This month, Tanzania's government sent in the army. The deployment was not to repel an invading force or to crush a terrorist threat. The army's instructions were clear: buy cashew nuts.
The intervention, which sent global cashew prices higher, was intended to solve a dispute between buyers of the unprocessed nut and farmers. John Magafuli, Tanzania's president and an African Hugo Chavez in the making, was reacting to a fall in prices. Because of a bumper west African harvest, raw cashew prices had fallen across the world. Tanzania, the seventh largest producer, is a swing supplier of the chattering classes' favorite cocktail snack. After requisitioning the East African country's entire supply, prices rose.
This is not the first time Mr. Magafuli has intervened in global commodity markets. Last year, I accused Acacia Mining – majority owned by Barrick Gold – of massively understating the mineral levels in its gold and copper exports. Acacia had operated in the country for years, made good profits and paid its executives handsomely, Mr. Magafuli noted. But he had somehow avoided paying much tax in Tanzania.
In retaliation, he banned exports of unrefined gold and slapped Acacia with back taxes and fines of an unfeasible $ 190bn. Acacia vigorously denies accusations of wrongdoing, although Barrick agreed to make a $ 300m "good faith" payment and hand over a 16 percent stake in each of Acacia's three Tanzanian mines.
Mr. Magafuli is a thoroughly nasty man. His policies on freedom of expression, teenage pregnancy and gay rights are reactionary, to put it mildly. Like Chavez, the late Venezuelan leader, his resource nationalism is likely to end badly. Companies will hardly be lining up to invest in Tanzania.
But like populist leaders the world over, Mr. Magafuli is tapping into something real. Tanzanian farmers do indeed receive far too little for their cashew nuts. One only has to compare the lives of people who eat the delicacy with those who produce them, many of whom can not afford to send their children to school or pay for healthcare rudimentary. That is true of those who produce most commodities in poor countries, from coffee and tea to cocoa and vanilla.
What is true of soft commodities is even truer of hard ones, such as gold, copper, diamonds and cobalt. In much of Africa, the miners who dig up these materials live short and brutish lives. They are often threatened by violence and environmental degradation. Meanwhile, those who benefit – which includes anyone with a nice wedding ring, an iPhone or indoor plumbing – live longer and more comfortably.
The commodities on which we rely for our modern existence are often the result of collusion between unscrupulous businesses and unsavory politicians. People from the countries that produce that wealth – whether the Democratic Republic of Congo or Tanzania – do not share widely in their national heritage.
There is another lens through which to look at the issue: that of national accounts. Africa – together with many other nominal poor countries from Papua New Guinea to Peru – plays a much greater role in the global economy than either output or trade figures suggest. Although Africans make up 16 percent of the world's population, in conventional national accounting terms they contribute less than 3 percent of the gross domestic product nominal world.
Yet this is vastly to underestimate Africa's true participation in the global economy. GDP measures value-added. But Africa exports most of its commodities – including in-shell cashew nuts – in raw form and at prices heavily influenced by powerful companies armed with tax experts, transfer-pricing wizards and lawyers. Most of the value-added occurs outside the continent. John Ashbourne of Capital Economics calculates that Bangladesh earns much from exporting clothes as does all of Africa exporting precious metals.
That staggering anomaly is exacerbated by the fact that, on the African side of the table, negotiators are often on the take themselves. While Mr Magafuli's approach is most unlikely to work, his basic instinct in trying to redress the balance is correct. Unfortunately for Tanzanians, grandstanding is not the answer. Only when nations install the physical and, especially, institutional infrastructure to extract more value at home will Africans benefit.
For centuries, the world's most advanced economies used African slaves to pick their cotton and harvest their sugar in places such as the US and the Caribbean. Slavery has been banned. The west would now prefer to leave these workers where they are to produce what the world needs. The power relationships remain essentially unchanged.