The impact of multinational corporations, global trade and extreme weather in West Africa

Introduction:

Agriculture is the most common source of income in the developing countries and especially in West Africa. Sadly it's also very fragile system. It's the most weather-dependent of all human activities and in this region it's highly threatened by climate change represented by major droughts and desertification. Unfortunately the climate change is not the only problem for west african farmers. The prices of their crops cannot compete with the highly subsidized european prices which means they can't access foreign markets but on the other hand the local governments are forced to open their markets to the cheap foreign goods which is preventing the local economies from growing. And for the multinational corporation farmers from these regions serve as a source of cheap labor where they can keep low wages.

Extreme weather

In this region over last few years we could witness a lot of extreme weather events. Especially major droughts causing huge famines and deaths due to a slow reaction of the rest of the world.

Climate has a strong influence on agricultural production.These impacts are particularly strong in developing countries in the tropics that in many cases are exposed to high variability in climate, and where poverty increases the risk and the impact of natural disasters. In Sahel and other West African regions double so because the rain-fed crop production is the main source of food and income and means to control the crop environment are largely unavailable to farmers: irrigation is rarely an option and use of mechanization, fertilizers and other off-farm inputs is low.

In 2009 irregular rains in Sahel region have led to lack of pasture, water and poor harvest. In some areas there was no harvest at all. This and high food prices has let to the most recent famine that endangered almost 10 million people. There was another food crisis in 2008 caused by similar factors.

Multinational corporations

The main goal of the MNCs is to maximalaze their profit. Many of them are participating in various development programs and are investing big amounts of money into them. But this doesn't match with their main goal- the profit. They have to keep this because they have the responsibility towards their shareholders. Their shareholder are expecting their share to grow as much as possible so they have better income. And if some MNCs invests so much in development aid the cost of its production is growing and it looses profit. The MNCs are not motivated in foreign aid because it contradicts to their main goal. In reality this means that the farmers receive just a minimal wage or buying price for their crops. The MNCs also tend to enter in short term contracts with farmers so they have no future possibility to improve their income because the MNC would not enter the contract again if they would ask for more money.

As an example we can take the cocoa production in west Africa. The Ivory coast and Ghana are the biggest exporters of cocoa in the world(especially Ivory Coast). This cocoa is exported into the developed nation for very low prices and then turned into expensive chocolate confection or industrial chocolate. The west african farmers have a minimal share on the profit. In 2001 Nestlé corporation was even accused of buying cocoa harvested by enslaved children. The children were taken from their families and forced to work in terrible conditions. Nestlé expressed its concerns but sad that they have no evidence that the cocoa is derived from slave labor.

Of course MNCs also provide development aid. The can subscribe to the Corporate social responsibility (CSR) which is a from of corporate self-regulation aimed at better working conditions or join forces with various NGOs and development organizations. For example Microsoft and Google help to boost employment rates among young people in 12 west african countries. The only problem is that this aid programs will never be in the center of MNCs interests.

Global trade

The international trade generates an incredible wealth. In economic theory this trade is beneficial for both sides, but this only works when the rules are the same for everybody. Sadly this is not true because the rules controlling trade heavily favor the rich nations that set the rules. Developed countries limit and control share of the world market by charging high taxes on imported goods. As a result, many developing countries can only afford to export raw materials, which give far lower returns than finished products.For example, the developed world buys cheap cocoa and turns it into expensive chocolate. At the same time, developing countries are threatened with having loans withheld unless they open their markets to rich countries' exports.

Developed countries subsidize their agricultural produce, driving down the price, this protects their farmers but the farmers from developing world can't compete with the subsidized prices .This has made many poor farmers even poorer, or forced them off their land completely. The developed countries tell the poor world to get rid of subsidies, but they continue to spend $1 billion a day subsidizing its own farming enterprises. Thanks to all these factors the developing countries serve as reservoirs of cheap labor and raw materials. As an example of the impacts of global trade we can take fishing in West Africa. Fishing has historically been central to the local economy. Beginning in 1979, the European Union began brokering fishing rights contracts off the coast of West Africa. This continues to this day. Commercial unsustainable over-fishing from foreign corporations have played a significant role in the large-scale unemployment and migration of people across the region. This stands in direct opposition to United Nations Treaty on the Seas which recognizes the importance of fishing to local communities and insists that government fishing agreements with foreign companies should be targeted at surplus stocks only.

Priorities in future development

For the successful development of agriculture in this region several factors need to be accomplished:

Support from the local governments, which need to be responsible in the decision making. It's important that they do not enter in unfair trade agreements with the MNCs or the developed nations.

More development programs funded by MNCs and support of long-term contracts with MNCs

Succesful cooperation between the local govenmets. For example Comprehensive Africa Agricultural Development Program (CAADP).

Responsible and fair approach of the developed world in international trade. With the same rules for everybody this trade can be beneficial for both sides.

Investments in agriculture management and adaptation of agriculture to the climate change (possible change of crops).

Better management of the foreign aid in an emergency