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

to farmer associations and their unions. In Benin, Cameroon, and BurkinaFaso, responsibility for extension services, particularly in the field of farmmanagement, is currently being taken over by farmer unions. Ultimately, it ishoped that these more focused associations will develop the technical capacityand cohesiveness to become equal partners with the cotton companies in a balancedcomanagement of the cotton sector. If a partnership happens, the governmentcould more effectively reduce its direct involvement.Entry of Private Actors in Ginning ActivitiesPrivatization of the cotton companies has been, in all countries, stronglyadvocated by a number of development partners, with the objectives of(a) providing cotton companies with clear managerial leadership, (b) improvingmanagement practices and cost efficiency, (c) reducing the risks of political interference,and (d) creating smaller and more manageable enterprises. However, theinvolvement of the private sector has so far remained limited. The privatizationprocess has been long and difficult. It has had to overcome the reluctanceof the established cotton companies, and to be accompanied by thedesign, in the absence of a clear reference model, of mechanisms to ensurethat delivery of critical services and functions to farmers would be preserved.In the sample of reviewed countries, only Benin (in 1995) and Burkina Faso(in 2004) have so far permitted private investors control of cotton companies,without, however, allowing them to compete for the supply of seed cotton. Eachcotton company has its exclusive zone in Burkina Faso; seed cotton is allocatedadministratively to cotton companies, at a fixed price, in Benin. 35 In Mali, privatizationof CMDT was originally scheduled to take place in 2004, but it waspostponed to 2008. In Burkina Faso, the scope of the privatization process waslimited by the fact that the two private cotton companies represented less than15 percent of the country’s total cotton production and SOFITEX (in which thegovernment retains a 35 percent share) remains by far the largest ginner. InBenin, the main ginner, SONAPRA, is still a parastatal company and accounts forabout 50 percent of seed cotton ginned in the country.The expected benefits of privatization have not yet materialized, in largepart because of the complicated financial situation of the sectors. In BurkinaFaso, privatization had the potential to bring new investments and new partnershipswith international traders, but the financial crisis that the cotton sectorhas experienced since 2005 is threatening progress. The impact of privatesector entry on cost efficiency has been limited so far, probably as a result ofthe absence of real competition. Privatization efforts have also not clearlyreduced political interference, as illustrated by the failure to reduce producerprices until 2006, in response to falling world prices. In Benin, the outcome ofreform clearly fell short of expectations and resulted in a sharp decline of thesector’s performance for a number of reasons: (a) new ginners were local andoften inexperienced businessmen attracted by short-term returns but withoutHISTORICAL BACKGROUND AND RECENT INSTITUTIONAL EVOLUTION 35