African Economy

In my operations management class I'm working on an extra credit assignment that involves the future of manufacturing in Africa, and how certain companies are moving to manufacture consumer goods in Africa as opposed to Southeast Asia, because wages are to rise in those countries. It will be cheaper to manufacture goods in Africa as wages continue to rise.

According to Maathai in The Challenge for Africa,

"Africa is still overwhelmingly a producer of commodities -- including coffee, cocoa, cotton, and sugar" (96).

The flip side of the coin is that "the money brought to rural areas through the sale of commodities such as cash crops is then siphoned back to the towns where the consumer goods are transported from, and eventually repatriated to the countries that produce them. Even most of the industries that are located in Kenya-tourism, and the growing of flowers, coffee, and tea-are largely owned by foreign companies" (97).

So what does this mean?

My take is that Africa is seen as an opportunity by outside, first world countries as a huge consumer base that needs modern day commodities like clothing - things other than the raw materials that they produce.

My fear for Africa is that when, eventually, the levels of output of raw materials and finished goods that come out of the country begin to even out - when Africa begins to produce more non cash crop items - that Africa won't be the one controlling the profits on those items. It would still be the outside first world countries that establish manufacturing plants in Africa.

The argument can be made, however, that the establishment of infrastructure, overtime, will be beneficial to the African people. There will be another opportunity for work aside from farming. As wage rates rise, as they are historically proven to do once manufacturing is introduced in a country, the companies will look elsewhere for cheaper labor, leaving opportunity for the natives to take control of the industry. This is all very long term, and generalized, but food for thought.