Africa-Press – Ethiopia. Commodity markets in Africa are expected to remain volatile in the coming months following the persistence of Covid-19 constrains in the supply chain and other global economic pressures, according to Economic Commission for Africa (ECA).
The Economic Commission for Africa (ECA) Director of Regional Integration and Trade Division Stephen Karingi made the remark during Price Watch session with African finance ministers.
On the occasion, Karingi said ‘Commodity prices amid COVID-19: prospects and policy implications for African economies.’ This is the 5th in the series of presentation sessions of price development in a specific sector compiled and disseminated by the ECA Price Watch Centre for Africa.
According to him, African economies remain largely dependent on primary commodities exports and that 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.
“High commodity dependence is associated with lower human development indicator across the developing world,” said Mr Karingi, adding “limited diversification and reliance on commodities sector are detrimental to long-term development in resource-rich countries.”
The ECA director noted that the commodities markets in Africa reacted strongly to COVID-19 in early 2020, owing to restrictions, economic slowdown and uncertain outlook.
The downside risk factors include the gloomy economic prospects, especially in industrialized economies if the new COVID-19 variant is not controlled; and slower growth in major commodity importing countries.
He recommended that countries should have an overhaul policy -fiscal, trade, human capital – to reduce strong dependence to global commodity markets. African countries 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.