This month, the Tanzanian government sent the army. The purpose of the deployment was not to repel the occupants or damage the terrorist threat. Army instructions were clear: buy Indian nuts.
The intervention, which resulted in increased prices, increased, ensuring that niche prices increased to resolve the dispute between buyers and farmers of unprocessed nuts. The Tanzanian president and African Hugo Chavez John Magabul responded to a drop in prices. Despite the West African yield buffer, unprocessed vegetable prices have fallen around the world. Tanzania, the seventh largest producer, is a shocking class-loving cocktail snack supplier. After the requisition for supplies from East Africa, prices have risen.
This is not the first time Magafuli has intervened in global commodity markets. Last year, he accused Acacia Mining, a majority owned by Barricklay Gold, that its exports of gold and copper significantly reduced the amount of minerals. Acacia has been operating in the country for many years, earning a good return and paying well for the executives, noted Mr Magafuli. But it somehow escaped paying a big tax in Tanzania.
Awfully, he banned the export of raw gold and shook Acacia with retroactive taxes and fines for an incredible $ 190 billion. Acacia vigorously rejects allegations of irregularities, although Barry agreed to make a $ 300 million "goodwill" payment and transfer 16 percent of the shares to each of Acacia's three Tanzanian mines.
Mr. Magafuli is a completely nasty man. His freedom of expression, adolescent pregnancy and gay rights policy is reactionary, to put it mildly. Like Chavez, a late Venezuelan leader, his nationalism of resources is likely to deteriorate. Companies are unlikely to be willing to invest in Tanzania.
But, like populist leaders around the world, Mr. Magafuli is touching something real. Tanzanian farmers really get too little of Indian nut. It is only necessary to compare the lives of those who eat delicacies with those who produce them, many of whom can not afford to send their children to school or pay for primary health care. This is the case for those who produce the bulk of agricultural commodities in poor countries – from coffee and tea to cocoa and vanilla products.
The one that applies to soft goods is even more straightforward than hard ones, such as gold, copper, diamonds and cobalt. In many African countries, miners who pull out these materials live in a short and brutal life. They are often at risk of violence and environmental degradation. At the same time, those who benefit – which includes everyone with a nice wedding ring, iPhone or indoor plumbing, live longer and more comfortable.
The goods that we rely on today's existence are often the result of a secret deal between secret companies and unwise politicians. People from countries producing this wealth – whether the Democratic Republic of Congo or Tanzania – do not widely participate in their national heritage.
There is another objective to look at this issue: the national account. Africa, along with a lot of other nominally poor countries from Papua New Guinea to Peru, play a much greater role in the world economy than production or trade data suggest. Although Africans account for 16 percent of the world's population, they account for less than 3 percent of the world's nominal gross domestic product in conventional national accounting systems.
However, it is significantly lower that Africa really contributes to the global economy. GDP has added value. But Africa exports most of its products, including Indian nuts, in raw form and at prices that are heavily influenced by strong firms armed with tax professionals, transfer pricelists, and lawyers. Most of the added value comes from the continent. John Ashbourne of Capital Economics estimates that Bangladesh earns the same amount of clothing as exports, as well as the whole of Africa that exports precious metals.
This striking abnormality is compounded by the fact that negotiators often take on the table on the African side. While Mr Magafouli's approach is unlikely to work, his fundamental institute is correct in trying to resolve the balance. Unfortunately for the Tanzanians, grandstanding is not the answer. Only when countries join the physical and especially institutional infrastructure, in order to get more value at home, is beneficial to Africans.
Over the centuries, the world's most advanced countries have used African slaves to choose their cotton and produce sugar in places like the United States and the Caribbean. Slavery is forbidden. The West now wants to leave these workers where they produce what is needed for the world. Power relations remain unchanged.