Cover_Rebuilding West Africas Food Potential

274 Rebuilding West Africa’s food potential

to play a role in credit provision, and credit provision is critical to providing essential inputs to cotton. In any

case, credit tied to production must be based on credible commitments. Whatever solution is found, whether

it involves privatization or not, must address the issues of credit provision that have been problematic in most

African countries where more complete privatization has been pursued. This may include legal reforms and

better enforcement of contracts rather than public provision of credit. However, to date there are not many

cases of successful private provision of credit for cotton in Africa. Moreover, maintaining gins is critical to the

viability of a cotton sector; it is simply not an option to allow these gins to go out of business.

In the case of cocoa, Côte d’Ivoire showed great reluctance to privatize. Even when the government announced

that privatization would be pursued, it delayed taking action to put privatization into force. The government

found ways to continue some of the more problematic policies brought about by public sector management

of the cocoa industry – notably high export taxes. In Ghana, the public export monopoly continues to be

the source of high quality cocoa to world markets. Hence, even the chocolate industry is reluctant to see it

privatized. Deterioration of quality has been cited as a problem in other cases where privatization reforms have

been pursued, and key industry participants do not want to see that happen in Ghana. Thus, as in the case

of cotton, full privatization in cases where it is partial and incomplete is often not considered among the best

policy choices, and it continues to face resistance from national governments.

The principal concern about complete privatization remains the problem of missing markets and imperfect

marketing institutions following privatization. The best example is the case of credit for cotton, but

similar problems with institutional development have been critical for cocoa as well. Slow privatization

of cocoa in Côte d’Ivoire was due to a belief that preparation in the form of institutional development

was needed before privatization provisions were finalized, yet there was a great deal of uncertainty as

to what measures were required. Earlier privatizations in Nigeria and Cameroon had occurred rather

quickly, and in cases of more recent privatizations phasing of reforms has been preferred.

In Africa a tension remains between government failure and private market failure. The rationale for

privatization – inefficient and sometimes corrupt parastatal exporters and gins – remains an issue in

these markets. The inefficiency is due in part either to the parastatal pursuing broad development

goals beyond simply marketing the commodity in question or to the evolution of world prices that

reduced financial viability of the parastatal. Private sector participation will likely force some public

firms to focus more directly on marketing or processing efforts only. But a balance needs to be found,

with a continuing role for government, since the private sector will not provide public goods when

privatization requires the state to discontinue certain activities. The most important policy concern then,

as reforms are pursued, is to foster institutional development of marketing, recognizing both the role of

the national government and potential efficiencies from private sector participation.

4.2 Pricing and taxation

Institutional development may be the primary policy concern that should be addressed, but a great

deal of attention continues to focus on pricing and taxation issues. Parastatals had set official prices on

a pan-territorial, pan-seasonal basis. In that way, they stabilized prices and made the setting of prices

for cocoa and cotton deeply political issues. When privatization has led to prices being determined by

private market forces, political entities – including producer organizations – have continued to try to

influence those prices, with limited success. Producers have shown a continuing desire for stability,

so policy regimes to provide that stability have been considered. In the case of Côte d’Ivoire the

government found new institutional means to implement former policy regimes. High, and now explicit,

export taxes have continued after a brief respite following initial privatization. Cocobod in Ghana has