shea butter has risen so much in recent years that African producers have started calling for fair prices for their labour.

Shea butter comes from the nuts of karité trees that grow in the Sahel region extending from West to East Africa, from Guinea and Senegal to Uganda and South Sudan. For centuries shea butter has been called “women’s gold” not only for its rich golden color (although shea butter can also sport a deep ivory hue, depending on the region) but also because it primarily provides employment and income to millions of women across the continent. Using traditional methods, women, often organized in cooperatives, harvest karité fruits. They then crush the nuts inside to extract the precious butter, which is boiled, cleaned, packaged and sold at the local markets or exported. Shea butter is non-toxic and edible, and can be used in cooking. But it is mostly used for cosmetic purposes.

The UN Development Programme (UNDP) estimates that an average of three million African women work directly or indirectly with shea butter. The top shea nut–producing countries are Nigeria, Mali, Burkina Faso, Ghana, Côte d’Ivoire, Benin and Togo.

Making good money
“I have been making good money for my family selling shea butter,” Lucette Ndogo, a well-known shea butter vendor at the Marché Central in Douala, Cameroon, said in an interview with Africa Renewal. She purchases the shea butter in bulk from Burkina Faso and sells it for a profit to clients who have come to trust the quality of her products.

Antoine Turpin of IOI Loders Croklaan, a global producer of edible oils, told The New York Times that “shea [butter] is an important source of revenue to millions of women and their families across Africa. Empowering these women economically is crucial to the industry’s sustainability.” The New York Times says Turpin’s company alone purchases an estimated 25% of all shea nuts picked by women in West Africa.

With the demand for natural and organic products rising in the Western world, shea butter has become a hot commodity. The precious substance is used for many different types of cosmetics and skin care products because of its natural healing properties; people prefer it to the harsh chemicals, artificial colors and fillers often used in conventional cosmetics.

Shea butter is also used in food products such as chocolates. Confect-ioners use it as a cocoa butter equivalent to give chocolates a higher melting point and a smoother texture. The butter is used in popular chocolate bars such as Kit Kat and Milky Way.


“Women’s gold”
According to The New York Times, a survey conducted in a village in Burkina Faso by USAID in 2010 found that for every $1,000 of shea nuts sold, an additional $1,580 in economic activities, such as reinvesting the money in other trades, was generated in the village. Shea butter exports from West Africa garner between $90 million and $200 million a year, according to the newspaper. The demand comes not only from major corporations but also from millions of entrepreneurs who hope to make a fortune in the distribution of this “women’s gold.”

With high demand come ethical issues, which often arise with products originating from the developing world, including Africa. Because of shea’s newfound popularity, the number of shea fair trade cooperatives and associations seeking a fair deal for African women has increased.

Fair prices for commoditiesCooperatives of women produce fair trade shea butter from shea nuts for use as cooking oil or for cosmetics. Photo: Vanessa Vick/Redux

Fair trade is an organized social movement dating from the 1980s that promotes better trading conditions between producers from developing countries and buyers in the developed world. Proponents also seek to raise consumer awareness, believing that an educated consumer may be willing to pay more for goods if the producer gets a fair deal.

In order to receive fair prices for their products, commodity producers have to maintain certain levels of environmental and labor standards recommended by fair trade certification organizations such as Fairtrade International, World Fair Trade Organization, Faire Trade USA and Fair Trade Federation, to name a few.

The fair trade model appears to offer an improvement on the conventional trade model. Paying market prices for the commodity guarantees a minimum price to the producers. The industries usually associated with fair trade are coffee, cocoa, bananas, flowers, gold and other exotic products. Shea butter was not one of the most sought-after African commodities until recently.

Harriet Lamb of the Fairtrade Foundation says, “Fair trade addresses the injustices of conventional trade, which too often leave the poorest, weakest producers earning less than it costs them to grow their crops. It’s a bit like a national minimum wage for global trade. Not perfect, not a magic wand, not a panacea for all the problems of poverty, but a step in the right direction.”

No clear evidence
Philip Booth from the Institute of Economic Affairs, a British think tank, sees things differently. He argues that “no clear evidence has been produced to suggest that farmers themselves actually receive higher prices under fair trade. Fair trade may do some good in some circumstances, but it does not deserve the unique status it claims for itself.”

Cosmetics retailers often portray fair trade shea butter as an exotic, traditional, authentic and ethical product encouraging female solidarity. The butter is produced by women in Africa and consumed mainly by Europeans and North Americans in search of “ethical” products. Because of the high number of companies and small entrepreneurs claiming to use fair trade shea butter in their products, it can be difficult to separate marketing strategy from real engagement.

L’Occitane en Provence, a French multinational cosmetics firm famous worldwide for its luxury products based on natural ingredients, prides itself on its use of fair trade shea butter in products including hand, body and foot creams. Indeed, for the company’s activities in Burkina Faso, its business model was recognized by UNDP in 2013 as one of the 12 most innovative and inclusive in Africa.

Platform to exchange ideas
A UNDP report titled L’Occitane au Burkina Faso: More than Just Business with Shea Butter Producers, highlights the company’s dedication, its collaboration with 15,000 rural women producers and its use of shea butter in its products. According to the report, L’Occitane estimates that it pays 20% to 30% more for shea butter from Burkina Faso than it would for shea butter from Western industries. Sales of shea butter to L’Occitane represent about $1.23 million in revenues yearly for the supplier cooperatives and their 15,000 rural women members.

In order for more African women in the shea industry to reap the benefits of fair trade, the Global Shea Alliance, an association that promotes quality and sustainability in the shea butter industry’s support for rural African communities and women’s empowerment, organized the New York Shea Butter Trade Industry Conference. With the first New York fair trade event, the Alliance sought to provide a platform for exchanging ideas across the supply chain of collectors, producers, traders, industrial users and consumers of shea butter.

“The Body Shop has used shea for over 19 years and we are firmly committed to using our learning to build a sustainable shea sector,” said Mark Davis, the company’s director of community fair trade. “Being a member of the Global Shea Alliance is critical to achieving that goal.”

Other global commodities, such as coffee, have become associated with fair trade, and many stakeholders in the shea industry aspire to create that association for their product. Salima Makama, the Global Shea Alliance’s president, is convinced that the African women who came to New York to implement better strategies to empower themselves are well on their way to turning the shea butter export into “real gold.” In a fancy Manhattan hotel in New York, women in colorful traditional African gowns make their way to one of the conference rooms. Their outfits provide a fascinating contrast to the grey and black business suits surrounding them. The crowd is diverse, but is gathered because of one thing: shea butter that comes from an African nut and is used in cosmetics as a lotion or moisturizer.

Source: Africa Renewal

In a fancy Manhattan hotel in New York, women in colorful traditional African gowns make their way to one of the conference rooms. Their outfits provide a fascinating contrast to the grey and black business suits surrounding them. The crowd is diverse, but is gathered because of one thing: shea butter that comes from an African nut and is used in cosmetics as a lotion or moisturizer. 

The Shea Butter Trade Industry held its first-ever conference in North America in May 2013. The occasion was an opportunity for African producers to mix with cosmetics industry giants such as L’Oréal and the Body Shop. The demand for shea butter has risen so much in recent years that African producers have started calling for fair prices for their labour.

Shea butter comes from the nuts of karité trees that grow in the Sahel region extending from West to East Africa, from Guinea and Senegal to Uganda and South Sudan. For centuries shea butter has been called “women’s gold” not only for its rich golden color (although shea butter can also sport a deep ivory hue, depending on the region) but also because it primarily provides employment and income to millions of women across the continent. Using traditional methods, women, often organized in cooperatives, harvest karité fruits. They then crush the nuts inside to extract the precious butter, which is boiled, cleaned, packaged and sold at the local markets or exported. Shea butter is non-toxic and edible, and can be used in cooking. But it is mostly used for cosmetic purposes. 

The UN Development Programme (UNDP) estimates that an average of three million African women work directly or indirectly with shea butter. The top shea nut–producing countries are Nigeria, Mali, Burkina Faso, Ghana, Côte d’Ivoire, Benin and Togo. 

Making good money

“I have been making good money for my family selling shea butter,” Lucette Ndogo, a well-known shea butter vendor at the Marché Central in Douala, Cameroon, said in an interview with Africa Renewal. She purchases the shea butter in bulk from Burkina Faso and sells it for a profit to clients who have come to trust the quality of her products. 

Antoine Turpin of IOI Loders Croklaan, a global producer of edible oils, told The New York Times that “shea [butter] is an important source of revenue to millions of women and their families across Africa. Empowering these women economically is crucial to the industry’s sustainability.” The New York Times says Turpin’s company alone purchases an estimated 25% of all shea nuts picked by women in West Africa. 

With the demand for natural and organic products rising in the Western world, shea butter has become a hot commodity. The precious substance is used for many different types of cosmetics and skin care products because of its natural healing properties; people prefer it to the harsh chemicals, artificial colors and fillers often used in conventional cosmetics. 

Shea butter is also used in food products such as chocolates. Confect-ioners use it as a cocoa butter equivalent to give chocolates a higher melting point and a smoother texture. The butter is used in popular chocolate bars such as Kit Kat and Milky Way. 

“Women’s gold”

According to The New York Times, a survey conducted in a village in Burkina Faso by USAID in 2010 found that for every $1,000 of shea nuts sold, an additional $1,580 in economic activities, such as reinvesting the money in other trades, was generated in the village. Shea butter exports from West Africa garner between $90 million and $200 million a year, according to the newspaper. The demand comes not only from major corporations but also from millions of entrepreneurs who hope to make a fortune in the distribution of this “women’s gold.” 

With high demand come ethical issues, which often arise with products originating from the developing world, including Africa. Because of shea’s newfound popularity, the number of shea fair trade cooperatives and associations seeking a fair deal for African women has increased. 

Fair prices for commodities

Cooperatives of women produce fair trade shea butter from shea nuts for use as cooking oil or for cosmetics. Photo: Vanessa Vick/Redux

Fair trade is an organized social movement dating from the 1980s that promotes better trading conditions between producers from developing countries and buyers in the developed world. Proponents also seek to raise consumer awareness, believing that an educated consumer may be willing to pay more for goods if the producer gets a fair deal.

In order to receive fair prices for their products, commodity producers have to maintain certain levels of environmental and labor standards recommended by fair trade certification organizations such as Fairtrade International, World Fair Trade Organization, Faire Trade USA and Fair Trade Federation, to name a few. 

The fair trade model appears to offer an improvement on the conventional trade model. Paying market prices for the commodity guarantees a minimum price to the producers. The industries usually associated with fair trade are coffee, cocoa, bananas, flowers, gold and other exotic products. Shea butter was not one of the most sought-after African commodities until recently. 

Harriet Lamb of the Fairtrade Foundation says, “Fair trade addresses the injustices of conventional trade, which too often leave the poorest, weakest producers earning less than it costs them to grow their crops. It’s a bit like a national minimum wage for global trade. Not perfect, not a magic wand, not a panacea for all the problems of poverty, but a step in the right direction.”

No clear evidence

Philip Booth from the Institute of Economic Affairs, a British think tank, sees things differently. He argues that “no clear evidence has been produced to suggest that farmers themselves actually receive higher prices under fair trade. Fair trade may do some good in some circumstances, but it does not deserve the unique status it claims for itself.”

Cosmetics retailers often portray fair trade shea butter as an exotic, traditional, authentic and ethical product encouraging female solidarity. The butter is produced by women in Africa and consumed mainly by Europeans and North Americans in search of “ethical” products. Because of the high number of companies and small entrepreneurs claiming to use fair trade shea butter in their products, it can be difficult to separate marketing strategy from real engagement.

L’Occitane en Provence, a French multinational cosmetics firm famous worldwide for its luxury products based on natural ingredients, prides itself on its use of fair trade shea butter in products including hand, body and foot creams. Indeed, for the company’s activities in Burkina Faso, its business model was recognized by UNDP in 2013 as one of the 12 most innovative and inclusive in Africa. 

Platform to exchange ideas

A UNDP report titled L’Occitane au Burkina Faso: More than Just Business with Shea Butter Producers, highlights the company’s dedication, its collaboration with 15,000 rural women producers and its use of shea butter in its products. According to the report, L’Occitane estimates that it pays 20% to 30% more for shea butter from Burkina Faso than it would for shea butter from Western industries. Sales of shea butter to L’Occitane represent about $1.23 million in revenues yearly for the supplier cooperatives and their 15,000 rural women members. 

In order for more African women in the shea industry to reap the benefits of fair trade, the Global Shea Alliance, an association that promotes quality and sustainability in the shea butter industry’s support for rural African communities and women’s empowerment, organized the New York Shea Butter Trade Industry Conference. With the first New York fair trade event, the Alliance sought to provide a platform for exchanging ideas across the supply chain of collectors, producers, traders, industrial users and consumers of shea butter.

“The Body Shop has used shea for over 19 years and we are firmly committed to using our learning to build a sustainable shea sector,” said Mark Davis, the company’s director of community fair trade. “Being a member of the Global Shea Alliance is critical to achieving that goal.”

Other global commodities, such as coffee, have become associated with fair trade, and many stakeholders in the shea industry aspire to create that association for their product. Salima Makama, the Global Shea Alliance’s president, is convinced that the African women who came to New York to implement better strategies to empower themselves are well on their way to turning the shea butter export into “real gold.” 

- See more at: http://www.un.org/africarenewal/magazine/august-2013/shea-butter-nourishes-opportunities-african-women#sthash.sJfsBapz.dpuf

In a fancy Manhattan hotel in New York, women in colorful traditional African gowns make their way to one of the conference rooms. Their outfits provide a fascinating contrast to the grey and black business suits surrounding them. The crowd is diverse, but is gathered because of one thing: shea butter that comes from an African nut and is used in cosmetics as a lotion or moisturizer. 

The Shea Butter Trade Industry held its first-ever conference in North America in May 2013. The occasion was an opportunity for African producers to mix with cosmetics industry giants such as L’Oréal and the Body Shop. The demand for shea butter has risen so much in recent years that African producers have started calling for fair prices for their labour.

Shea butter comes from the nuts of karité trees that grow in the Sahel region extending from West to East Africa, from Guinea and Senegal to Uganda and South Sudan. For centuries shea butter has been called “women’s gold” not only for its rich golden color (although shea butter can also sport a deep ivory hue, depending on the region) but also because it primarily provides employment and income to millions of women across the continent. Using traditional methods, women, often organized in cooperatives, harvest karité fruits. They then crush the nuts inside to extract the precious butter, which is boiled, cleaned, packaged and sold at the local markets or exported. Shea butter is non-toxic and edible, and can be used in cooking. But it is mostly used for cosmetic purposes. 

The UN Development Programme (UNDP) estimates that an average of three million African women work directly or indirectly with shea butter. The top shea nut–producing countries are Nigeria, Mali, Burkina Faso, Ghana, Côte d’Ivoire, Benin and Togo. 

Making good money

“I have been making good money for my family selling shea butter,” Lucette Ndogo, a well-known shea butter vendor at the Marché Central in Douala, Cameroon, said in an interview with Africa Renewal. She purchases the shea butter in bulk from Burkina Faso and sells it for a profit to clients who have come to trust the quality of her products. 

Antoine Turpin of IOI Loders Croklaan, a global producer of edible oils, told The New York Times that “shea [butter] is an important source of revenue to millions of women and their families across Africa. Empowering these women economically is crucial to the industry’s sustainability.” The New York Times says Turpin’s company alone purchases an estimated 25% of all shea nuts picked by women in West Africa. 

With the demand for natural and organic products rising in the Western world, shea butter has become a hot commodity. The precious substance is used for many different types of cosmetics and skin care products because of its natural healing properties; people prefer it to the harsh chemicals, artificial colors and fillers often used in conventional cosmetics. 

Shea butter is also used in food products such as chocolates. Confect-ioners use it as a cocoa butter equivalent to give chocolates a higher melting point and a smoother texture. The butter is used in popular chocolate bars such as Kit Kat and Milky Way. 

“Women’s gold”

According to The New York Times, a survey conducted in a village in Burkina Faso by USAID in 2010 found that for every $1,000 of shea nuts sold, an additional $1,580 in economic activities, such as reinvesting the money in other trades, was generated in the village. Shea butter exports from West Africa garner between $90 million and $200 million a year, according to the newspaper. The demand comes not only from major corporations but also from millions of entrepreneurs who hope to make a fortune in the distribution of this “women’s gold.” 

With high demand come ethical issues, which often arise with products originating from the developing world, including Africa. Because of shea’s newfound popularity, the number of shea fair trade cooperatives and associations seeking a fair deal for African women has increased. 

Fair prices for commodities

Cooperatives of women produce fair trade shea butter from shea nuts for use as cooking oil or for cosmetics. Photo: Vanessa Vick/Redux

Fair trade is an organized social movement dating from the 1980s that promotes better trading conditions between producers from developing countries and buyers in the developed world. Proponents also seek to raise consumer awareness, believing that an educated consumer may be willing to pay more for goods if the producer gets a fair deal.

In order to receive fair prices for their products, commodity producers have to maintain certain levels of environmental and labor standards recommended by fair trade certification organizations such as Fairtrade International, World Fair Trade Organization, Faire Trade USA and Fair Trade Federation, to name a few. 

The fair trade model appears to offer an improvement on the conventional trade model. Paying market prices for the commodity guarantees a minimum price to the producers. The industries usually associated with fair trade are coffee, cocoa, bananas, flowers, gold and other exotic products. Shea butter was not one of the most sought-after African commodities until recently. 

Harriet Lamb of the Fairtrade Foundation says, “Fair trade addresses the injustices of conventional trade, which too often leave the poorest, weakest producers earning less than it costs them to grow their crops. It’s a bit like a national minimum wage for global trade. Not perfect, not a magic wand, not a panacea for all the problems of poverty, but a step in the right direction.”

No clear evidence

Philip Booth from the Institute of Economic Affairs, a British think tank, sees things differently. He argues that “no clear evidence has been produced to suggest that farmers themselves actually receive higher prices under fair trade. Fair trade may do some good in some circumstances, but it does not deserve the unique status it claims for itself.”

Cosmetics retailers often portray fair trade shea butter as an exotic, traditional, authentic and ethical product encouraging female solidarity. The butter is produced by women in Africa and consumed mainly by Europeans and North Americans in search of “ethical” products. Because of the high number of companies and small entrepreneurs claiming to use fair trade shea butter in their products, it can be difficult to separate marketing strategy from real engagement.

L’Occitane en Provence, a French multinational cosmetics firm famous worldwide for its luxury products based on natural ingredients, prides itself on its use of fair trade shea butter in products including hand, body and foot creams. Indeed, for the company’s activities in Burkina Faso, its business model was recognized by UNDP in 2013 as one of the 12 most innovative and inclusive in Africa. 

Platform to exchange ideas

A UNDP report titled L’Occitane au Burkina Faso: More than Just Business with Shea Butter Producers, highlights the company’s dedication, its collaboration with 15,000 rural women producers and its use of shea butter in its products. According to the report, L’Occitane estimates that it pays 20% to 30% more for shea butter from Burkina Faso than it would for shea butter from Western industries. Sales of shea butter to L’Occitane represent about $1.23 million in revenues yearly for the supplier cooperatives and their 15,000 rural women members. 

In order for more African women in the shea industry to reap the benefits of fair trade, the Global Shea Alliance, an association that promotes quality and sustainability in the shea butter industry’s support for rural African communities and women’s empowerment, organized the New York Shea Butter Trade Industry Conference. With the first New York fair trade event, the Alliance sought to provide a platform for exchanging ideas across the supply chain of collectors, producers, traders, industrial users and consumers of shea butter.

“The Body Shop has used shea for over 19 years and we are firmly committed to using our learning to build a sustainable shea sector,” said Mark Davis, the company’s director of community fair trade. “Being a member of the Global Shea Alliance is critical to achieving that goal.”

Other global commodities, such as coffee, have become associated with fair trade, and many stakeholders in the shea industry aspire to create that association for their product. Salima Makama, the Global Shea Alliance’s president, is convinced that the African women who came to New York to implement better strategies to empower themselves are well on their way to turning the shea butter export into “real gold.” 

- See more at: http://www.un.org/africarenewal/magazine/august-2013/shea-butter-nourishes-opportunities-african-women#sthash.sJfsBapz.dpuf

Women packing soap made from shea butter at a processing unit run by the Nununa Federation of Shea Producers in Burkina Faso. Photo: Roel Burgler/Hollandse Hoogte/Redux

In a fancy Manhattan hotel in New York, women in colorful traditional African gowns make their way to one of the conference rooms. Their outfits provide a fascinating contrast to the grey and black business suits surrounding them. The crowd is diverse, but is gathered because of one thing: shea butter that comes from an African nut and is used in cosmetics as a lotion or moisturizer. 

The Shea Butter Trade Industry held its first-ever conference in North America in May 2013. The occasion was an opportunity for African producers to mix with cosmetics industry giants such as L’Oréal and the Body Shop. The demand for shea butter has risen so much in recent years that African producers have started calling for fair prices for their labour.

Shea butter comes from the nuts of karité trees that grow in the Sahel region extending from West to East Africa, from Guinea and Senegal to Uganda and South Sudan. For centuries shea butter has been called “women’s gold” not only for its rich golden color (although shea butter can also sport a deep ivory hue, depending on the region) but also because it primarily provides employment and income to millions of women across the continent. Using traditional methods, women, often organized in cooperatives, harvest karité fruits. They then crush the nuts inside to extract the precious butter, which is boiled, cleaned, packaged and sold at the local markets or exported. Shea butter is non-toxic and edible, and can be used in cooking. But it is mostly used for cosmetic purposes. 

The UN Development Programme (UNDP) estimates that an average of three million African women work directly or indirectly with shea butter. The top shea nut–producing countries are Nigeria, Mali, Burkina Faso, Ghana, Côte d’Ivoire, Benin and Togo. 

Making good money

“I have been making good money for my family selling shea butter,” Lucette Ndogo, a well-known shea butter vendor at the Marché Central in Douala, Cameroon, said in an interview with Africa Renewal. She purchases the shea butter in bulk from Burkina Faso and sells it for a profit to clients who have come to trust the quality of her products. 

Antoine Turpin of IOI Loders Croklaan, a global producer of edible oils, told The New York Times that “shea [butter] is an important source of revenue to millions of women and their families across Africa. Empowering these women economically is crucial to the industry’s sustainability.” The New York Times says Turpin’s company alone purchases an estimated 25% of all shea nuts picked by women in West Africa. 

With the demand for natural and organic products rising in the Western world, shea butter has become a hot commodity. The precious substance is used for many different types of cosmetics and skin care products because of its natural healing properties; people prefer it to the harsh chemicals, artificial colors and fillers often used in conventional cosmetics. 

Shea butter is also used in food products such as chocolates. Confect-ioners use it as a cocoa butter equivalent to give chocolates a higher melting point and a smoother texture. The butter is used in popular chocolate bars such as Kit Kat and Milky Way. 

“Women’s gold”

According to The New York Times, a survey conducted in a village in Burkina Faso by USAID in 2010 found that for every $1,000 of shea nuts sold, an additional $1,580 in economic activities, such as reinvesting the money in other trades, was generated in the village. Shea butter exports from West Africa garner between $90 million and $200 million a year, according to the newspaper. The demand comes not only from major corporations but also from millions of entrepreneurs who hope to make a fortune in the distribution of this “women’s gold.” 

With high demand come ethical issues, which often arise with products originating from the developing world, including Africa. Because of shea’s newfound popularity, the number of shea fair trade cooperatives and associations seeking a fair deal for African women has increased. 

Fair prices for commodities

Cooperatives of women produce fair trade shea butter from shea nuts for use as cooking oil or for cosmetics. Photo: Vanessa Vick/Redux

Fair trade is an organized social movement dating from the 1980s that promotes better trading conditions between producers from developing countries and buyers in the developed world. Proponents also seek to raise consumer awareness, believing that an educated consumer may be willing to pay more for goods if the producer gets a fair deal.

In order to receive fair prices for their products, commodity producers have to maintain certain levels of environmental and labor standards recommended by fair trade certification organizations such as Fairtrade International, World Fair Trade Organization, Faire Trade USA and Fair Trade Federation, to name a few. 

The fair trade model appears to offer an improvement on the conventional trade model. Paying market prices for the commodity guarantees a minimum price to the producers. The industries usually associated with fair trade are coffee, cocoa, bananas, flowers, gold and other exotic products. Shea butter was not one of the most sought-after African commodities until recently. 

Harriet Lamb of the Fairtrade Foundation says, “Fair trade addresses the injustices of conventional trade, which too often leave the poorest, weakest producers earning less than it costs them to grow their crops. It’s a bit like a national minimum wage for global trade. Not perfect, not a magic wand, not a panacea for all the problems of poverty, but a step in the right direction.”

No clear evidence

Philip Booth from the Institute of Economic Affairs, a British think tank, sees things differently. He argues that “no clear evidence has been produced to suggest that farmers themselves actually receive higher prices under fair trade. Fair trade may do some good in some circumstances, but it does not deserve the unique status it claims for itself.”

Cosmetics retailers often portray fair trade shea butter as an exotic, traditional, authentic and ethical product encouraging female solidarity. The butter is produced by women in Africa and consumed mainly by Europeans and North Americans in search of “ethical” products. Because of the high number of companies and small entrepreneurs claiming to use fair trade shea butter in their products, it can be difficult to separate marketing strategy from real engagement.

L’Occitane en Provence, a French multinational cosmetics firm famous worldwide for its luxury products based on natural ingredients, prides itself on its use of fair trade shea butter in products including hand, body and foot creams. Indeed, for the company’s activities in Burkina Faso, its business model was recognized by UNDP in 2013 as one of the 12 most innovative and inclusive in Africa. 

Platform to exchange ideas

A UNDP report titled L’Occitane au Burkina Faso: More than Just Business with Shea Butter Producers, highlights the company’s dedication, its collaboration with 15,000 rural women producers and its use of shea butter in its products. According to the report, L’Occitane estimates that it pays 20% to 30% more for shea butter from Burkina Faso than it would for shea butter from Western industries. Sales of shea butter to L’Occitane represent about $1.23 million in revenues yearly for the supplier cooperatives and their 15,000 rural women members. 

In order for more African women in the shea industry to reap the benefits of fair trade, the Global Shea Alliance, an association that promotes quality and sustainability in the shea butter industry’s support for rural African communities and women’s empowerment, organized the New York Shea Butter Trade Industry Conference. With the first New York fair trade event, the Alliance sought to provide a platform for exchanging ideas across the supply chain of collectors, producers, traders, industrial users and consumers of shea butter.

“The Body Shop has used shea for over 19 years and we are firmly committed to using our learning to build a sustainable shea sector,” said Mark Davis, the company’s director of community fair trade. “Being a member of the Global Shea Alliance is critical to achieving that goal.”

Other global commodities, such as coffee, have become associated with fair trade, and many stakeholders in the shea industry aspire to create that association for their product. Salima Makama, the Global Shea Alliance’s president, is convinced that the African women who came to New York to implement better strategies to empower themselves are well on their way to turning the shea butter export into “real gold.” 

- See more at: http://www.un.org/africarenewal/magazine/august-2013/shea-butter-nourishes-opportunities-african-women#sthash.sJfsBapz.dpuf

Women packing soap made from shea butter at a processing unit run by the Nununa Federation of Shea Producers in Burkina Faso. Photo: Roel Burgler/Hollandse Hoogte/Redux

In a fancy Manhattan hotel in New York, women in colorful traditional African gowns make their way to one of the conference rooms. Their outfits provide a fascinating contrast to the grey and black business suits surrounding them. The crowd is diverse, but is gathered because of one thing: shea butter that comes from an African nut and is used in cosmetics as a lotion or moisturizer. 

The Shea Butter Trade Industry held its first-ever conference in North America in May 2013. The occasion was an opportunity for African producers to mix with cosmetics industry giants such as L’Oréal and the Body Shop. The demand for shea butter has risen so much in recent years that African producers have started calling for fair prices for their labour.

Shea butter comes from the nuts of karité trees that grow in the Sahel region extending from West to East Africa, from Guinea and Senegal to Uganda and South Sudan. For centuries shea butter has been called “women’s gold” not only for its rich golden color (although shea butter can also sport a deep ivory hue, depending on the region) but also because it primarily provides employment and income to millions of women across the continent. Using traditional methods, women, often organized in cooperatives, harvest karité fruits. They then crush the nuts inside to extract the precious butter, which is boiled, cleaned, packaged and sold at the local markets or exported. Shea butter is non-toxic and edible, and can be used in cooking. But it is mostly used for cosmetic purposes. 

The UN Development Programme (UNDP) estimates that an average of three million African women work directly or indirectly with shea butter. The top shea nut–producing countries are Nigeria, Mali, Burkina Faso, Ghana, Côte d’Ivoire, Benin and Togo. 

Making good money

“I have been making good money for my family selling shea butter,” Lucette Ndogo, a well-known shea butter vendor at the Marché Central in Douala, Cameroon, said in an interview with Africa Renewal. She purchases the shea butter in bulk from Burkina Faso and sells it for a profit to clients who have come to trust the quality of her products. 

Antoine Turpin of IOI Loders Croklaan, a global producer of edible oils, told The New York Times that “shea [butter] is an important source of revenue to millions of women and their families across Africa. Empowering these women economically is crucial to the industry’s sustainability.” The New York Times says Turpin’s company alone purchases an estimated 25% of all shea nuts picked by women in West Africa. 

With the demand for natural and organic products rising in the Western world, shea butter has become a hot commodity. The precious substance is used for many different types of cosmetics and skin care products because of its natural healing properties; people prefer it to the harsh chemicals, artificial colors and fillers often used in conventional cosmetics. 

Shea butter is also used in food products such as chocolates. Confect-ioners use it as a cocoa butter equivalent to give chocolates a higher melting point and a smoother texture. The butter is used in popular chocolate bars such as Kit Kat and Milky Way. 

“Women’s gold”

According to The New York Times, a survey conducted in a village in Burkina Faso by USAID in 2010 found that for every $1,000 of shea nuts sold, an additional $1,580 in economic activities, such as reinvesting the money in other trades, was generated in the village. Shea butter exports from West Africa garner between $90 million and $200 million a year, according to the newspaper. The demand comes not only from major corporations but also from millions of entrepreneurs who hope to make a fortune in the distribution of this “women’s gold.” 

With high demand come ethical issues, which often arise with products originating from the developing world, including Africa. Because of shea’s newfound popularity, the number of shea fair trade cooperatives and associations seeking a fair deal for African women has increased. 

Fair prices for commodities

Cooperatives of women produce fair trade shea butter from shea nuts for use as cooking oil or for cosmetics. Photo: Vanessa Vick/Redux

Fair trade is an organized social movement dating from the 1980s that promotes better trading conditions between producers from developing countries and buyers in the developed world. Proponents also seek to raise consumer awareness, believing that an educated consumer may be willing to pay more for goods if the producer gets a fair deal.

In order to receive fair prices for their products, commodity producers have to maintain certain levels of environmental and labor standards recommended by fair trade certification organizations such as Fairtrade International, World Fair Trade Organization, Faire Trade USA and Fair Trade Federation, to name a few. 

The fair trade model appears to offer an improvement on the conventional trade model. Paying market prices for the commodity guarantees a minimum price to the producers. The industries usually associated with fair trade are coffee, cocoa, bananas, flowers, gold and other exotic products. Shea butter was not one of the most sought-after African commodities until recently. 

Harriet Lamb of the Fairtrade Foundation says, “Fair trade addresses the injustices of conventional trade, which too often leave the poorest, weakest producers earning less than it costs them to grow their crops. It’s a bit like a national minimum wage for global trade. Not perfect, not a magic wand, not a panacea for all the problems of poverty, but a step in the right direction.”

No clear evidence

Philip Booth from the Institute of Economic Affairs, a British think tank, sees things differently. He argues that “no clear evidence has been produced to suggest that farmers themselves actually receive higher prices under fair trade. Fair trade may do some good in some circumstances, but it does not deserve the unique status it claims for itself.”

Cosmetics retailers often portray fair trade shea butter as an exotic, traditional, authentic and ethical product encouraging female solidarity. The butter is produced by women in Africa and consumed mainly by Europeans and North Americans in search of “ethical” products. Because of the high number of companies and small entrepreneurs claiming to use fair trade shea butter in their products, it can be difficult to separate marketing strategy from real engagement.

L’Occitane en Provence, a French multinational cosmetics firm famous worldwide for its luxury products based on natural ingredients, prides itself on its use of fair trade shea butter in products including hand, body and foot creams. Indeed, for the company’s activities in Burkina Faso, its business model was recognized by UNDP in 2013 as one of the 12 most innovative and inclusive in Africa. 

Platform to exchange ideas

A UNDP report titled L’Occitane au Burkina Faso: More than Just Business with Shea Butter Producers, highlights the company’s dedication, its collaboration with 15,000 rural women producers and its use of shea butter in its products. According to the report, L’Occitane estimates that it pays 20% to 30% more for shea butter from Burkina Faso than it would for shea butter from Western industries. Sales of shea butter to L’Occitane represent about $1.23 million in revenues yearly for the supplier cooperatives and their 15,000 rural women members. 

In order for more African women in the shea industry to reap the benefits of fair trade, the Global Shea Alliance, an association that promotes quality and sustainability in the shea butter industry’s support for rural African communities and women’s empowerment, organized the New York Shea Butter Trade Industry Conference. With the first New York fair trade event, the Alliance sought to provide a platform for exchanging ideas across the supply chain of collectors, producers, traders, industrial users and consumers of shea butter.

“The Body Shop has used shea for over 19 years and we are firmly committed to using our learning to build a sustainable shea sector,” said Mark Davis, the company’s director of community fair trade. “Being a member of the Global Shea Alliance is critical to achieving that goal.”

Other global commodities, such as coffee, have become associated with fair trade, and many stakeholders in the shea industry aspire to create that association for their product. Salima Makama, the Global Shea Alliance’s president, is convinced that the African women who came to New York to implement better strategies to empower themselves are well on their way to turning the shea butter export into “real gold.” 

- See more at: http://www.un.org/africarenewal/magazine/august-2013/shea-butter-nourishes-opportunities-african-women#sthash.sJfsBapz.dpuf

Rwanda sees Electronic Clearance System lifting Trade

KIGALI - Rwanda has introduced an electronic clearing system that is expected to shorten the time taken for goods to cross its borders, cut costs for businesses and boost regional trade, government officials said on Friday.

Slow movement of goods through borders and ports in the East African Community (EAC), a five-member trade bloc which includes Rwanda, has been cited among the major impediments to doing business in the region.

The Rwanda Revenue Authority (RRA), which unveiled the system, said it expected it to cut the time traders spend on goods clearance by 56 percent and save traders and businessmen up to $9 million annually on clearance costs.

"This is a ground-breaking scheme to cut the red tape snarling trade and I am confident it will pave the way for similar systems in other EAC countries as well as making Rwanda an even cheaper place to do business," Ben Kagarama, RRA Commissioner General, said in a statement.

Tiny, landlocked Rwanda constantly punches above its weight in the region, racing ahead of bigger neighbours like Uganda in terms of ease-of-doing business, and going head to head with Kenya in trying to create a world class information, communication and technology (ICT) sector.

In the World Bank's Doing Business 2012 report, Rwanda was ranked 45 out of 183 countries assessed, up five places from the previous year.

Trade Mark East Africa (TMEA), an organisation aimed at boosting integration in the region, said the $3.3 million scheme called the Rwanda Electronic Single Window was expected to cut the time taken to clear goods at the central African nation by three days.

The group said it would launch similar projects in Burundi and Uganda later this year.

"Not only will this bring Rwanda several steps closer to the ports of Dar es Salaam in Tanzania and Mombasa in Kenya but will lead to direct savings for business ... and introduce greater transparency and accountability into the whole chain of clearing goods," Mark Priestley, TMEA Rwanda country director, said.

Using the system, traders will no longer need to physically take documents from one agency to another for processing but can now enter all necessary information online. It will also cut the time spent by trucks at border points by 30 percent.

The United Nations Conference on Trade and Development (UNCTAD) also helped to develop the system.

Source: Reuters

China strengthens Africa ties with $20 bln in loans

BEIJING - Chinese President Hu Jintao on Thursday offered $20 billion in loans to African countries over the next three years, boosting a relationship that has been criticised by the West and given Beijing growing access to the resource-rich continent.

The loans offered were double the amount China pledged for the previous three-year period in 2009 and is the latest in a string of aid and credit provided to Africa's many poverty-stricken nations.

The pledge is likely to boost China's good relations with Africa, a supplier of oil and raw materials like copper and uranium to the world's most populous country and second-largest economy.

But the loans could add to discomfort in the West, which criticises China for overlooking human rights abuses in its business dealings with Africa, especially in Beijing's desire to feed its booming resource-hungry economy.

Hu brushed off such concerns in his speech at the Great Hall of the People, attended by leaders including South African President Jacob Zuma and Equatorial Guinea's Teodoro Obiang Nguema, a man widely condemned by rights groups as one of the world's most corrupt leaders.

"China wholeheartedly and sincerely supports African countries to choose their own development path, and will wholeheartedly and sincerely support them to raise their development ability," Hu said.

China will "continue to steadfastly stand together with the African people, and will forever be a good friend, a good partner and a good brother", he added at the summit held every three years since 2000.

Hu also pledged to "continue to expand aid to Africa, so that the benefits of development can be realised by the African people". He did not provide an amount.

Hu said the new loans would support infrastructure, agriculture, manufacturing and development of small and medium-sized businesses in Africa.

"CHEQUE BOOK" APPROACH

Critics say China supports African governments with dubious human rights records as a means to get access to resources.

The EU has rejected what they call China's "cheque book" approach to doing business with Africa, saying it would continue to demand good governance and the transparent use of funds from its trading partners.

Such criticism draws rebukes from China that the West still views Africa as though it were a colony. Many African countries say they appreciate China's no-strings approach to aid.

"Africa's past economic experience with Europe dictates a need to be cautious when entering into partnerships with other countries," Zuma told the forum.

"We are particularly pleased that in our relationship with China we are equals and that agreements entered into are for mutual gain," Zuma added.

"We certainly are convinced that China's intention is different to that of Europe, which to date continues to intend to influence African countries for their sole benefit."

China's friendship with Africa dates back to the 1950s, when Beijing backed liberation movements in the continent fighting to throw off Western colonial rule.

GROWING TRADE LINKS

Chinese state-owned firms in Africa also face criticism for using imported labour to build government-financed projects like roads and hospitals, while pumping out raw resources and processing them in China, leaving little for local economies.

"Certainly quite a number of us are thinking we need to move into more value addition," South African's Trade and Industry Minister Rob Davies told Reuters.

"We need to export mineral products in a more processed form ... We need to bite this bullet very seriously."

Trade has jumped in the past decade, driven by Chinese hunger for resources to power its economic boom and African demand for cheap Chinese products.

China's trade with Africa reached $166.3 billion in 2011, according to Chinese statistics. In the past decade, African exports to China rose to $93.2 billion from $5.6 billion.

Industrial and Commercial Bank of China 601398.SS, for example, the world's most valuable lender, has invested more than $7 billion in various projects across the continent.

Source: Reuters

EPA – EU’s Fight for Raw Materials & Markets for Its Products

By: Prosper Kwesi Acquah; Business & Financial Analyst,
Member of Volta Advocacy Forum. Email: prosper@ghanacountryservices.com

 A lot has been said and written about the Economic Partnership Agreement (EPA) being tabled by the EU for 98 African, Caribbean and Pacific (ACP) countries to sign. I am by no means an expert on EPA issues but from the little I know about the EPA, my strong opinion is that Ghana should NOT sign the EPA even if the terms are acceptable to the country. Instead Ghana should only sign as a member of the ECOWAS grouping. This article intends to share my thoughts in arriving at the conclusion above.

The EPAs are supposed to be reciprocal trade liberalization agreements which is meant to replace a non reciprocal agreement which expired in 2008. As part of the EPA, the EU is seeking the elimination of duties on about 80% of goods exported by the EU to ACP countries in return for a similar access to the EU market by ACP countries. According to the Socialist Group of the European Parliament, “the EPAs were intended to be centered on the objective of reducing and eventually eradicating poverty, consistent with the objectives of sustainable development and gradual integration of the ACP countries into the world economy”; a very laudable objective. Yet the negotiations have been bedeviled with a lot of acrimony, accusations and suspicions which has delayed the ratification and signing of the agreements by the six regional blocks that constitute the ACP. One wonders if the true objective of the EPAs is as stated above, and why the EU should coerce any country or regional block to sign the agreement.

The truth is that the EPAs are not as much about the interests of Sub Saharan Africa, the Caribbean or the Pacific countries as it is about Europe becoming more economically competitive. The EPAs are about finding market for European products, having access to cheaper raw materials from Africa and being able to compete with China, India and recently Brazil in the African market. When Africa exports raw materials duty free to the EU market, EU manufacturers will be able to buy these raw materials at cheaper prices because the saving from not paying import duties will be passed on to them. After production the EU manufacturers will be able to export their products to Africa duty free thereby achieving additional cost savings. The cost savings on both raw materials and finished goods is likely to make EU goods competitive with goods manufactured from China and other emerging countries.

It is very important for EU products to be competitive in the African market because most developed economies are experiencing little or no growth and in some cases shrinkage. It is obvious that products manufactured in Europe are unable to compete with those manufactured in Asia even in the European market let alone compete in the African market. The EU therefore sees the EPAs as its main way of becoming competitive again.

As much as every economist agrees that exports are very important to the development of ACP countries, the goods or products being exported are even more important. As figures show, ECOWAS for instance exports primarily raw materials to the EU market. ECOWAS countries cannot develop or become competitive from exporting unprocessed raw materials to the EU, China or USA only to turn around and import products that have been manufactured using those same raw materials. To develop, we must grow the domestic production capacities of member countries, increase agricultural production and industrialize just as China and Brazil are doing. This is the only way we can enhance regional integration, provide employment for our people, ensure food security and reduce conflicts in the region.

For Ghana and other ACP countries, any economic agreement that it signs should have these overriding aims of:

• Building the capacity of its people from advances of science and technology

• Ensuring sustainable development of its people and economy

• Regional (ECOWAS) integration

• Integration of the economies of all the ACP countries

• Enhancing the growth of key sectors of the economy such as manufacturing, agriculture etc.

• Ensuring development that sustains the environment – agreements should not be exploitative

The question we need to be asking ourselves is that will the EPA ensure that we achieve at minimum the things listed above? How complementary is the EPA to the developmental goals of Ghana, the ECOWAS region or the ACP countries. Will this agreement support Ghana’s goals of transitioning from being a raw material exporting nation to an industrialized manufacturing country? According to the European Commission (EC) /Eurostat figures, the EU imported EUR 1.5B worth of goods from Ghana of which only 2.8% were manufactured goods. Over 95% of these goods were unprocessed food (mainly cocoa), crude materials and mineral fuels. This pattern of exporting raw materials from Ghana or Africa to the rest of the world has persisted for decades and we can all attest to its consequences, – highly import dependent, collapse of the manufacturing sector and chronic high unemployment rates.

Since 2008, the EU has not being able to finalize these EPAs. There have been several accusations by ACP countries, European development organizations and even the Socialist Group of the European parliament against the negotiation styles used by the EU. Some of the accusations include the fact that the EU is using divide and rule tactics by beginning negotiations with individual countries when negotiations seem to stall with the regional groupings. For instance when negotiations with ECOWAS stalled, the EU decided to negotiate directly with Ivory Coast, Cameroun, Ghana etc.

The approaches of the EU seem to go contrary to their stated aim of ensuring regional integration within and across the ACP regions. The EU in recent times has resorted to threats and coercion by insisting that countries such as Ghana ratify or sign the EPAs by certain arbitrary deadline. The question is why should countries be pressured into singing agreements that are in their own interest? ACP countries should be wise enough to know when agreements are in their interest. The EPAs are primarily designed to secure and safeguard the interests of the EU and its people and not that of ACP countries.

It is not surprising to know that in November 2008, the European Commission (EC) adopted ‘Communication 699’ titled “The Raw Material Initiative (RMI) – meeting our critical needs for growth and jobs in Europe” which sort to outline the EUs strategy to respond to the raw materials challenge it faces. One of main pillars of the RMI according to the EU is “to ensure a level playing field in access to resources in third countries”. Also as part of its ‘Europe 2020 Strategy’, the EU has a flagship strategy "An industrial policy for the globalization era" and that strategy foresees the setting up of a framework for a modern industrial policy that will "address all elements of the increasingly international value chain from access to raw materials to after-sales service". Exactly what the EPAs seek to achieve is to guarantee access to raw materials and market for manufactured European goods.

One communication document from the EC also states “The Trade strategy for raw materials takes full advantage of the Market Access Partnership (such as the EPA). Furthermore, efforts are being made to introduce disciplines on export duties in the context of negotiations of some Free Trade Agreements.
The EU has also been using the opportunity of WTO accessions to include this issue in negotiations with a range of candidate countries relevant from a raw materials supply perspective.” The EU’s goals for the EPAs are too obvious.

We should be very suspicious of any negotiation in which one party coerces and threatens the other while negotiations are still ongoing. Ghana and for that matter other sub Saharan African countries should not be intimidated by the tricks of the EU. The truth is that the EU’s BATNA (Best Alternative to a Negotiated Agreement) is very low and that for the ACP countries is very high. The EU cannot export their finished products to the Americas, Asia, Australia or anywhere else apart from Africa. On the other hand Africa currently is unable to produce enough for its domestic needs let alone for export. The Chinese, Europeans and Americans are battling for the African market as a destination for their products. The EPAs seem to be the EU’s way of gaining some advantages over the competition. It therefore stands to reason that all that Africa will be exporting to the EU are raw materials. If those raw materials are exported to the EU duty free, it provides cheaper inputs for European manufacturers thus reducing their cost of production and improving their competitiveness with the Chinese.

ECOWAS Export to the EU

Source: Eurostat(online data code: DS_018995)

The chart above shows that of the EUR 21.2B worth of goods that the EU imported from ECOWAS countries in 2010, mineral fuels constituted 67% (EUR 14.3B), food and live animals 22% (EUR 4.6B) and crude material 6% (EUR 1.2B); all these goods (94% of ECOWAS’s exports to the EU) can safely be described as raw materials or primary goods, largely unprocessed.

If Ghana should sign an EPA and ECOWAS refuses to sign, the EU will flood Ghana with its manufactured goods while at the same time exploiting what is left of the country’s natural resources. Other ECOWAS countries such as Nigeria will most probably respond to Ghana’s actions by placing a ban on goods from Ghana (disregarding all ECOWAS agreements). It must be noted that signing an EPA with the EU is not bad in itself. What some of us are advocating is that the terms should be well negotiated so as to protect and even boost local industries and employment. For instance I don’t believe any trade or civil society group will be against the importation of construction and agricultural equipment into Ghana duty free; these organizations will however oppose the importation of agricultural products, furniture and the like into the country duty free. Some will even advocate a total ban on the importation of such products.

An agreement negotiated by ECOWAS is more likely to result in favorable terms for all its member countries than that which is negotiated by any single member country. In any case why should an individual country such as Ghana negotiate an EPA with a regional block, the EU?

ECOWAS and for that matter Ghana must ensure that before they sign the EPA, it must address the following important issues;

i. The list of EU products exempt from import duties should not include any agricultural product since EU countries continue to subsidize their farmers

ii. All other EU products that enjoy subsidies directly or indirectly must not be exempt from import duties.

iii. The percentage of EU goods exempt from duties should be negotiated down to below 50%.

iv. There should not be any ambiguities in the list of products or goods that Ghana or ECOWAS countries can export to the EU.

v. The EU must set up structures to ensure that Ghanaian and ECOWAS producers and manufacturers are able to meet the so called EU standards for their goods and products.

vi. The EPA should not include any intellectual property rules or clauses. As the EU will use that to bar the importation of certain products from China as well as block the use of certain technologies to develop local industry.

vii. The effect of the EPA on government tariff revenue is properly modeled out and understood.

viii. The EPA must at the minimum not hinder regional trade and integration.

ix. ACP countries should reserve the right to review the agreement every three (3) years and perform impact assessment to decide whether to abrogate or re-endorse it.

In my view as a pan-African, history tells us a lot about the human rights and good governance records of European countries when they divided up and colonized the African continent. It is therefore obvious that this agreement is not about human rights and good governance but rather about cheap raw materials and market for Europe’s products. It’s about competition with Chinese products. I am curious to know why the EU is pushing these agreements down the throats of ACP countries, (black countries). Why are countries such as Algeria, Egypt, Libya, Morocco and Tunisia not included in these EPAs? The only way the EU and other so called developed countries can continue to dictate to Africa is to keep the continent economically colonized. Just as India and Brazil in recent years, Ghana, Nigeria, Kenya and the likes can liberate themselves economically if concerted efforts are made at achieving that end.

To conclude, as I have indicated earlier, I am not necessarily against the signing of an EPA by Ghana or ECOWAS; my main concern is that there seem to be a lot of red flags that must be watched carefully. Ghana and ECOWAS negotiators must ensure that any agreement signed with the EU, Brazil, China, India or any other resource hungry economy is in the interest of the guy on the streets of Nima in Accra or Apapa in Lagos. All the issues I have raised in this article must be looked at intensely; we should not be swayed by promises of Aid and Grants. We must beware of aids and grants; they have not been able to transform our economies after depending on same for over half a century.