Commodity Dependence Worsens For Africa Says UN

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Countries like Uganda are being urged to diversify themselves to manufacturing and high value services such as construction, banking, telecom, and retailing to hedge against volatile commodity prices.


Nine more developing economies became dependent on commodity exports between 2010 and 2015, bringing the total to 91, about two-thirds of all the 135 developing countries, a new UN report says.
 
Published today, The State of Commodity Dependence Report shows that, during the same period, developing countries saw their revenue from commodity exports jump 25% to US$ 2.55 trillion.
 
Commodity dependence can negatively affect human development indicators like life expectancy, education, and per capita income.
About two thirds of commodity-dependent developing countries recorded a low or medium human development index in 2014-2015, according to The State of Commodity Dependence 2016 report by United Nations Conference on Trade and Development (UNCTAD).
 
UNCTAD Secretary-General Mukhisa Kituyi said in the context of dramatic volatility in commodity prices, developing countries will struggle to achieve the Sustainable Development Goals unless they break the chains of commodity dependence.
 
Mukhisa Kituyi observes that many developing countries have been commodity-dependent for the past three decades, and that  it is worrying to see that the numbers are going up. 
The rise in commodity dependence was most noticeable in Africa, where seven new countries entered the category in 2014-2015, bringing the total to 46. Over the same period, the number remained stable at 28 in Latin America and the Caribbean, while the region of Asia and Oceania saw its total increase by two to 17.
 
Regarding the type of exports, dependence was predominantly on agricultural products. This was the case for 41% of the countries, while 30% depended on fuel exports and 23% on minerals, ores and metals.
 
More than half of the countries depending on agricultural commodity exports, and two thirds of countries relying on minerals are African.
 
United Nations Conference on Trade and Development defines a country as dependent on commodities when its commodity exports account for more than 60% of its total merchandise exports in value terms.

Uganda is one of the commodity-dependent developing countries in where at least forty-six e countries fall in the same category.
Five leading commodity markets for Uganda according to the UNCTAD report include European Union, East African Community through intraregional trade, United Arab Emirates, Democratic Republic Of Congo, China and United Arab Emirates.
Uganda's  food imports as a share of total commodity imports in 2015 amounted to 608 million dollars or 33% of commodity imports.
Total fuel imports in as a share of total commodity imports amounted to 998 million dollars in 2014/2015.
Total commodity imports in 204/2015 was over 6.5 trillion shillings or $Us 1 816 million. The six trillion shillings could finance all the Local government budge for about two years.
Commodity dependence according to Paul Collier of the World Bank observed that dependence on commodities is unsustainable because of the highly volatile prices and that in most cases, the rents generated by primary commodities have been associated with poor governance.
 
Countries like Uganda are being urged to diversify themselves to manufacturing and high value services such as construction, banking, telecom, and retailing to hedge against volatile commodity prices.

Two out of three developing economies according to studies are hostage to price changes in agricultural products, fuels and other commodities, and their growth perspectives were put in check in 2011 when a decade-long commodities boom came to a crashing end
 
 
 

 

Mentioned: ministry of trade