UN To Nigeria, Others: Diversify Exports To Survive Economic Shocks

The United Nations Conference on Trade and Development (UNCTAD) has African countries to diversify their exports to survive economic shocks from global crises such as the COVID-19 pandemic and the war in Ukraine.

In a new economic report that was published on 14 July, the UNCTAD says African countries can diversify their economies through boosting exports of high-value services, expanding private businesses’ access to financial services, tapping into new financial technologies and implementing effective policies.

Despite decades-long efforts to diversify, 45 out of the continent’s 54 countries remain dependent on exports of primary products in the agricultural, mining and extractive industries. Nigeria is among the countries that major in exportation of primary products like crude oil, cocoa and other products but import processed ones.

Soaring food and energy prices are hitting African countries especially hard as they struggle with the impact of the COVID-19 pandemic, climate change and the war in Ukraine.

“To cope with current crises and insulate itself against future shocks, Africa must diversify its economies,” NCTAD said in the report that was published on its website. The continent of 1.4 billion people is among the least diversified regions in the world with regard to exports.

The orgaisation said fintech holds promise in Africa. It said the recent growth of financial technology (fintech) firms in Africa is spurring more innovation and investment opportunities. Fintech has the potential to help African countries achieve financial and social inclusion.

UNCTAD’s Economic Development in Africa Report 2022 shows that neglecting the potentially transformative role of high knowledge-intensive services, such as information and communications technology, business services and digital financial services, is among the key reasons why export diversification remains a challenge in Africa.

Commodities account for more than 60 per cent of total merchandise exports in 45 of the 54 countries in Africa, leaving them highly vulnerable to global commodity price shocks and undermining the continent’s inclusive growth and development prospects.

83 per cent of African countries are highly dependent on commodities. The NCTAD considers a country to be dependent on commodities when these products make up more than 60% of its total merchandise exports. Based on this definition, 83% of African countries are commodity dependent, accounting for 45% of the commodity-dependent countries worldwide.

Commenting on the report, Secretary-general of UNCTD, Rebeca Grynspan said the report serves Africa’s effective integration into high-end global value chains. “I hope that this report will prove a valuable guide to policymakers to drive the export diversification of goods and services by empowering private businesses to step into new markets and thrive.

Also, President and chair, board of directors, African Export-Import Bank Benedict Oramah said As African countries work to rebuild their economies post COVID-19, economic development in Africa report 2022 brings a new perspective on how the services sector contributes to export diversification and promotes structural change.