The United Nations Conference on Trade and Development (UNCTAD) has launched the Commodities and Development Report 2017 pinning Uganda and other 15 COMESA member countries for continued export of commodities, leading to them recording low levels of development and high poverty rates.
The report bases 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.
Meanwhile, the report says Egypt, Swaziland and Mauritius have diversified their economies and are not categorized as commodity export dependant countries. COMESA officials have since proposed that a joint study be conducted with UNCTAD to come up with permanent solutions to the dependency of commodities for export.
The report showcases 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.
The report urges countries to introduce 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.
New report pins Uganda, others on export of commodities
