PRESS CONFERENCE ON AFRICA’S ECONOMIC DEVELOPMENT

PRESS CONFERENCE ON AFRICA’S ECONOMIC DEVELOPMENT

Even as developing countries as a whole had been extremely successful in expanding their share of manufactured goods in global trade, accounting for some 70 per cent of developing country exports, Africa had not shared in that success, Jan Kregel, Senior Adviser, United Nations Conference on Trade and Development (UNCTAD), told a Headquarters press conference today.

Mr. Kregel was launching a report entitled “Economic Development in Africa:  Trade Performance and Commodity Dependence”, which was also releasedin Geneva, Brussels, London, and other major centres.  According to the report, the majority of African countries were boxed into a trading structure that subjected them to terms-of-trade losses and volatile foreign exchange earnings that severely impeded their effective macroeconomic management and stunted capital formation.  That hampered efforts to diversify into more productive activities and added to their debt burden.

The original report, he said, at the inception of UNCTAD some 40 years ago this year, had singled out three particular areas of importance:  improved primary commodities, exports and earnings, so that developing countries can increase imports; the diversification of their exports from primary commodities to manufactured goods; and increasing aid to developing countries, in order to allow them to finance the external deficits that would be required to meet development goals, and also to buy the amount of imported capital goods required to meet the investment targets for those particular goals.

Mr. Kregel said that, 20 years ago, primary commodities accounted for about three quarters of developing country exports.  Since then, the continent had not successfully expanded its manufactured goods exports.  In fact, Africa’s share in world manufacturing exports fell from 6.3 per cent in 1980 to 2.5 per cent in 2000.

Thus, the continent’s rate of expansion had led to a declining share in overall manufactures, because other developing country regions had expanded much more rapidly.  The rate of increase in Asia, for example, was 14 per cent.  And even in Latin America, where there had been extreme difficulty in expanding into manufactured good export sales, the rate of expansion was around 12 per cent.  The first and most important conclusion of the report was, therefore, that, judging by UNCTAD’s three original objectives for development, African countries were still in the initial objective -- that of trying to improve primary commodity sales and primary commodity earnings in order to finance development.

He said Africa also tended to have a declining share in global exports of primary commodities, meaning that not only was the continent not participating in the expansion of manufactured exports by developing countries, its share of primary commodity exports had also been falling.  That was largely due to the fact that Africa’s exports tended to be primarily in the area of traditional primary commodities –- cocoa, coffee, tea, and cotton.  The rates of growth for those commodities had been declining.  So, they faced declining sales in particular export markets.

In those categories classified as the most dynamic primary commodity products, Africa produced only one -– knitted undergarments.  But even in that, its participation was limited to just two countries, Mauritius and Swaziland, and accounted for less than 2 per cent of Africa’s total exports.  So, not only had Africa remained commodity dependent and had fallen behind relative to other developing countries, but it had also fallen behind in terms of the commodity composition of those exports, he added.

He said the last aspect of this year’s report -- the fourth in the series of reports by UNCTAD from the Office of the Special Coordinator for Africa –- looked at policy implications.  That noted the striking similarities between the policy implications that came up in the current report and those contained in the original UNCTAD-1 conference recommendations and final report -- in particular, the initiatives for bringing about the stabilization of primary commodity prices and attempting to reduce the volatility of primary commodity prices.

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