The United Nations Economic Commission for Africa (UNECA) has forecast that commodity markets in Africa would remain volatile in the coming months, following the persistence of COVID-19 challenges in the supply chain and other global economic pressures.
In a statement issued on Thursday, UNECA quoted Stephen Karingi, director of regional integration and trade division at UNECA as saying that African economies remain largely dependent on primary commodities exports.
“Although the commodity sector in most African economies is a significant source of national revenues, high dependence on the sector means high vulnerability to the vagaries of international markets and volatile prices passed on to local markets,” Karingi said.
The session, which was titled “Commodity prices amid COVID-19: prospects and policy implications for African economies”, also revealed commodities markets in Africa reacted strongly to COVID-19 in early 2020 owing to restrictions, economic slowdown and an uncertain outlook. From mid-2020, a significant rebound in commodities prices brought them above their pre COVID-19 levels, with short term volatilities partly supported by expansive macroeconomic policies.
“High commodity dependence is associated with lower human development indicators across the developing world. Limited diversification and reliance on commodities sectors are detrimental to long-term development in resource-rich countries,” Karingi said.
Oliver Chinganya, a director at UNECA, noted while the macroeconomic effects are well known, the trends of commodity prices and their influence on the revenue of African countries require delving into deeper analysis to have a good grasp of the situation.
MG/abj/APA