UNCTAD Secretary-General's
High-Level Multi-Stakeholder Dialogue on Commodities
in the context of UNCTAD XII
28-29 January 2008
African Policy Responses
to the Commodity Price Boom
By
Mr. Christopher L. Gilbert
Professor, University of Trento, Italy
& Birkbeck, University of London, UK
The views expressed are those of the author and do not necessarily reflect the views of UNCTAD
African Policy Responses to the
Commodity Price Boom
Christopher L. Gilbert
(University of Trento, Italy, and
Birkbeck, University of London, UK)
Prepared for UNCTAD Secretary-General's High Level MultiStakeholders Dialogue on Commodities in the context of
UNCTAD XII, Geneva, 27-28 January 2008
The Changing Face of Africa
• The past two decades have seen Africa evolve from
being primarily an exporter to traditional agricultural
products to become an exporter of oil, metals and
minerals.
• Africa’s oil exports are now greater than her combined
exports of all other primary products. At the same time,
the majority of African countries are oil importers.
• Metals and minerals have also become much more
important and are more valuable than agricultural
exports. Diamond exports have grown sharply. Gold
exports are static with higher prices offset by declining
yields in South Africa.
Traditional Agricultural Exports
• The prices of Africa’s traditional agricultural exports have
remained on the sidelines of the current boom.
• Coffee has become much less important as coffee prices
have remained low and many producers have
diversified. Only in Burundi and Rwanda does export
concentration remain high.
• Despite only modest price rises, cocoa exports have
performed better. African producers have maintained
competitive advantage and market share.
• Cotton production continues to grow in francophone
Africa, despite poor prices, in part due to subsidies in
developed economies.
Who are the winners and losers in
Africa?
The winners are the oilexporting countries, and, to
a lesser extent, exporters of
metals and minerals
The losers are oil-importing
exporters of traditional
agricultural commodities.
The map shows projected
annual gains and losses
($m, 2000 prices) for 200610 relative to 1996-2000.
On a per capita, per diem
basis, the biggest gainers
are Equatorial Guinea,
Gabon, Angola, Botswana
and the Congo Republic.
The biggest losers are
Mauritania, Djibouti, South
Africa and Mozambique.
The winners win more than
the losers lose.
Many of the poorest
African countries are
neither major gainers nor
major losers.
Policy Options – Coffee
• Although prices have
recovered from crisis
levels, coffee is only
moderately remunerative.
• Consumption growth
remains slow.
• Production costs are high
relative to Brazil and
This is not the right crop in
probably Vietnam.
which to encourage
investment.
Policy Options – Cocoa
• Africa remains the
dominant producer.
• Prices are good, although
not spectacular.
• Demand growth is strong.
• Existing trees are growing
old.
Governments of current and potential cocoa-producing
countries should work with the major multinationals to plan
for future production growth.
Policy Options – Cotton
• Prices remain relatively weak,
possibly as the result of continued
high levels of subsidy in
producing-consuming countries.
• Price prospects depend crucially
on continuing trade negotiations.
Even if curtailment of subsidies
only raises long run prices
modestly, Africa will be able to
take a larger share of the total.
• Quality is an important issue in
cotton. African ginners must work
to guarantee consistently high
quality levels.
Countries in the Sahelian
region remain highly
dependent on cotton,
which is the only realistic
export crop. Successful
conclusion of the trade
negotiations is the single
most important factor.
Policy Options – Natural Rubber
•
•
•
•
•
Industrially-consumed commodities, in particular natural
rubber, have been strong over the boom.
Rapid motorization in Asia suggests demand growth will
remain fast.
Africa is only responsible for a small proportion of world
rubber production, but has considerable potential.
The Asian experience is that rubber is better suited to
large farms or plantations rather than African-sized
smallholdings. This poses a problem.
Nevertheless, African governments should look at the
potential for rubber production.
Policy Options – Biofuels
•
•
•
•
Sugar, soybeans and vegetable oils are the major
biofuels. Africa is not a major exporter of these crops.
Europe and North America have yet to make a serious
commitment to biofuels. This makes it difficult to
confidently predict good export growth prospects.
There is greater potential in domestic use of biofuels in
African countries currently dependent on petroleum
imports. Locally produced vegetable oils offer the
greatest potential - these can be used as diesel additives in existing vehicles with only minor modification.
Governments and multilaterals should give this issue
urgent attention to this issue.
Policy Options – Metals and Minerals
• Countries which have not
undertaken comprehensive
geological surveys should
urgently do so.
• Artisanal mining is important,
particularly for gold, diamonds
and other gemstones.
• This sector has received
inadequate attention from
governments and agencies, in
part because of environmental
concerns and in part because
it is not always within the law.
Governments need to provide a
best practice legal framework
for small-scale mining which
encourages formalization
without discouraging seasonal
working.
Policy Options – Small Scale Mining
• Small scale mining offers
important opportunities
for service companies
and local entrepreneurship.
• Relative to agriculture,
small-scale mining is
capital-intensive.
Financing structures
should be explored.
Criminality can be a problem.
Miners need accessible and
transparent arrangements for
selling their production.
Resource-Rich Countries
•
•
•
•
•
These countries face a different set of problems.
There is a concern that large resource revenues can
undermine democratic accountability. Governments and
companies should ensure maximum transparency.
Taxation structures should be designed to minimize the
probability that one or other party will choose to renege.
Governments should save high resource revenues if their
economies’ absorptive capacity is limited.
Resource revenues can crowd out agricultural production, in
particular of export crops. Governments should find ways of
supporting farmers in order to maintain rural livelihoods.
To avoid “Dutch Disease” savings should be channelled into
overseas assets.
Thank you for
your attention