Trade Choices

In Uncategorized on August 2, 2006 at 2:33 am

I’ve found that my blogging style is basically thus… I read an article somewhere, it has something to do with international development policy and the way it affects the poor (or more directly Niger), then I put down my thoughts about it.

So with that in mind, this is what I just read:
Niger : Cheap fabric imports ruin Enitex’s business – Textile Fashion News Fibre2Fashion

So here is what I think about it… Niger just can’t win.

Let’s go back in time to the beginnings of the industrial revolution. A lot of people wonder why Africans can’t follow the same development path as Americans or Western Europeans, and I think I can help shed light on this idea…

A typical path to development, one used by many East Asian countries in the most recent past, is to use their comparative advantage in cheap labor and shipping accessibility to ramp up their textile industry. In the best of times, this creates lots and lots of jobs for adults, and their income allows them to send their kids to school. Within a couple of generations, the textile industry (or whatever other value-added, metal bashing, sewing, cooking whatever industry) slowly fades and the population is educated and skilled enough to transition the economy to a more diversified, services oriented one. By services, I mean more like the America or Europe we know today, with people designing stuff, doing research, advertising, marketing, and other various non-blue-collar things. This is the path to raising living standards, with a little something for everyone.

With the idea of development in mind, some Chinese investors (in this case synonymous with the Chinese Government) bought the Nigerien National Textiles Company, SONITEX. Renamed Enitex, they decided to try to create a small economy of scale, growing cotton wherever it would grow in Niger, then using the cotton in their factory to make pagne material.

Anyone who has traveled to Africa is familiar with the wealth of fabrics and materials there. You can buy a pagne, usually something around 3 meters by 1 meter of material, for only a couple of US dollars. Every man, woman, and child in Niger had something made from a pagne, from the typical short-sleeved, button down shirt for men, to the more frilly, shoulder-padded bu-bu’s or dresses for women, completed with matching headresses.

So, it would have seemed like a good idea to make it all in Niger, without having to worry about shipping in across borders or paying any duties on it.

The problem is, even with everything being done in Niger by Nigeriens – the poorest country in the world… the Asian Chinese-manufactured Pagne material coming all the way across the Indian Ocean, around the Cape of Good Hope, and up the West Coast to Benin or Ghana, catching a truck up through the Sahel to the Grand Marche in Niamey, is still cheaper than the home-grown Enitex stuff.

How and why can this be possible? There must be a bunch of reasons… but my guess is that the bottom line would be the overhead costs for Enitex – probably labor costs. Also, growing cotton in Niger is just not a good prospect at all – it’s way too input-intensive. Cotton takes so much water, fertilizer, etc. to grow even in a good environment, it just becomes way too expensive to grow in Niger.

Academics aside, this seems totally crazy and unfair, as it leaves us all wondering what Nigeriens can do besides subsistence farm.


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