African countries have an opportunity to transform their economies through a commodity-based industrialisation strategy that leverages on the continent’s abundant resources, current high commodity prices and changing organisation of global production process.
This is according to a newly-published Economic Report on Africa 2013 (ERA 2013) launched in Abijan, Ivory Coast on Monday.
Such a policy is necessary if the continent is to become a global economic power that can address the challenges of youth unemployment, poverty and gender disparities, says the ERA 2013, co-authored by the Economic Commission for Africa (ECA) and the African Union (AU) Commission.
Unlike the previous report, the ERA 2013 focuses on nine economies as case studies in Africa namely; Egypt, Ethiopia, Ghana, Nigeria, South Africa, Zambia, Kenya, Cameroon and Algeria, said Carlos Lopes, ECA executive secretary.
“Maximizing Africa’s commodities for industrialisation involves adding value to soft and hard commodities and developing forward and backward linkages to the commodity sector,” he said about the key message in the new report themed, ‘Making the most of Africa’s commodities: Industrializing for growth, jobs and economic transformation’.
AU commissioner for economic affairs Maxwell Mkwezalamba said adding value to their raw materials locally could also bring about diversification of technological capabilities, an expanded skills base and deepening of individual countries’ industrial structures.
The report notes that although Africa boasts about 12 percent of the world’s oil reserves, 40 percent of its gold, 80 to 90 percent of chromium and platinum group metals, 60 percent of arable land and vast timber resources, value addition is still limited, culminating in the paltry receipts for the export of its primary commodities.
A case in point is the coffee industry where up to 90 percent of Africa’s total income from the commodity, calculated as the average retail price of a pound of roasted and ground coffee, goes to consuming countries in Europe, North America and Asia.
African producers such as Ethiopia too can benefit more from this, says the report.
While some African countries have made modest progress in forward and backward linkages to their commodity sectors, others still have some ground to cover, according to the report, adding that interventionist State policies and continental initiatives could help improve the situation.