Learning from the economics of networks to enhance poverty alleviation in African cotton zones

Abstract

Cotton sectors in Sub-Saharan Africa (SSA) were run by monopolistic para-statal organisms for a long time. They embarked upon a restructuring/liberalisation process as of the mid-1980s but the outcomes were mitigated at best. As these sectors resemble service distribution networks (telecommunication, power, etc.) in terms of historical monopolies and deregulation, cotton development in SSA could be reviewed and their current restructuring appraised according to economics of networks models.This paper stresses that cotton sectors in SSA could be considered as service networks. They have a 3-layer morphology and comply with the five recognition criteria as suggested by Curien (2000). Stylised facts regarding network dynamics closely fit former cotton sector development patterns in most SSA countries. Cotton development did not occur without the related networks reaching a critical size that public intervention helped to attain through a time-demanding process.In areas where cotton production is not very developed, it would not be worthwhile to attempt to restructure existing cotton networks as they are of insufficient size. Where cotton production is well developed, such deregulation could be considered but not through a vertical disintegration procedure. Splitting an existing nationwide monopoly into a limited number of local monopolies is a way of preserving vertical integration and of facilitating geographical regulation which should be more efficient and comprehensive than regulating only through purchase price fixing.economics of networks; cotton; deregulation; Mali; privatization; liberalization