Why Africa should fight for free trade, not fair trade; for competitiveness in global markets and not kindness in consumers
Everyday there is an effort mainly in the West to save Africa from something – tyranny, impunity, poverty, disease, ignorance – whatever. Always, the savior is an institution or person from Western Europe and its off-shoots in North America. This “savior” is presented as kind, generous and altruistic. Consequently, the supposed beneficiaries need not be active participants in the efforts to save them.
Yet, even within this trade and investment camp, the view that self-righteousness (as opposed to self-interest) and charity (as opposed to profit) should be the driving motive abounds. It seeks to “help” Africa’s poor get a fair price for their crop in international markets.
An entire industry has developed and is growing in London, Paris, New York and Brussels called “the ethical market.” The Fair Trade Foundation argues that “fair trade seeks to change the lives of the poorest of the poor” and that “fair trade addresses the injustices of conventional trade, which traditionally discriminates against the poorest, weakest producers.
It enables them to “improve their position and have more control over their lives.” Hence high-minded consumers of coffee, tea, cocoa, etc in Western countries are asked to pay a premium price for goods produced by Africa’s impoverished masses to express their solidarity with these wretched of the earth.
Professors John Sender, Chris Cramer and their colleagues have been doing research in Uganda and Ethiopia to establish the validity of claims that fair-trade certified products actually benefit these poor masses. Their focus of study are the poorest people in rural areas, the landless or land-poor wage earners in agriculture. Although our view is that most peasants own their own land, they found that many actually are landless or land poor and depend largely or sometimes entirely on wages for their survival.
I have always had a problem with fair-trade. All countries that developed through trade have done so by producing and exporting high value products at the most competitive price. Some have done this through purely market mechanisms, others through deliberate strategic interventions in the market.
Whichever path they chose, success at export-led growth resulted from innovations in policies, institutions, technologies and organization. Why then should Africa’s “success” at trade come as a result of the kindness of consumers in the West, not the innovation of our firms and farms?
Secondly, I am chronically suspicious of these “save the poor” movements perhaps because I have greater faith in the selfishness of man than his altruism. In my experience on earth, I have learnt to prefer the self-interested to the self- righteous. I find it much easier to negotiate anything with businessman Sudir Ruperelia than Pastor Martin Sempa: the former’s self-interest makes him flexible and accommodating; the latter’s self-righteousness (“I am speaking on behalf of The Almighty”) makes him rigid and uncompromising.
Like in all globally organized “save the world” movements, the benefits of the campaign go to those who work in its advocacy institution before (if ever) trickling down to intended beneficiaries. Even in the remotest part of poor Africa, ordinary people know that you benefit more by working for a charity than being a beneficiary of its work.
Even at the International Criminal Court (ICC), which many African elites embrace, it is better for you to be its employee than to be a recipient of its justice. For example, over the last ten years of its existence, it has spent US$ 900m and convicted one person. Certainly, that is justice for those it employs at The Hague and in the field as investigators, not the “victims of impunity.”
So, I listened attentively as Deborah Johnston, Carlos Oya, John Sender and Sam Bbosa spoke on the impact of “fair-trade” certification on the poorest households in Uganda. According to the research findings, a basic analysis of the data shows that tea and coffee workers on fair-trade certified cooperative production sites are paid less or at least not more than those on non-certified sites.
In coffee and tea, for example, the proportion of workers in fair-trade certified cooperatives who earn wages below 60% of the median wage is 18 percent (for coffee) and 30% (for tea); in non certified cooperatives, it is 4% (for coffee) and 5% (for tea).
On almost every issue, cooperatives that are certified for fair trade perform worse than those that are not. For example, only 28% of workers in fair trade certified coffee cooperatives get free meals; in non fair trade certified, it is 63%. When it comes to access to clean toilets, it is 20% for certified and 82% for non certified; overtime compensation, fair trade certified is only 7%, non certified is 94%.
No one working with fair trade certified coffee cooperatives had access to a shower; at least 20% of those working in non free trade certified coffee cooperatives had access to a shower. And DFID has been funding fair trade in Uganda.
Let the research speak for itself. “Detailed working life histories (30+ in Uganda coffee sites) and focus group interviews suggest: Workers either do not know about or generally do not believe that they benefit from, the ‘social’ benefits supposedly associated with fair trade price premiums. It is very easy to find very young children who work for wages particularly in coffee areas.
Most of the poorest wage workers in the sample started to work for wages when they were 10-14 years. To pay health and schooling costs, many people have incurred debts at usurious interest rates, restricting options in labour and coffee markets.” So if fair trade does not help the poor, who does it help?
Well, a supermarket in the UK earns ten times more from coffee than a producer in Uganda. An employee of the Ankole Cooperative Union earns 15 times more than the man who picks coffee. A fair-trade official in UK earns 500 times more than a coffee picker. So much for fair trade!