Organization and Performance of Cotton Sectors in Africa ... - infoDev

due course, in regional markets—will increase the political acceptability of sectorreform and will also provide some guarantee of long-term commitment todevelopment of the national industry.This approach then leaves the question: is there any role for smaller firms ina high-performing cotton sector? Tanzania’s sector will continue to be based onsuch small firms for the foreseeable future. However, even in concentrated sectorsand perhaps in local monopolies (if there are one or two small concessionareas), small firms can use their lower overhead to keep big firms focusing ontheir own efficiency and on paying reasonable prices to farmers. Moreover,small firms are the only feasible entry point for innovative local entrepreneurswho wish to enter the cotton industry and have to start somewhere. A key lessonfrom this study, however, is that such firms must be made to adhere tostrict codes of conduct if their presence within a sector is to do more goodthan harm.WAYS FORWARD FOR PARTICULAR SECTOR TYPESAlthough there are some common challenges across African cotton sectors,many challenges are more acute in some sector types than others. Moreover,the appropriate response to most challenges will depend heavily on the type ofsector in question. Thus, this final section considers the key challenges andopportunities facing each of the main sectoral types. Some reflections onfuture trajectories for cotton sector organization in Africa are given as a preface.Future Trajectories for Cotton Sector Organization in AfricaThe typology presented in this book offers a strong and reliable framework toprovide insights into possible evolutionary paths of African cotton sectors andto guide decision makers on the possible paths of future reform. In the shortto medium term, the most likely change within African cotton systems is anincrease in the number of local monopoly systems in WCA. However, localmonopolies should be a transition phase toward market-based sector typessuch as concentrated and competitive systems. If so, the most desirable endtype is probably a concentrated system, which has a wide range of desirableproperties if regulatory challenges can be overcome to make them more stable.For example, if clear licensing rules can be developed, total regulatory costsunder a concentrated system may be lower than with local monopolies, 94 whileincentives for cost reduction are greater. Assuming that appropriate regulatorymodels can be developed, the strength of farmer associations in WCA (relativeto most countries of ESA) could mean that the local monopoly stage could bea reasonably short one. 95 However, additional attention must still be paid toeducating farmer associations about the realities of the world cotton marketand to increasing their operational capacities.174 LABASTE, POULTON, AND TSCHIRLEY