Over-dependence on commodity exports hits Zim development

Source: Over-dependence on commodity exports hits Zim development – NewsDay Zimbabwe December 19, 2017

ZIMBABWE is one of the countries that have continued to record low levels of development and high poverty rates due to over-dependence on commodity exports, the United Nations Conference on Trade and Development (UNCTAD)’s Commodities and Development Report 2017 has revealed.

BY PHYLLIS MBANJE

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 were characterised by low human development.

According to the report presented recently to the Common Market for Eastern and Southern Africa (Comesa) secretariat, 16 countries, which include Zimbabwe, were yet to review and introduce new policies in order to bring about holistic and inclusive development.

The report based 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 are 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.

The Comesa secretariat has since proposed that a joint study be conducted with UNCTAD to come up with permanent solutions against dependence on commodities for export.

The 98-page document showcases results of 10 case studies conducted in 12 countries around the world, namely Costa Rica, Brazil, Argentina, Botswana, Sierra Leone, Ghana, Nigeria, Mali, Burkina Faso, Bangladesh, Indonesia and Zambia.