Pink Plastic Pearls or why our children are unemployed

Pink plastic pearls or why our children are unemployed

Just about three or four times a week you can go to Hosea Kutako airport outside Windhoek or Sir Serste Khama airport in Gaborone or any other airport in Africa and you will witness a strange phenomenon. As you watch people checking in for the Ethiopian Airlines flight you will see a large number of them are flying with no luggage, not even carry on luggage. If you ask them why you will find that these are people not going Addis Ababa but transiting there for the connecting flight to Guangzhou in southern China. In 2017 you could get a return ticket to Guangzhou with Ethiopian  for about US$800 from Windhoek. And on top of that Ethiopian Airlines would throw in 45 kilos of free luggage plus another seven as cabin luggage. This explains why people carry almost nothing when they leave for China.

These people are Africa’s new generation of Millennial traders. They carry nothing with them but return with often a hundred kilos plus of purchases they have made from Guangzhou (formerly Canton) which has for hundreds of years been the main trading hub of southern China. In 2016 it was estimated that some 500,000 Africans arrived every in Guangzhou to do one thing only and that is to buy high value to weight items and ship them back to their home country where they would be sold. What has emerged in this century has been a huge but informal trade worth what many estimate is billions in exports for China every year.

Often these informal traders return home and declare imports that are worth very little and pay only small amounts of import duty and VAT. Increasingly these informal traders and the networks that they create in their own countries has served to under-cut the prices in many established retail outlets and so have made these goods much cheaper for the average citizen. The problem is of course that this trade, even were it properly declared at the border, has the great advantage of decreasing  the cost of Chinese goods in country because it shortens what economists call the value chain between producer ie China and the African consumer.

Dr Heidi Haugen, a Norwegian sociologist undertook a recent  study of the trade between Ghana and China in pink plastic pearl earrings. This is a strange commodity, no doubt. She followed the whole chain from inputs  to final buyer in Ghana but what she discovered is a revelation. African politicians in gold producing countries dream of establishing a gold jewellery manufacturing industries but there is no local market and most African women could never afford such luxuries especially with gold trading at US$ 1280/0z. So matching pink plastic pearls earrings are commonly given out to bridesmaids at weddings in Ghana. These are cheap, about Yuan 1.7 per pair at retail price when sold by the informal traders which at the time of the study was about US0.25 per pair.

The actual value chain, as it is called is reproduced below. What is clear is that the Chinese make the pink plastic pearl earrings for about $US 0.09 per pair. The Chinese supplier then adds 32% and sells it to the Ghanaian in Guangzhou for US0.12 per pair.

 

The trader then ships the plastic pearl earrings back to Accra, paying whatever it is they do in tax, and then distribute them through his or more commonly her, network to retailers who then sell them to the happy couple who are about to get married for about US$0.25 per pair. So you ask what has this got to do with my children being unemployed? The answer is, everything! Most of the value added is made by the Ghanaian trader and retailer. But all the jobs are created in China because Ghana does not have the metal, the electrolytic coating, the plastic pearls or the glass stones. And furthermore if a Ghanaian manufacturer actually wanted to produce the pink plastic pearl earrings in Accra he would almost certainly have to import the components from China at a much higher price. What is true of pink plastic pearl earrings is unfortunately true of just about everything we consume in Africa. In Africa we make virtually nothing except holes in the ground for the big mining companies.

The jobs are created in China but the profits are made by Ghanaians with no African jobs created except retail sales in Ghana. This is the sad story of Africa, writ small in pink plastic but it is  true of almost everything consumed in Africa. It is cheaper to buy in China and trade in Africa. And so our children are unemployed not because of the brave women who travel to China not speaking a word of Mandarin and conducting their business on Google translator. They are simply trying to feed their families. It is not the fault of the retail networks that distribute these cheap products to the newlyweds. If you are looking for looking for a villain it is our fault and the fault of those who rule us, who will not dare tell the people the painful political truth, that until we have these inputs in Africa and until we can make it cheaper than the Chinese then our children will all be unemployed. But it is said, that if you point a finger at someone there are always three fingers pointed back at you.  In order for Africa to succeed it will mean great sacrifice by its peoples and we all know that we will never elect any politician who tells such ugly truths.

These are the views of Professor Roman Grynberg and not necessarily those of UNAM where he is employed.