Africa’s wealth of natural resource reserves make it one of the largest producers and exporters of a number of commodities in the world. For example, the continent produces roughly three-quarters of the world’s platinum and over half of the world’s diamonds.
Despite this wealth of resources, very little value is added to these commodities on the continent, with the large majority of its raw materials being exported to the international market.
Edward George, head of soft commodities research at Ecobank, told an audience at the Africa Trade Finance Week in Cape Town this week that despite producing 70% of the world’s cocoa, three-quarters of West Africa’s cocoa crop is exported raw to Europe and Asia where it is processed into cocoa products and chocolate.
To give an idea of how little value is being captured by exporting raw commodities, that are manufactured elsewhere and then imported back into Africa, George used the example of a typical chocolate bar.
“Back in the 1970s when cocoa prices were very high, cocoa accounted for up to 50% of the value of a chocolate bar. By 1980, this had fallen to up to 16%. The most recent estimates put it at between 6% and 7%… The truth is that if you have a 24 segment bar of chocolate, farmers get little more than one chunk of the bar.”
He added that the vast majority of profit from a sale of a chocolate bar is captured by the chocolate manufacturer, estimated at 70%.
“There is only so much value you can get out of a raw cocoa bean. It is when you turn it into something else that the value really is there." READ MORE
Source: How it is made in Africa #IFAMAFRICA
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