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

EXECUTIVE SUMMARYCotton is a rare economic success story in Sub-Saharan Africa (SSA). While thecontinent’s share of total world agricultural trade fell by about half from 1980to 2005, its share of world cotton exports more than doubled. The crop is amajor source of foreign exchange earnings in more than 15 countries of thecontinent and is a crucial source of cash income for millions of smallholderfarmers and their families. In some countries, especially in the Sahel, there isno short- to medium-term cash crop substitute for cotton for small farmers.Throughout SSA, cotton sectors face major challenges pertaining to competitivenessand sustainability. In parts of West and Central Africa (WCA) sectorsare experiencing financial crises brought on by years of declining productivitythroughout the sectors, compounded by unfavorable external factors (exchangerate fluctuations and market distortions). Because of the size of the sectors—afunction of past success—these crises pose serious threats to the ruraleconomies and macroeconomic stability of the countries. Problems facing sectorsin East and Southern Africa (ESA) do not have the same macroeconomicramifications. Nevertheless, some of the best performers in that region are currentlygoing through credit default crises, and all face important challenges tocreating a solid basis for sustained growth over time.Since the early 1990s, governments of most cotton producing countries in SSAhave been implementing sectoral reforms, often with the support of the WorldBank and other development institutions. These reform processes generallyentailed disengaging the state, facilitating greater involvement of the privatesector and producer organizations, ensuring greater competition in input andxxiii