Saving Africa one Smartphone Cover at a Time
It’s been a week since arriving home from Ethiopia and finding myself back in Amsterdam (the Netherlands). Time to shake off the rural life and catch up with my urban friends, to change the burning African sun for a shy Dutch spring. And time to buy a new smart phone cover, as I had lost mine in a shady Ethiopian basement bar and I tend to take large risks with my pocket electronics.
Obviously, I should have bought the cover in Ethiopia; it is the typical kind of paraphernalia you are able to find on every African street corner. Due to my disability to plan, however, I didn’t and had to buy a cover in Amsterdam. This is much more challenging as street selling, and street life in general, are not quite common in my rainy hometown. Luckily there is the omnipotent Internet with plenty of virtual corner shops. Quickly I found a nice red cover, in a lovely shop called miniInTheBox.com (worldwide business leader in selling blue-ribbon consumer goods). Cost including delivery: €3.79, again: €3.79. To put this amount into perspective: for €3.65 you’ll enjoy a cappuccino at Starbucks and with a Dutch minimum wage you could buy 18 of those covers in just one day of work. Take into account that the cover is made 9000 km from my P.O. Box in Amsterdam and think again: €3.79. Only to send it by mail in the Netherlands it will cost you about €2.
After a little internet research I discovered that I still swindled myself. The invoice revealed the company’s name Light in the Box co.ltd (One World One Price), where I could buy the cover for €3.29. Talking to my friends about this article, it seemed that I was a very late adaptor. They laughed at me and showed me Dealextreme (great gadgets, price & service), where I could have bought it for $1.99 (free shipping). Also at Alibaba (Global trade starts here) I could have bought a far better cover for the same price. Triggered, I googled deeper: at Shenzhen Qicaitong Silicon & Plastic Technology Co. Ltd (We develop 120 new products monthly to supplement your selection) you could buy my cover in bulk for a lousy €0.28.
Qicaitong employs 400 people in two factories and another 40 in five sales departments. Hundreds of families are directly dependent on the company for their food, furniture and beer. A multitude of families are indirectly dependent as farmers, furniture makers and bartenders to supply the newly created demand: Chinese development in a nutshell, fuelled by the comparative advantage of an extremely low price of labour. Of course, I omit many other (social) development issues which still deserve attention, like freedom of speech, infrastructure, a healthy work environment, natural resources and so on. Bottom line is, however, that Chinese low labour prices account for the majority of global poverty reduction.
Africa; where technical assistance, capacity building and educational programmes still need to ignite an economic miracle. Before you accuse me of capitalistic one-dimensionality, do not get me wrong: from a human perspective education is extremely important. It enables girls to break through prehistoric social patterns and decreases rape (emancipation), articulates citizens to take control of their governments (democratisation) and facilitates long-term development through increased skills (innovation). My point here, however, is that it does not result in country-wide poverty alleviation like China. On the contrary, from the sole fact that remittances are higher than ever, you could draw the conclusion that education positions the brightest minds to build up a happy life elsewhere. Thus the interesting question is: why is my smartphone cover not been ‘made in Africa’? The price level is still low: for €3.79 you can buy 50 Ethiopian buna (coffee) and there is no such thing as an Ethiopian minimum wage. Meanwhile the Chinese minimum wage depending on the area fluctuates around €11 a day. I am convinced that in the future my cover indeed will be made in Africa.
We understand that mass production moved from Europe to China. Now the transition to make in our heads is that of the shift from China to Africa. In order to facilitate this shift we need to search for the enablers which empower Qicaitong to deliver the cover in my P.O. Box for just €3.79. Next to predictability (peace), there are issues like infrastructure (internet, roads, seaports) and supportive legislation (get rid of ridiculous European standards and African bureaucracy). As long as there is peace, infrastructure and legislation, next to cheap labour, production will eventually move.
In this sense cheap labour is not (at least not per definition) something to be afraid of, as long as it functions as the booster to ignite an economic flywheel. As soon as the Chinese factories in China are written off, investors will search (globally) for the perfect place to open up their new factory. This does not mean a mere replacement from European production from China to Africa, it implies that newly accumulated Chinese wealth itself is about to move.
My hope is that in a couple of years a Chinese man, who lost his cover in Brazil, will buy a new one ‘made in Malawi’, via a Kenyan trader and transported by a Tanzanian shipper. He will be amazed by the cheap price and maybe he will write an article about it. By then China tackled pollution, the Chinese people demanded more freedom and work in a safe environment. By then African children could look for vacancies in their own country as the economic flywheel is turning.
Floris de Roy is an Economist, based in the Netherlands.