Africa must reduce its dependency on raw material exports and imports

05/11/2015
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African experts attending the 10th African Economic Conference in Kinshasa from November 2 to 4, called on African countries to reduce their excessive dependency on raw material exports and imported consumer goods, as the only viable way to reduce poverty and social inequality on the continent.

The experts issued this recommendation during an extremely productive session entitled “Inclusive Growth and Structural Transformation for Poverty Reduction in Africa”.

During a presentation entitled “Dependency on raw materials and human development”, Burundian researcher Janvier D. Nkurunziza pointed to Africa’s excessive dependency on its raw materials (ores, oil and agricultural products). He explained that, in some countries such as Algeria, oil products account for around 80% of total exports. There are other countries in similar situations.  At the same time, almost all of the continent’s consumer goods and equipment are imported.  

This situation, which Nkurunziza described as “chronic dependency”, is a result of the economic model left behind by the occupying colonial powers – a model designed to make Africa a reliable source of raw materials for their industrial economies. “This dependency has long been an observed phenomenon, but we have never managed to reverse the trend,” he added.

By way of a practical solution to this problem, Nkurunziza called on all profit-based economies in Africa to implement courageous policies and to move towards a model under which raw materials are processed locally. This, in turn, will generate more wealth and employment, and will increase investment in the infrastructure sector – a key driver of growth. He concluded by arguing that the establishment of local processing industries will help to combat unemployment and vulnerability, as well as poverty more generally.

Congolese researcher Kambalé Mirembe made similar points during his address, also highlighting dependency on raw materials as a source of vulnerability. In his presentation, entitled “Does growth contribute to development?”, he pointed to the stable macro-economic situation in his home country, the Democratic Republic of Congo. The figures show that, despite an average growth rate of 5% over the last five years, predicted growth in the region of 8.4% in 2015, and an abundance of mining resources, inequality remains persistent in DRC.

As well as stressing the importance of local processing, Mirembe also called on all countries that receive an income from mining activities to come together to form a dedicated grouping similar to the Organization of Petroleum Exporting Countries (OPEC), with a view to influencing global prices and markets for these materials. “Why has nobody considered this before?” he asked.

Another researcher, Zerihum G. Kelbore, focused on the question of imports – another factor that has a debilitating impact on African economies. In his address, he called on African countries to liberalise their economies with a view to increasing trade and therefore driving down the prices of certain products. His presentation, entitled “Liberalisation, structural transformation and poverty reduction: empirical realities in Africa”, was the subject of heated debate.

Some of the experts in attendance argued that the liberalisation of trade can have harmful consequences and can therefore accentuate poverty. Others argued that local African companies lack the resources to compete with major foreign firms. “Uncontrolled liberalisation will lead to the total destruction of local businesses,” explained one of the participants.

Kelbore argued that, while liberalisation will have some harmful consequences, Africa and its populations will benefit in the long run.