“RED GOLD” – ANOTHER RESOURCE CURSE?
In most African countries, the prices of basic commodies are greatly linked to the price of fuel. This could be attributed to the cost of transportation which increases with fuel price increases and the high elasticity of local demands which make it easier for the consumers to bear the biggest brunt of any increases. This no doubt makes one sees how the capitalist system is working harder than ever to increase the chasm between rich and poor. The removal of the fuel subsidy in Nigeria and the mayhem that followed seem to have been the test-drive by the IMF and World Bank. Since protests in Nigeria did not have much impact, there is now consideration of covering more grounds. Cameroon happens to be next in line – but unlike Nigeria that recieved so much attention, I will not be suprised if ‘France-dominated Cameroon’s removal goes unnoticed.
The thought of it has however made me go back to look at an article I wrote for FabAfrique Magazine on the ‘Red Gold’. If the problem of black gold has been subsidies, what exactly is the problem of this resource?
Over the last few months I have not ceased to wonder if Africa would have been better-off without all the abundance of natural resources. What with all the appellations like Collier’s ‘Natural Resource Trap’, the ‘Natural Resource Curse’ or most strangely, the one that beats me most, the ‘Dutch Disease’. The paradox of a blessing being a curse at the same time, is one too complex for my little head to fathom. But behold, the evidence is overwhelming and I cannot pretend not to see it – the conflict that seems to accompany natural resources and the widespread poverty in Africa – a land of affluence.
It is a fact that Africa is blessed with rich soil that permits it to grow almost everything needed for mankind’s existence. There’s cocoa for chocolate, and its related products, coffee for tea, timber for construction and the making of wooden instruments and paper, cotton for clothing, palm for palm oil, and many others.
Africa is also flooded with natural resources that the world largely depends on. Amongst these are gold, copper, bauxite, diamond, and the one that is usually called “black gold”, crude oil. Another form of “gold” has come up today, which I term “red gold”. This is crude palm oil that amounts for a greater part of income in countries like Nigeria, Ivory Coast, DR Congo and Cameroon. And it is these countries that stand tall in the hall of fame of crude palm oil production in Africa.
Unfortunately, it is also a fact that diamonds are responsible for Sierra Leone’s worst nightmare, that Nigeria’s fuel subsidy crisis is a manifestation of the case of a country ‘living at the banks of a river and washing its hands with spittle’, that the civil war in the Congo and the Libyan crisis are cases where resources have made people wolf unto their brothers – just to name a few.
Am I deliberately leaving out Cameroon here? This should not have been surprising since World Bank Director Paul Collier in his award winning book The Bottom Billion deliberately leaves out Cameroon in most serious discussions and only mentions it briefly when referring to the depletion of resources in the Country.
I am not going to delve into questioning why Cameroon seems so much under the radar or where the depleted resources have gone to, but I am bound by conscience to wonder if Cameroon is free from the resource curse. I am going to take a look at just one resource here – what I call The ‘Red Gold’. This is crude palm oil that accounts for a greater part of income in countries like Nigeria, Ivory Coast, Democratic Republic of Congo, and Cameroon. These are the countries that stand tall in the hall of fame of crude palm production in Africa.
The Republic of Cameroon which ranks fourth in crude palm oil production in Africa according to the United Nation’s Food and Agricultural Organization (FAO) has crude palm oil as one of its main agricultural products. The country which is fondly called ‘Africa in miniature’ can boost of a yearly production of about 200,000 tons of palm oil. In 2011, production was 210,000 tons up from the previous 200,000 tons.
Crude palm oil which has always been a part of the
people of much of West Africa, and Cameroon in particular actually gained industrial prominence in 1910 when the Germans established industrial plantation units around Edea under the Société de Palmerais de la Ferme Suisse. Then, came the Cameroon Development Corporation (CDC), in the 1940s. And later on the PAMOIL Cameroon Ltd.
Palm oil production in Cameroon is highly favored by the tropical climate that consist of 4 to 5 months of dry season, and about 7 to 8 months of rainy season, coupled with the South West Monsoon wind that blows across the coast of the country where large agro industrial corporations like the Cameroon Development Corporation (CDC) is situated, including the Palm Oil Corporation of Cameroon (PAMOIL), the Manyu Oil Palm Initiative. Independent farmers too, are involved in this highly lucrative business, and most of them have come under the Cameroon Association of Palm Oil Producers, headed by Claude Leonard Mpouma, and the Small Holders Scheme.
Large farms of palm nuts used in the production of palm oil which covers about 170,000 hectares can be seen mainly in the South West, South, Littoral, Centre and East.
This new form of “Red Gold” generates a yearly income of more 200 billion FCFA, about 400 million dollars, and provides about 65,000 indirect and direct jobs.
Because of the high quality of Cameroon’s crude red palm oil; which is cholesterol free and rich in vitamin E, there’s high demand for it at home and abroad. If it is not demanded for cooking, it is demanded for the making of soap and other cosmetic products found in the greatest shops around the world.
The exponential growth in demand has meant the supply is lagging as local production fails to grow simultaneously thanks to the poor state of farm-to-market roads, crude or rudimentary machines used by some small holders and the poor quality of some of the seedlings causing am almost 100% increase in the price of palm oil from the official 450frs CFA (almost a dollar) to about 750frs CFA in the black market. This poses a problem given that a majority of Cameroonians in the local areas live on less than a dollar a day. Much like Black Gold, this resource seems to be going down the road of becoming too expensive for the ordinary man.
While one could be optimistic enough to say that the future of palm oil in Cameroon is bright because of the ‘tarring’ of some farm-to-market roads, like the famous Kumba-Buea stretch of road, the widening of the Douala –Yaoundé road, and the provision of high yielding palm seedlings to farmers by structures like the Cameroon Development Corporation (CDC), PAMOIL Cameroon Ltd, Programme de Developémment de Palmerais Villageois(PDPV), which also coordinates the activities of small holders farmers, the question that remains unanswered is whether these modest achievements are worth commending in a country so richly blessed
Maybe I am not being reasonable here, given that the government has signed many agreements in favor of the farmers and in 2010, it jointly launched a project with the government of the Federal Republic of Nigeria (Africa’s biggest producer of palm oil) aimed at generating income in the palm oil sector in four years time, supported by the United Nations Industrial Development Organization and the Common Fund for Commodities. Recently, Cameroon and UNIDO reached a deal in Vienna, Austria to promote the industrialization of palm oil production in Cameroon. Following this programme, four pilot centres were chosen; the Agro Industrial Unit in Bora in the East, Massoumbou Gardens in Littoral, the Agro Industrial Development Company in the South and the Manya Oil Palm Cooperative in the South West. This will certainly bridge the gap between demand and supply which requires the creation of about 20,000 hectares of palm tree farms yearly.
These are wonderful efforts with great prospects but history and the reality of international trade dampen my hilarity. It is true that today, for the first time, most African countries have made the most impressive breakthrough into global markets for goods and services other than just primary products, it is also true that most of the firms established during the colonial era, still continue to play a major role in the export-import trade of the now independent States which were their former colonial preserves. Most of these pay very low prices for the cash crops they export to Europe while they set very high prices for the finished products they import for sale in Africa. Also, the major share of their profits is sent back to their home countries rather than being invested in the African economies where the profits are made. This has the unfortunate effect that a structural imbalance is created in the African economies resulting from their over dependence on the export of one of few primary products and this makes their economies extremely vulnerable to external factors and seriously hinders their internal development.
This is my fear for the future of ‘Red Gold’.
 The Dutch disease is an economic concept that explains the apparent relationship between the increase in exploitation of natural resources and a decline in the manufacturing sector.