Maize, fish, ice, oil and AK-47s – reading the news about Africa and trade

If you’re interested in African issues, you’ve spent time thinking about this question: “Why is Africa poor?” One of my favorite development economists – Nancy Birdsall, head of the Center for Global Development – tends to answer this question by asking people to think of Mississippi in the early 1950s as a soverign nation. It’s likely that the poorer parts of America would have had a very difficult time reaching a high level of development had they not been part of a larger, integrated whole with major industrial production centers. Had Mississippi had tarrif barriers that prevented it from trading with Alabama or Louisiana, it’s likely it would have had a much harder time modernizing… kinda like post-colonial African nations who are separated from each other by national borders, a dysfunctional transportation system and punitive taxes and other financial barriers.

Birdsall’s observation suggests that fans of African development should be cheering for the plan to bring Uganda, Tanzania and Kenya into a common, united market by 2010. But as Abe McLaughlin notes in a recent Christian Science Monitor article, it’s not exactly smooth sailing so far for an ambitious plan to bring 82 million people together with a single currency by 2009 and a common president by 2010. (Smart money suggests that Yoweri Museveni sees himself as this president, a logical step after 25 years of leading Uganda…) Watching a train loaded with maize attempt to make the journey from Kampala to nothern Tanzania, it becomes very clear that ambitious integration plans face real obstacles in terms of infrastructure and politics. Given recent media crackdowns in Kenya and Museveni’s election-rigging, is it reasonable to believe that three soverign nations will combine forces, even if it were to their economic advantage?

(I’m reading Juan Enriquez’s “Untied States of America” at the moment, which makes the argument that it’s lots easier to split nations apart than it is to bring them together… then again, I’m not sure just how moved I am by his arguments.)

A major infrastructural issue holding East African development back is power generation capacity. George Obulutsa has an excellent story on the Reuters newswire about drought, ice and fishmongers in Tanzania. 2/3rds of Tanzania’s power generation capacity is via hydroelectric power. While this is environmentally admirable, it’s a disaster at present as the region is suffering a massive drought, and hydropower production is running at about a tenth of maximum capacity. This leads to blackouts 16 hours a day in Dar Es Salaam.

And those power cuts make it very difficult to produce ice, which fishmongers need to preserve their catch. Fishermen have to sell their catch within a few hours, and buyers don’t want to buy much fish, as they need to cook and eat it within a day, rather than refrigerating it. Obulutsa’s story is one of those wonderful journalistic moments, when you realize that a drought is responsible for the smell of spoiling fish in the market through a series of complex economic relationships.

While hydropower can be an unreliable friend, it’s less likely to spark a civil war than petroleum. The BBC reports that extremely well armed militants in the Niger Delta are engaging in prolonged gun battles with the Nigerian military over oil and petrol. Yesterday’s attack involved “Thirty speedboats, each carrying 15 militants” who attempted to raid a petrol tanker using rifles, machine guns and rocket-propelled grenades. They were engaged by seven Navy patrol boats in Escravos River in the western Niger Delta.

The militants are affiliated with the Movement for the Emancipation of the Niger Delta (MEND), who are demanding that more of the wealth extracted from the Delta be returned to to the local community, which is one of the most impoverished in Nigeria. MEND forces have kidnapped foreign oil workers and carried out a set of attacks that have dropped oil output by 20%.

The issue in the Niger Delta is, again, the question of “Why is Africa poor?” Nigeria is the eighth largest oil exporter in the world and the largest exporter in Africa. The 2.6 million barrels of oil exported per day should generate enormous amounts of income which could transform all areas of Africa’s most populous nation. But much of that money is made by international oil companies… and much is pocketed by corrupt government officials… and much of the revenue that makes it into government coffers never reaches the area where the oil is extracted… which grows poorer as pollution from oil exploration affects the local economy, which is highly dependent on fishing.

Perhaps those of us concerned about cross-border trade in Africa should take a close look at the small arms trade, which doesn’t seem to have a hard time getting AK-47s to far corners of the Niger Delta. If only they were so effective in moving around blocks of ice…