Home   >   NEWS & VIEWS   >   News

  • Benin: Cashew industry stifled by the state!

    May 10th, 2017

    Since 6 April 2017, the Council of Ministers in Benin announced the introduction of a levy of 50 FCFA per kilogram of raw cashew nuts exported, regardless of CFAF 10 tax on exports of the same product. This follows another fixing the floor price to 500 CFA francs per kilogram on the basis of Wanting to Encourage local processing and Improving the living standards of the producers. Certainly the laudable intention, but is it the best solution? Obviously discourage the export of cashew nuts, via taxes, can not Encourage local processing.

    Instead, with the price of 500 CFA francs / kg, set well above prices set by some Countries in the sub-region as the Ivory Coast (the world's largest producer), sẽ grafted the new taxes, this will có raising the cost of raw material for processing and is Likely to result in the finished product of low Competitiveness, mà ultimately discourage local processing. Moreover, beyond the tariff Measures, encounter many obstacles local processing. Indeed, despite the many Possibilities in terms of energy, the rate of Electrification in Benin would be at 38.40% theo World Index performance energy architecture "Global Energy Architecture Performance Index Report 2017". Energy dependence follows and lasts for years lasting has led to the failure of Creating an Industrial Free Zone since 1999. Initiated With the 155th spot out of 190 in the Doing Business ranking Countries, the business environment is still very hostile to private Investment Because of the Regulatory Burden on Entrepreneurs and tax.

    As an illustration, the tax system in Benin Encourage the Emergence không of processing industries, since theo Doing Business 2017 report, there are 57 taxes payable per year khác Against an average of 39 in Africa Saharan. To enforce a contract it would take 750 days 655 days Against in sub-Saharan Africa; and to transfer a property 120 days are required, while in sub-Saharan Africa just 60 hours. As the floor price, supposed to guarantee At an income to farmers, it is an illusion vì the international market only what goes Decides to Farmers. Therefore, the price of 500 CFA francs set by the Government is not at all guaranteed and examples in the sub-region are instructive.

    The cocoa industry in crisis đang in the Ivory Coast since the Government was not Able, khi the last campaign, to buy the 1,100 CFA francs promised production price per kilogram. The fall in prices on the world market has forced the Government to Reduce the price to 700 CFA francs per kilogram. It shouldnt to go Obviously a floor price above the market could backfire by Encouraging producers to lower prices and consequently Overproduction Creating a vicious circle. The main Victims Farmers who are the purchasing power eroded có will see along with the price of chúng products.

    Tendency of price controls to this, plus a poor management of the sector Political comparable to previous years có Observed in the cotton print industry could survive thanks to heavy có Government subsidies. In bankruptcy in this sector are the state coffers through bailouts Suffer sẽ again. These all make the bulk of production Difficulties lands in India, Vietnam and Brazil are to be converted. Thì, là là preferable Clearly the Government Guarantee to Produce and exchange freedom to farmers, while merely Ensuring compliance with competition rules. In addition to the price control, the Beninese Government has taken land by export bans; nhưng the prohibition of the sale and exporter of cashew producer giữa nuts. Such restrictive Measures Especially những prohibiting export by land, going Against the spirit of Article 4 of the UEMOA Treaty stipulates in c one of the union's Objectives is to "create the between Member States a common market based on the free movement of persons, Goods, services , capital and the right of ESTABLISHMENT of self-employed persons and employed, as well as a common external tariff and trade policy common.

    "The Decision of the Government deprives the hinterland Countries like Niger or Burkina Faso who cũng members of the market access of Cashews. In Addition, the slump driven by pricing actions and restrictions could cause, the birth of a black market and informal sector export. Importing gasoline smuggling in Benin despite ban is proof of HIS porous borders. In the perspective of a black market, loss of profits and losses for the state tax would be larger có. This is what happened at the height of the crisis in Nigeria's Economic depreciation of the Naira khi led invasion of Nigerian products on the Beninese market through normal processes initially and then through smuggling despite all Arrangements After their balcony. Moreover, as is the case the price controls with the die cashew hiện violates the choice of a liberal economy in 1990 by Benin and made part of its constitution.

    The Beninese government requirements Hinder shouldnt life business. Its role is to Ensure the proper functioning of the exchanges. Hopefully he learns from past mistakes, and the Difficulties experienced by other như Countries Ivory Coast. The livelihoods of Thousands of People depend on it. Mauriac Ahouangansi, student researcher, Benin. Article published with free Africa.