Commodity dependence worsens, says UN report


Malawi’s continued dependence on commodity for exports has doubled in the past 20 years, a situation United Nations Conference on Trade and Development (Unctad) says could slow progress towards meeting Sustainable Development Goals (SDGs) by 2030.

Unctad defines a country as dependent on commodities when they account for more than 60 percent of its total merchandise exports in value terms.

The 2019 Unctad report titled State of Commodity Dependence shows that other commodity-dependent countries, including Malawi, increased from 92 between 1998 and 2002 to 102 between 2013 and 2017 with more than half of the world’s countries (102 out of 189) and two thirds of developing countries dependent on commodities.

More than half of the world’s countries and two thirds of developing countries are dependent on commodities, the report indicates.

Figures from Unctad indicate that merchandise export value jumped from $433 million (about K320 billion) in 1995 to $970 million (about K718 billion) in 2017 with commodity export valued at $386 million (about K286 billion) and $770 million (about K570 billion), respectively.

Tobacco, sugar, molasses, honey and tea remain the top exports while European Union, South Africa, Zimbabwe, United States of America and China are leading destination markets for commodity exports.

The report notes that commodity-dependent developing countries are vulnerable to negative commodity price shocks and price volatility with average commodity price levels between 2013 and 2017 being below their peak.

This contributed to an economic slowdown in 64 commodity-dependent countries, with several of them going into recession.

As growth decelerated, the fiscal situation in many of these countries deteriorated, resulting in the accumulation of public debt.

“Given that commodity dependence often negatively impacts a country’s economic development, it is important and urgent to reduce it to make faster progress towards meeting the Sustainable Development Goals,” said Unctad secretary general Mukhisa Kituyi in the foreword of the report.

In Malawi, agriculture sector contributes approximately 80 percent of export earnings, according to National Statistical Office (NSO) figures.


Share This Post