Legitimate trade
With the discovery of the Americas and European ships came the transatlantic slave trade.
European products, such as firearms, copper and cloth, were exchanged for slaves. Slaves, back
then, were Africa’s major export commodity. An estimated 12 million Africans were shipped
across the Atlantic Ocean to the Americas to work as labourers, mainly on plantations and in mines.
This is a very important element of trade that caused immense human misery, reduced African
populations, and disrupted development. It is treated extensively in a different chapter of this
textbook.
In 1807, Britain abolished the slave trade; that is Britain declared the trade as illegal. Not all
European trading nations followed suit. Nevertheless, transatlantic slave trade declined
significantly, because the British navy was patrolling the sea, fining slave ships and setting slaves
free. The abolition of the transatlantic slave trade did not mean a trade embargo. Slave trade was
replaced with so called “legitimate trade”. Legitimate trade included trade in any commodities
except slaves. Remember there are gains from trade.
A commercial shift to agricultural exports indeed took place, to palm oil, ground nuts and gum
arabic (harvested from the acacia tree) in particular. The shift had implications for West African
societies. Profit margins were lower. African elites probably lost out, because they were less able
to participate in small-holder production or effectively tax it.
The transport revolution
Transportation costs greatly matter for trade. Why do transportation costs hold back trade?
Transportation costs create a price wedge between buyer and seller and can undo gains from trade.
Again, take Saba and Bakari. If it costs 10,001 shillings to transport the chicken from Saba’s farm
to Bakari’s home, there will be no gains from trade and hence, no trade. This is because either the
buyer or seller has to pay the transportation costs. If Saba pays the transportation costs of 10,001
shillings and she values the chicken herself at 10,000 shillings, she will ask for a price of at least
20,001 shillings. However, Bakari is not willing to pay this price. If Bakari pays for the
transportation, the maximum price he would be willing to offer to Saba is 9,999 shillings (Bakari’s
willingness to pay 20,000 minus the transport costs of 10,001). You can see what happens when
transportation costs decline below 10,000 shillings: We observe trade between Saba and Bakari.
With every further decline, gains from trade will increase. Note that reducing transportation costs
can benefit both producers and consumers.
Early trade was held back by extremely high transportation costs. Geography is to blame.
Typically, water transport is the cheapest means of transport. Africa, however, lacks navigable and
inter-connected waterways. Canoes were used along some rivers such as the river Niger and on
Lake Victoria (some 700 km away from the sea). Large reductions in transportations costs came
with big vessels and modern steam ships in the late 19th century. However, steamships could not
navigate on African rivers because of frequent rapids and low water levels during the dry season.
The next best transport option for inland traffic would be draft animals such as horses, oxen and
donkeys. However, because of the presence of animal trypanosomiasis draft animals and cattle
herding could not be used in large parts of Africa. Trypanosomiasis, is a parasitic disease
transmitted by the tsetse fly. Draft animals infected with trypanosomiasis are likely to die. Map 3
shows the absence of cattle in tsetse areas.
Hence, head-loading was the main mode of transport. This was extremely costly. Much of the cargo
consisted of provisions for the voyage itself. Only low weight – high value goods were carried
through the hinterland. The slave trade was cheap, because slaves could be walked. The photo
below shows a caravan transporting highly valuable ivory from Uganda to the coast, some 1,000
km faraway. Bulky items were transported over very short distances only.
Hence, head-loading was the main mode of transport. This was extremely costly. Much of the cargo
consisted of provisions for the voyage itself. Only low weight – high value goods were carried
through the hinterland. The slave trade was cheap, because slaves could be walked. The photo
below shows a caravan transporting highly valuable ivory from Uganda to the coast, some 1,000
km faraway. Bulky items were transported over very short distances only.
A new technology brought a transport revolution: Railroads. The first railroad was built in 1862 in
South Africa to facilitate the export of gold and diamonds. From 1883 on, railroads were built in
other sub-Sahara African countries. Figure 1 shows the expansion of railroad coverage. The phase
up to 1914 was most dynamic: More than 21,000 km of rail were built. The speed slowed down in
the 5 years after World War I (which ended in 1918), but caught up in the interwar period. By 1937
the rail network reached 35,000 km of length. The year 1937 marks the end of the dynamic: 75
percent of today’s rail network (ca. 47,000 km) has been established by then. Recently, rail saw a
comeback due to Chinese investments. Motor roads started in the 1930s. At the beginning, roads
were often feeder roads, directing traffic to the railroad. Later, in the 1950s and 1960s, motor roads
became the dominant transportation technology.
Transportation costs of pre-modern transportation technologies were extremely high making export
production unprofitable. For example, the Gambia and Senegal groundnut production was only
profitable close to the Gambia River that flows into the sea. Ghana’s cocoa production was
profitable only up to a 50 km distance from the coast. In Kenya, coffee growing would have been
profitable only up to 300 km from the coast (not reaching the fertile soils of the Kenya Highlands).
Table 2 shows the massive reduction in transportation costs by the railroad. In Ghana, carriers
would move one ton of goods over one mile at the cost of 5 shilling. In contrast, the railroad charged
0.8 shilling. Hence, the railroad did the same service at only 16 percent of the costs. In Nigeria,
carriers were paid less and therefore head-loading costs were lower. Still, the railroad charged only
7.6 percent of the price of head-loading. Transportation in Kenya was particularly expensive before
the railroad. Part of the high porterage costs can be explained by marauding Maasai warrior parties
at that time. Caravans needed large numbers of armed guards for protection. Porters probably asked
for a higher salary as well to be persuaded to take the dangerous journey through Kenya.