Policies, Prices, and Poverty : The Sugar, Vegetable Oil, and Flour Industries in Senegal
Like many countries in Sub-Saharan Africa, Senegal has struggled to develop its industrial sector in the face of import competition. For basic food products, there is an implicit trade-off between the objectives of maintaining employment and loweri...
| Main Authors: | , , |
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| Format: | Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2015
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2015/06/24578636/policies-prices-poverty-sugar-vegetable-oil-flour-industries-senegal http://hdl.handle.net/10986/22159 |
| Summary: | Like many countries in Sub-Saharan
Africa, Senegal has struggled to develop its industrial
sector in the face of import competition. For basic food
products, there is an implicit trade-off between the
objectives of maintaining employment and lowering the cost
of living, both of which figure prominently in current
government policy. Conflicting pressures have led to a
rather inconsistent policy mix of high levels of protection
with price ceilings. The products of the three industries
examined here—sugar, vegetable oil, and flour—account for
roughly 14 percent of the consumption basket of the poor, so
distortions in their prices can have a significant effect on
poverty reduction. This paper compares domestic prices in
Senegal with world prices since 2000, and then explains the
difference by examining the protection enjoyed by these
industries, along with their market structure. The analysis
finds that high protection and market power have resulted in
domestic prices which were often two or three times the
equivalent world price. Tightening of price ceilings and
some liberalization have taken place recently, but consumers
have continued to pay above world prices for sugar and
edible oil in 2014. The paper estimates that if this
differential were eliminated, the purchasing power of
households around the poverty line would increase by 3
percent, 227,000 people would move above the poverty line,
and the national poverty rate would drop by 1.9 percentage
points. The cost to consumers far exceeds the total wage
bill paid by these industries. Further liberalization of
these industries is recommended, along with phasing out
price controls and shifting government policy from
protecting traditional enterprises to the promotion of new
export-oriented ones. |
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