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Divergence in West Africa

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Divergence in West Africa

The divergence between Ghana and Côte d’Ivoire extended to other West African countries. During the Yaoundé years, West African countries were categorised as either unaffiliated (Ghana, Nigeria, Gambia, Sierra Leone and Guinea) or affiliated (Côte d’Ivoire, Mali, Togo, Senegal, Niger, Gabon, Upper Volta and Benin). In the first decade of independence, the same pattern of development was observed in Ghana (already examined), Guinea (examined below) Sierra Leone (see World Bank, S, 1966) and Nigeria. These countries at least attempted to diversify during the commodity crisis due to the threat posed to political elites.

To start with Nigeria: although oil was already exported in large quantities at independence, the sharp decline in cocoa prices in 1961 led to a change of policy in the region that cultivated cocoa beans (Diamond, 1988: 95). Cocoa-bean production was not as important to the Nigerian economy as to the Ghanaian economy because the cultivation of cocoa was limited mainly to one region of Nigeria: the west. The government of Western Nigeria reduced the set price of cocoa and prepared a new diversification program (to be privately led) during the 1961 commodity crisis (Diamond, 1988: 95). However, the diversification effort was hindered by an unrelated political crisis that engulfed Western Nigeria from 1962 (see Tamuno, 1991) and the country at large from 1964. Furthermore, crude-oil exports slowly took centre-stage in the Nigerian economy from the mid- to late 1960s. In short, the diversification effort was impeded by political crisis and the discovery of oil in commercial quantities.
Guinea in the 1960s offers a better example of the development trajectory exemplified by Ghana. Guinea and Côte d’Ivoire are comparable in several respects, as they share a border and a colonial history. The production system in Côte d’Ivoire in the late 1950s (comprising cocoa, coffee and bananas) was almost identical to that of Guinea, due to their common colonial heritage. The price-stability scheme adopted by France in the 1950s in its trade relations with Côte d’Ivoire also applied to Guinea. However, of all of France’s former West African colonies, Guinea was the only country not to participate in the Yaoundé trade system. In 1958, France organised a referendum in its West African colonies to determine whether the colonies wished to adopt the new French Constitution; if so, the colonies became part of the new French Community of shared sovereignty; if not, the territories were granted independence. Guinea was the only colony in which the major political party campaigned against the constitution and ultimately opted for independence (Schmidt, 2009). The French government reacted to this decision by cutting all ties with Guinea, including its trade arrangements.
The loss of French subsidies caused something of a crisis for Guinea’s export economy. After the withdrawal of France in late 1958, the true state of Guinea’s export system was revealed. Previously, 80 percent of Guinea’s exports—predominantly coffee, bananas, cocoa and pineapples—had been sold on the French market (World Bank, 1966: 23). The remaining 20 percent of Guinea’s exports at independence comprised natural minerals. The removal of France’s price-support system revealed severe failings in the economy. This posed a threat to the ruling elites as diversification became inevitable. Due to the presence of substantial mineral deposits, the exploitation of minerals became the easiest way to diversify Guinea’s economy. From 1959, the importance of traditional colonial products began to decline; there was no longer an incentive to promote coffee, cocoa or banana production. In its new mode of diversification, the government instead entered into agreements with mining, aluminum, bauxite and alumina companies (World Bank, 1966: 12).
By 1965, the proportions of agricultural products and minerals in Guinea’s export composition had reversed: agriculture now accounted for 20 percent of export. The government commissioned an alumina plant (the Fria plant) in partnership with private international interests, whose output accounted for 60% of Guinea’s gross export earnings by 1966 (World Bank, 1966: 23). In general, the value of Guinea’s export increased from 4,874 million francs at independence (with a trade deficit of 8,125 million francs) to 12,851 million and a surplus of 766 million by 1964 (World Bank, 1966: 22). The country’s economy had become much more diversified. The government earned US$30 million yearly from alumina by 1964, compared with virtually zero at the point of independence. Fria was producing 480,000 tons of alumina per year by 1964/65, which was sold in Western Europe, North America, Africa and Eastern Europe under a bilateral agreement. The country was exporting 800,000 tons of bauxite by 1965.
The value of Guinea’s traditional colonial exports decreased by more than 70 percent between 1959 and 1965. In the absence of artificial market protection, products such as cocoa and banana were no longer competitive. Pineapple exports fell by 65 percent between 1960 and 1964 (ibid.: 13). The amount of coffee produced and exported decreased to 6,400 tons in 1964 from tens of thousands of tons under the French price-support system. Approximately 90,000 tons of bananas were produced and exported at the time of independence in 1958, but by 1964 the volume had fallen below 20,000 tons (ibid.). The main reason for the reduction in agricultural exportation was the absence of a local production advantage in several of these products. The price subsidies received from France in the late colonial years (from 1961 in the case of cocoa) was the basis for Guinea’s production of pineapples, coffee, bananas and cocoa.
The few colonial products still exported in 1965 (e.g. 20,000 tons of bananas and 6,400 tons of coffee) remained uncompetitive in the global market, but fell under a preferential trade system with Eastern Europe (World Bank, 1966: 43). In 1965, the government of Guinea decided to promote agriculture, and conducted a study to determine which crops were most appropriate for growth in the country, as opposed to those under a price-promotion scheme. Sugar, tomatoes, tea and tobacco were among the products selected in 1965 for comprehensive diversification (World Bank, 1966: 13). The main difference between Ghana and Guinea was the presence of abundant mineral deposits in the latter, making it easier for Guinea to diversify. Meanwhile, the discovery of oil in commercial quantities separated Nigeria from Ghana and Guinea.
In contrast, Togo, Senegal, Niger, Gabon and Upper Volta followed Côte d’Ivoire’s development trajectory. Cocoa beans and coffee were Togo’s main export crops, and the country signed a trade agreement with France (similar to the 1961 Cooperation Agreement) immediately after independence. In a 1963 report, the World Bank wrote of Togo’s coffee production and exportation that “half of the crop is bought by France at a price above world market [prices] which more than offsets any loss incurred on sales to other countries at world market prices” (World Bank, T, 1963: 15). The main effect of the Yaoundé Convention on the Togolese economy was to increase the production and exportation of traditional colonial products; diversification was only attempted in the cases of cotton and palm oil (World Bank, T, 1968: 27)—the same products into which Côte d’Ivoire attempted to diversify. Togo’s palm oil diversification scheme was funded by aid from the EEC. The main changes in Togo’s geographical distribution of trade following the institution of the Yaoundé Convention were summarized by the World Bank in a 1967 report as follows: “the major change in the geographical distribution of exports (see Appendix - Table 21) is the declining share of the Franc area (in which France itself represents over 90%) although in absolute terms there is an increase since 1964. This is mainly due to the increasing ease of exports into EEC countries other than France, with which Togo is associated” (World Bank, T, 1968: 30). The World Bank also recorded the replacement of France by other EEC countries as the main source of Togo’s imported products (ibid.).
This development trajectory was common to all of the West African countries associated with the EEC. Cameroon, for example, gained independence in 1960 and made a special trade agreement with France in 1961 (World Bank, 1964: 18). The details of the arrangement, proposed by France, included privileges in the French market in the form of guaranteed prices, preferential duties, import quotas and direct subsidies (ibid.:19). As calculated by the World Bank, “the purely financial gain represented by the differentials between French market prices and world market prices is estimated at some 2.0 billion francs CFA for 1961 or 7% of total exports in that year” (ibid.). But the political and economic cost to Cameroon incurred by the trade system are incalculable: the arrangements denied the country policy space, mandated the importation of French products and increased the dependency of Cameroon’s political and economic system on France’s former colonies. This special trade arrangement was annulled by the Yaoundé Convention, after which the government of Cameroon instituted a development policy in line with the Yaoundé provisions. Through the Yaoundé Convention, the EEC provided Cameroon with grants to support local cocoa prices (World Bank, 1966: 8), resulting in increased governmental efforts to promote cocoa cultivation. In a 1968 report, the World Bank documented the main changes to the Cameroon economy in terms of direction of trade, stating that since its association with the EEC, “Cameroon’s exports to France have dropped from over half of [the] total Cameroon exports to 37 percent, while exports to … EEC [have] increased sharply” (World Bank, 1968: 9).
The same pattern was evident even in countries whose main export crops were not cocoa and coffee. For example, France introduced a price-support scheme for Niger’s main export crops, groundnuts and cotton, soon after independence (World Bank, N, 1964: 17), and the scheme was taken over by the EEC in 1964 (World Bank, N, 1968: 20). The EEC subsidised Niger’s main exports throughout the Yaoundé years, which affected the government’s development policies by perpetuating the colonial economic system (ibid.). The same occurred in Senegal, whose main export crop was groundnuts.

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