“Cotton Sector Liberalisation In Sub Saharan Africa: The Impact Of Counter-Reforms In Tanzania”

Globalization and free trade bear the promise of welfare gains through increased competition; also in the agricultural sector. In accordance with this, liberalisation has been called by the International Financial Institutions and implemented by a “one size fits all” approach. However, where the increased-competition goal has been achieved, not always have the expected welfare gains been consequent. In this paper, I analyse the case of the cotton sector in Tanzania. The choice of Tanzania is appropriate since it is considered to date the only sub-Saharan Africa country where both privatization and liberalisation of the cotton sector have been fully accomplished. After liberalisation, Tanzania has seen a depletion of its cotton sector: particularly regarding the quality of its produce. In response, it has been implementing so to say “counter-reform” policies in the attempt to rescue the sector from a wreck. Counter-reform policies can be envisaged as policies that are opposite in direction to those implemented in a process of liberalisation. In this paper, I focus on the implementation of a number of single counter-reform policies in the cotton sector of Tanzania. I proceed by assessing the effect, if any, of such policies on the daily premium over the A Index price obtained for Tanzanian cotton. The impacts provide normative implications for policies on farmers and ginners.