DAKAR LETTER: One of the effects of our problems has been to provoke a fall in the price of the kind of commodities on which African countries rely
NEWS of Ireland’s turmoil has travelled widely, but you might have thought a dirt track in a remote cotton-growing region of southern Mali would be just the place to find sanctuary from the apocalyptic gloom.
While Ireland trudged through blizzards last week, it was a stifling 35 degrees where I was, travelling along potholed backroads en route to a small village near the border with the Ivory Coast. It’s one of the poorest places in the world; many families barely eat once a day, and literacy rates are in single figures. Ireland’s problems could scarcely have felt more remote.
But three hours into the journey, the car radio managed to pick up a signal from Radio France Internationale, and there it was. Tensions were rising on the Korean peninsula, the newsreader intoned gravely. And Ireland had agreed a bailout deal with the IMF and the EU. A shivering reporter in Dublin talked us through the detail.
Ireland's troubles have been more than incongruous background noise in parts of west Africa, however. While European chancelleries and Wall Street traders have had self-evident cause to feel anxious about the unravelling of the Irish economy, the ripples have been turning up in unlikely places. During five days in Dakar, for example, la crise irlandaisewas a recurring theme.
The two countries may now share the distinction of having the IMF looking over their books every year, but Ireland and Senegal usually don’t have much reason to cross paths. Neither country has diplomatic representation in the other. The Department of Foreign Affairs estimates that there are about six Irish people living in Senegal, while official figures put the number of Senegalese living in Ireland at fewer than a dozen.
The highlight of our recent bilateral relations came when, in 2007, an Irish student volunteering in Senegal was jailed for three weeks after admitting to police that he dropped his trousers and “mooned” outside the local governor’s house in the city of Saint Louis. Irish officials intervened on his behalf.
But one of the effects of Ireland’s recent turmoil has been to set off a fall in international prices for commodities that open economies such as Senegal’s rely on as exports.
For example, on November 18th, the day EU and IMF teams arrived in Dublin, maize futures – traded contracts used to hedge or to speculate on price movement — fell to $5.38 a bushel on the Chicago exchange. This compared to $5.77 a week previously and reflected trends for many other food commodities.
“What a difference a few days make,” said Jean-Martin Bauer, markets specialist at the World Food Programme regional office in Dakar. He attributed the drop partly to traders’ fears that Ireland’s financial troubles would herald reduced economic growth in Europe, shrinking demand for these commodities.
Such fluctuations can have a big impact on Senegalese farmers. Global prices for the country’s food exports collapsed after the fall of Lehman Brothers in 2008, with Senegalese groundnuts – a source of income for two thirds of the rural population – still not yet fully recovered.
Elsewhere in West Africa, farm gate prices fell for shea nuts and rubber, commodities grown by many smallholders in Ghana and Liberia, respectively.
More recently, when a Russian drought in August forced the Kremlin to ban wheat exports, the price of wheat rose a few weeks later in Senegal, causing bakers there to go on strike. The time lag then was about six weeks, which is why experts in Senegal say they’ll know by the new year whether the European uncertainty that began with Ireland’s bailout will be felt by Senegalese farmers.
“As for the current euro crisis it’s too early to tell,” says Bauer. “Will it spread to other countries? What impact [will there be] on overall economic output in the euro zone and elsewhere? Certainly, a nightmare scenario would have the situation develop into a bearish outlook for commodities, tropical commodities included.”
“People here are following it,” said Mamadou Dansokho, of the Applied Economics Research Centre in Dakar, of the Irish situation. “We’ll know if it has an impact by the end of the year.”
The local stake in Europe’s economic wellbeing, then, may partly explain the Irish story’s unlikely reach.
Not that Ireland’s most recent problems are commanding everyone’s attention, of course. At a Dakar restaurant, a Senegalese man shook his head sympathetically on hearing where the journalist at the next table was from. “It was very sad, what happened to Ireland,” he said, turning to his wife. “Did you hear what happened to them? France stole their place at the World Cup.”
