Finance, monetary affairs, economic planning and integration ministers of African countries began discussion in Addis Ababa, this morning on how the continent brings an end to its suffering from global commodity prices decline mainly caused because of its reliance on primarily commodity export.
The decline in global commodity prices is leading several African countries to current account deficit as the countries still rely on raw commodity export, said Mr. Carlos Lopes, UN Under-Secretary-General and Executive Secretary of Economic Commission for Africa (ECA).
“Low commodity prices in particular are causing lower export revenues, fiscal imbalances and current account deficit across several African countries. In 2015, Africa had the highest negative current account balance over the past ten years,” said speaking at the opening of the 9th conference joint African Union and UN Economic Commission for Africa (ECA).
He mentioned World Bank’s survey, which found out that 42 of the 46 commodities in 2015 were traded at their lowest level since the early 1980s. “As a result of its dependency on imports and its reliance on commodity and natural resources exports and on small number of buyers for its export, African countries are highly exposed to volatility and trade shocks,” he said.
Prime Minister Hailemariam Desalegn of Ethiopia, who also addressed the meeting stated that the downturn in commodity prices threaten the strong growth experienced by most African countries in the past decade and half.
“…In this context pursuing industrialization and structural transformation agenda in imperative to strengthen the fundamentals of our respective economies,” he suggested as the solution that takes Africa out of primary commodity (mainly agricultural products and minerals) prices dependency.
From it was $110 in 2014 the price of a barrel of crude oil dropped down to around $40 this year. Likewise metal and agricultural commodities prices have fallen by 17% and 16% on average in 2015, respectively.
“Our ministers of finance and economic planning as well as our central banks, must help to foster conditions to support industrial policy,” Dr. Nkosazana Dlamani Zuma, Chairperson of AU Commission said, stressing the need for the continent to create millions of jobs each year Africa’s youth bulge to an opportunity.
“…We cannot look to others to fund our industrialization, because they are unlikely to do so. We must therefore get on with the programs set out in the strategy for Accelerated Industrial Development of Africa implementation, namely facilitating access to credit and private financial resources; regional stock markets, investments by development finance institutions; and harnessing resources in pension and other funds for industrialization,” she said.
The ministerial meeting, which began with experts gathering last Thursday, is set to be concluded tomorrow.