Limited diversification and over-reliance on the commodities sector are detrimental to long-term development in resource-rich countries, says Stephen Karingi, Director of Regional Integration and Trade Division at the Economic Commission for Africa (ECA).
According to him, Africa’s commodity markets remain highly volatile as the resurging virus crisis blocks supply chains amid rising global pressures.
Mr. Karingi was speaking at the ECA Price Watch session with African finance ministers on “Commodity prices amid Covid-19: prospects and policy implications for African economies.”
“High commodity dependence is associated with lower human development indicators across the developing world,” he said.
Mr. Karingi recommended that countries should overhaul their policies to reduce strong dependence on global commodity markets. African countries, he said, should also promote economic and fiscal diversification, including through the landmark African Continental Free Trade Area (AfCFTA).
“AfCFTA will assist with Covid-19 recovery but expected benefits from AfCFTA will not be automatic. Member states must pursue ratification of the agreement and implement it effectively,” he noted.