From a raw commodity to value added
From a raw commodity to value added

Imperative for adding value to primary commodities - Assertive lessons from Indonesia for Ghana, Africa

A recent African Business news reported that Africa is at a pivotal moment, boasting immense potential with the world’s youngest population.

Advertisement

It noted that the continent’s working-age population is projected to increase by two-thirds, from 370 million adults in 2010 to over 600 million by 2030.

Potentially, that demographic shift positions Africa as a key global economic player: And that begs the question: How does Africa plan to engage that large increase in population in productive jobs?

It’s clear that persisting in producing and selling primary commodities on the cheap — without adding value as had been the historical norm  — cannot be a sustaining model for the continent. 

Kwame Nkrumah’s foresight

Kwame Nkrumah’s prescience continued to toll for Africa.

Reading him makes you feel that he was alerting Africa to this very matter, this very day. He wrote in 1965 that “The struggle against neo-colonialism is not aimed at excluding the capital of the developed world from operating in less developed countries.

It is aimed at preventing the financial power of developed countries being used in such a way to impoverish the less developed.”

He cautioned that “Neo colonialism is the worst form of imperialism.

For those who practice it, it means power without responsibility and for those who suffer from it, it means exploitation without redress.”

 [Nkrumah was overthrown the very next year, 1966, after the publication of his book, Neo-Colonialism: The Last Stage of Imperialism.]

A reader lately sent me the front page of the Daily Graphic of November 30, 1962.

With a caption “Made in Ghana: A Survey of our Local Industries”, the paper noted that “In less than six years after independence, Ghana now produces its own safety matches, paints, nails, biscuits, alcoholic drinks, cooking utensils, roofing materials, canned fruits, meat and fish.” 

Additionally, it said, Nkrumah’s Ghana “has its own chemical factory for producing insecticides and other chemicals.

We also have a brewery, a milk processing plant, and a lorry and bicycle assembly plant.

Overall, we can take pride in over ninety industries, thanks to the government's comprehensive industrial programme.

This programme comprises five main sectors: state-owned enterprises, enterprises owned by foreign private interests, enterprises jointly owned by the state and foreign private interests, cooperatives, and, finally, small-scale Ghanaian enterprise.”

Cues from Indonesia

For the industrialised nations, however, it was expected and comforting that global commodity markets continue to stay that way for their advantage.

So the idea of making commodity markets more resilient to risks or how to absorb “commodity shocks” was an issue at the World Economic Forum’s Annual Meeting at Davos 2022.

Moderating the panel of five or so individuals for that particular discussion was one Bruce Whitfield (BW), a noted journalist and author of the book, Genius: How to Thrive at the Edge of Chaos.

Representing Indonesia was Muhammad Lufti (ML), Minister of Trade of Indonesia at the time.

Advertisement

The following interchange (slightly edited for clarity) ensued between the two:

BW: You wanted to triple your economy by 2030.

That is a lot of consumption. 

That is a huge amount of demand.

Can the world be geared to support your growth or your growth ambition?

ML: Well, I don’t know about the world, but I want to continue what the minister from Peru says.

Advertisement

If we just rely on selling a basic commodity, the country cannot sustain itself. I guarantee you that.

But I want to tell you a story … I don’t want to name the commodity.

We stopped the export of one commodity.

We got about $1.1 billion in 2019 selling that one commodity.

We stopped it.

We forced people to make value additions to that. 

Advertisement

We created stainless steel.

Suddenly, Indonesia became the number two stainless steel producer in the world.

Do you know how much the multiplications? $10.86 billion that very year - after doubling that in 2021 to be 21 billion.

This year 10 per cent of Indonesian export will be coming from stainless steel. 

The recipe is value-added! [But] when the developing country created something, the developed country is not happy.

So right now, I’m having a dispute settlement with the developed countries, almost like every other day.

But for Indonesia, we have no choice but to fight it.

BW: Is it? Would it be wrong to call that a little bit of resource nationalism if you like, withholding supply?

ML: I don’t want to hear it! Do you know that at one point the Europeans had 3.7 [million] more vaccines than they needed? Okay?

And they sent it back to Indonesia - to countries such as Indonesia - two weeks before the expiration date.

I don’t want to hear it.

BW: But where’s the rest of the world is going to, at the end of the day, threatened by you?

ML: Yeah. Well, at the end of the day, it’s about national interest, you know?

But we are a democratic country. 

I have 270 million people hungry…  

And I need to cater to that as much as the European needs to cater to the Europeans, as much as other developed countries need to cater to the developed countries.

So, this is a fight of democracy to sustain the very fabrics of survival.

So, Minister (Peru), trust me, you have to do what Indonesia does.

 If you want it, I’ll show it to you.

I’ll come to your country.

BW: It’s one of the great issues that commodity supplies/producers have all around the world: extraction and export and then import at a considerably higher cost, of course.

ML: (Laughing) Do you know what they call that? Colonialism… 

Adding value to cocoa

As noted in an interview with  on World Chocolate Day (July 7, 2023), about 70 per cent of the world’s cocoa beans come from four West African countries: Ivory Coast, Ghana, Nigeria and Cameroon, with the Ivory Coast and Ghana accounting for more than 50 per cent of the world´s cocoa output.

In 2022, the export value of cocoa beans and cocoa products from Ghana amounted to around $2.3 billion.

Around 80 per cent of the global cocoa industry’s annual wealth of between US$130billion and US$150billion is generated during secondary processing (cocoa paste manufacturing, etc) which continues to be non-existent in the country.

While Africa grows the bulk of the world’s raw cocoa beans, it is estimated the continent produces only about one per cent of the chocolate — missing out on a part of the business that generates the biggest returns.

The writer is a trainer of teachers, leadership coach, motivational speaker and quality education advocate.

E-mail: [email protected] 

Connect With Us : 0242202447 | 0551484843 | 0266361755 | 059 199 7513 |

Like what you see?

Hit the buttons below to follow us, you won't regret it...

0
Shares