Commodity-dependent countries warned — diversify or fail
Fifty ministers and other government officials from African countries with significant mining sectors met in Addis Ababa, Ethiopia, on December 20 at an industrial development event at which the UN Conference on Trade and Development (Unctad) presented its Commodities and Development Report 2017.
Kojo Busia, acting coordinator of the African Minerals Development Centre (AMDC), said that the message from the report, co-authored with the Food and Agriculture Organisation of the UN, was clear: “Either we diversify our economies or we fail.”
Representatives from Ethiopia, Niger, Chad and Madagascar, as well as from the UN Economic Commission for Africa (ECA), the African Union and others, received the report, titled Commodities Markets, Economic Growth and Development, from Unctad Africa office acting head Milasoa Cherel-Robson.
ECA executive secretary Vera Songwe said in keynote remarks that “in Africa, we are price takers. We have resources but at the same time we do not determine our prices.”
The report was presented during a session titled From Dependence on Raw Materials to Industrialisation: Practical Steps for African Countries, part of a meeting on intersectoral linkages and capacity development. Deliberations were informed by the report and a new Manual on Building Capabilities for Negotiating Contracts Aligned with the African Mining Vision produced by the AMDC, the African Union Commission and ECA.
The Commodities and Development Report 2017 says without a renewed commitment to policy change, commodity dependent developing countries will, by 2030, lag behind countries with more diverse economies in their social and economic achievements.
Unctad and the Food and Agriculture Organisation of the UN (FAO) argue that this is a likely scenario given that global food and nonfood commodity prices — with the exception of oil — are expected to remain at their 2010 levels.
The 2003-11 commodity price boom drove up export revenues and, generally, economic growth rates for many commodity-dependent developing countries, but this trend has either slowed down or been reversed since global commodity prices stabilised at a lower level, the report notes.
This, in turn, has brought to light the importance of investing in human capital and social protection as well as of redistributive policies, considering that strong overall economic growth alone does not necessarily translate into poverty reduction and food security achievements.
The report stresses the need for commodity-dependent developing countries to pursue structural transformation to improve their social and economic prospects, reduce poverty, realise food security and achieve the SDGs at large.
To support its policy recommendations, the report reviews policies pursued by several countries and their respective socioeconomic impacts. The case studies cover such commodities in producing countries as soybeans in Argentina and Brazil, rice in Bangladesh, diamonds in Botswana and Sierra Leone, cotton in Burkina Faso, coffee and bananas in Costa Rica, cocoa in Ghana, nickel in Indonesia, sorghum in Mali, oil in Nigeria and copper in Zambia.
According to the report, policies that can promote inclusive growth over the next 15 years include economic diversification, expanding the linkages between the commodity sector and the national economy, adopting countercyclical expenditure policies and investing in health and education.