Swaps sweep the board
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CTA. 1999. Swaps sweep the board. Spore 82. CTA, Wageningen, The Netherlands.
Permanent link to this item: http://hdl.handle.net/10568/48485
Internet URL: http://spore.cta.int/images/stories/pdf/old/spore82.pdf
Swaps, barters, and nonmonetary exchanges have long been frowned upon and decried by purist economists. Not that their opinions count in the thriving world of local exchange trading systems and international barter networks. In the small...
Swaps, barters, and nonmonetary exchanges have long been frowned upon and decried by purist economists. Not that their opinions count in the thriving world of local exchange trading systems and international barter networks. In the small bustling market town of Nditam, 250 km north of Yaoundé, the capital of Cameroon, the activities of women producers show just how deeply rooted modern trade is in ancient practices. Grouped together in the 'Beyii Ndeng' association, which means 'Women, to the Fields' in the Tikar language, they help each other clear land, and sow and harvest their crops. Their complex system of mutual support goes further: to respect fallow patterns, they do not all cultivate the same food crops. This year, those growing sweet potatoes will give part of their crop to those growing macabo or taro. Such exchange is an old tradition with the Tikar people; they have, since ages, traded with the Bedjang pygmies, their neighbours in this central region of Cameroon, without ever using money. What they barter has changed with modernity. Nowadays, one party will give old clothes, salt, soap, lamp oil, and local alcohol, and receive bamboo furniture, game, and muscle power for working on plantations. Lots of LETS ... Some people in modern societies yearn for this form of fair trade from the good old years. Since 1993, dozens of LETS (Local Exchange Trading System) projects have been launched in Europe. They started in Canada in 1983 and have spread far and wide throughout the West. They cover a multitude of barters between individuals or communities, and for all sorts of goods or services: lessons, food, do-it-yourself handiwork, use of computer equipment, helping hands, baby sitting, and many others. The Belgian daily Le Matin runs a swap shop section of small advertisements. In France, the traditional bric-a-brac traders have been joined by a new wave of LETS fairs where nonmonetary exchanges are traded. And LETS services have set up shop in cyberspace with such French-language websites as www.selidaire.org or www.troc-en-france.com. English-speaking services include the International Barter Corporation, with its website www.ubarter.com. In Havana, Cuba, swap traders known as permutas have set up another type of web, where people can exchange apartments as their family situations change through deaths and births. It is hard to quantify these transactions at macroeconomic level, in part because national borders-especially those of ACP countries-are porous, much to the profit of smugglers. But in the case of Russia, the IMF has estimated that one-half of all trade exchanges are through barter. A general estimate is that such transactions represent 10-12% of the volume of all world trade, with all that this means in terms of lost statistics and lost tax revenue. Barter trade took off in its present form in the 1950s in exchanges between Eastern Bloc countries. In the 1970s and 1980s they were built into industrial exchanges and technology transfers, adding a new element to North-South relationships. More recently, in the 1980s and 1990s, they have taken on the form of financial compensation through debt conversions and swaps. One such method, known as ÒswitchÓ, is a triangular operation in which two of the three parties set up an agreement for payment. The value of goods exchanged is recorded by the central banks of the countries concerned, and only the outstanding balance is paid in hard currency. As for debt swaps, the debtor country hands over part of its debt liabilities at a discount, in exchange for inward investment or purchase of exports from the country. Since it became a command economy in the 1960s, Cuba has been, and still is, a past master at barter. It has bartered its sugar production for Soviet and now Russian petrol (in 1997, it swapped 3.25 million t of sugar for 9.75 million t of crude oil). In 1995, Fidel Castro's country set up sugar swap deals with France (for wheat), with a British trader, and Iran (for fertilisers). During the 1980s, some African countries such as Tanzania swapped products like tea for tractors. Nigeria is well known as the most adept barterer on the African continent, swapping its oil for small parts. Smuggling and laundering... The value of bartering is emphasised by the French organisation ADEPTA1, the association for international exchange of agricultural and food products and technology. It holds that nonmonetary compensation, or countertrade, is an important asset for agricultural development in Southern countries. Similarly, ACECO2, a French body for countertrade, seeks to maintain a certain ethical code of conduct in nonmonetary exchanges and to 'protect' businesses involved in such trade. Nonetheless, countertrade is an area rife with blows below the belt. It is well known as a way to get products for a price below their market value. It is also a way for some operators to offload surplus production. And countertrade does not go unchallenged either. The famous swap between France and China involving Airbus planes and textiles and clothes has had a drastic effect on the French textile sector. In the early 1990s, Rwanda swapped a good part of its bean crop for weapons; the result was the terrible massacre of the ethnic groups. Similarly, the ongoing armed conflicts in Angola, Sierra Leone, and ex-Zaire are fed by barters of arms for precious stones. The Russian mafia operates in these countries as well to launder its dirty money. But the consequences of countertrade are not always so dire. In Cameroon caps of beer bottles marked by the breweries with a winning symbol can be swapped at any beer outlet for a free beer. The winning caps are sometimes accepted as a ticket to ride ... by taxi drivers. 1. The ADEPTA association was set up in 1997 by the French Ministry of Agriculture. It brings together 210 businesses in sectors ranging from agricultural development to food processing. Its mission is to assist its members in identifying business partners and to promote contacts through trade missions, exhibitions, and fairs. 2. ACECO is a private French body, specialised in partnership and advisory services for commercial negotiation and export finance for countertrade. It organises training courses and information services by sector and assists its member businesses for projects, financial engineering, and seeking opportunities in countertrade.
SubjectsMARKETING AND TRADE;
- CTA Spore (English)