Commodities export dependence hurting development in COMESA countries, UNCTAD
The United Nations Conference on Trade and Development (UNCTAD) has launched and presented the Commodities and Development Report 2017 to COMESA Secretariat.
The Report has revealed that sixteen (16) COMESA countries have continued to be commodity export dependent leading to them recording low levels of development and high poverty rates.
The report is basing its findings on the recent commodity price boom of 2003- 2011 which showed that strong commodity prices do not alter the long-term pattern of their terms of trade.
The terms of trade of economies that dependent on primary commodities tend to deteriorate in the long run due to the secular decline of primary commodity prices relative to the prices of manufactured goods.
In view of this, UNCTAD has made several observations on the disadvantages of being too dependent on export commodities for developing countries. It has also given different policy recommendations that countries should introduce in-order to bring about holistic and inclusive development.
The 16 COMESA countries that are commodity export dependent have been named as: Burundi, DR Congo, Comoros, Djibouti, Eritrea, Ethiopia, Kenya, Libya, Madagascar, Malawi, Rwanda, Seychelles, Sudan, Uganda, Zambia and Zimbabwe. Egypt, Swaziland and Mauritius have diversified their economies and are not categorized as commodity export depended countries.
COMESA secretariat has since proposed that a joint study be conducted with UNCTAD to come up with permanent solutions to the dependency of commodities for export.
The 98-paged document is showcasing results of ten case studies conducted in twelve countries around the world namely: Costa Rica, Brazil, Argentina, Botswana, Sierra Leone, Ghana, Nigeria, Mali, Burkina Faso, Bangladesh, Indonesia and Zambia. Specifically, for Zambia, the report has recommended that the country introduces polices that will help build a resilient economy through countercyclical fiscal policy, pursuing diversification and promoting good governance.
Other policies include expanding linkages of commodity sectors with the local economy and promoting inclusive growth through social protection, investing in human capital and pursuing transparent policies.
Commodity export dependent developing countries derive the bulk of their export earnings from primary commodities such as minerals, ores, metals, fuels, agricultural raw materials and food.
Export commodity dependence may cause potentially harmful impacts and affect all dimensions of sustainable development. Most of the developing countries that depend on commodity exports and/or imports are characterized by low human development
The annual Commodities and Development Report series is produced jointly by UNCTAD and the Food and Agriculture Organization (FAO). It seeks to contribute to an understanding of the linkages between commodity markets and development outcomes by highlighting a number of transmission channels through which commodity prices impact an economy:
First, there are impacts that emanate from the terms of trade. Second, commodity dependence presents fiscal and monetary policy challenges. Third, developments on international commodity markets can affect consumers and producers at the micro level.
