Friday, January 28, 2011

Big Bag of Africa

One of my better-visited posts dealt with Ethiopian monetary policy. The question is: what is the chance of another Birr devaluation? One vote for pretty good based on pretty simple trends. The currency stays relatively stable against the dollar for 5-6 months, then is devalued. The hope with the last one, though, was that it would be large enough to stave off another such episode for a longer period of time. Blattman ponders:
The under-qualified macroeconomist in me expected Ethiopia’s recent devaluation to actually spur rather than slow the manufacturing sector. In time that may be so. But in a place where inputs and machinery are imported, a devaluation is a mixed blessing. Existing firms must be adding real value to production to succeed. The agricultural export sector, where few foreign inputs are needed, seems to have a brighter future.
South Africa is starting its own development agency. "development assistance for the year 2006 is estimated between $363 – $475 million.  This is 0.18% of South Africa’s GDP from 2006 – which matches the figures for US development assistance as a share of the economy."

People seem to enjoy ranking Africa's leaders. Here is the latest (Hat tip: Africa is a Country)

The Economist does Nollywood (Nigerian Hollywood).

How helpful is fairtrade chocolate? One journalist's opinion is here
World cocoa prices easily exceed the Fairtrade minimum. Kuapa has built schools and clinics but competition for beans is fierce and many other buyers offer farmers incentives, such as loans or machetes or insecticides.  Some farmers are loyal to Fairtrade but many have good reasons to sell their beans elsewhere.
Farmers are an important lobby in Ghana, which has seen two government changes in the last five elections, and hence
Ghana has fixed a minimum farm gate price of 3200 cedis, or $2165, roughly two thirds of the world market price.  It is unusual for farmers to be this well rewarded.  During the late 1970s, producers received just 10 per cent of the world market price.
This means fair trade matters less in Ghana than it used to now that the alternative is not as bad.  Here is another good article on the subject.

Speaking of chocolate exporters, there's a new article on Cote d'Ivoire which "traces the civil war to the politicization of citizenship and ethnicity during the democratization process."

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