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

etween these competing needs, providing sufficient benefits to all stakeholdersso that the system is able to maintain itself and grow.This hypothesized trade-off is at the center of the organizing feature of thisbook: a typology of cotton sectors in SSA based on the structure of the market forthe purchase of seed cotton and of the regulatory framework in which farms andfirms operate. Market structure can be defined by the nature of players andentities in the sector, together with the distribution of roles and power betweenthem. The regulatory framework is the set of rules, regulations, and other legalinstruments that are imposed on participants in the sector to enable it to operateand limit conflicts. These two pillars of the framework (market structureand regulatory framework) are based on the observation that structure has afundamental influence on the balance that a country is able to strike betweencompetition and coordination, and that regulatory frameworks can modify thecompetition–coordination trade-off but must deal with structure as it exists.Together with basic characteristics common to nearly all SSA economies (suchas the predominance of undercapitalized smallholder farmers, widespread failureof input and credit markets, and weak legal systems), these two factorsestablish the opportunities and constraints that cotton sector stakeholdersoperate within.Figure 1 below shows the five sector types identified in the typology, alongwith each country’s current location and its evolution over the recent past.Solid arrows depict changes that have taken place in sector organization sincethe mid-1990s; dashed arrows suggest changes that may be under way. Thelines showing recent changes in sector organization illustrate the point thatreform is not a one-off event and that most sectors are still seeking an optimalstructure to cope with the challenges of remaining internationally competitive.National monopolies are now found only in WCA and, with the exception ofSenegal, are owned and operated by public or mixed companies. Local monopolieshave more than one firm, but they establish geographical areas withinFigure 0.1 Location of Cotton Sectors within African CottonSector TypologyNational monopolyCameroonMaliChad*Senegal*(private)Local monopoly(“concession”)MozambiqueBurkina FasoCôte d’Ivoire*Ghana*Concentrated,market-based Competitive HybridZambiaZimbabweTanzaniaBeninUgandaNote: * Not included in this studyxxviEXECUTIVE SUMMARY