- April 24, 2023
- Posted by: AITRC 2
- Categories: News, Blog, Report
WEEKLY TRADE POLL FOR AFRICAN COUNTRIES
APRIL 2023
Africa is a continent rich in natural resources, including minerals, oil, gas, arable land, and biodiverse ecosystems. The potential of these resources to drive economic growth and development in Africa has been a subject of much discussion and debate because natural resources play a key role in the economies of many African countries and are essential to the rural poor’s way of life. Large portions of Africa’s population depend on these resources for income and survival, and they are also the main generator of tax revenue and national wealth. However, the actual utilisation and management of these resources have varied across the continent, leading to mixed results in terms of leveraging natural resource potential for growth and development. In fact, with the appropriate strategy and policy, it is argued that natural resources can be exploited to change an economy from one that depends on exports of basic commodities to one with a sizable manufacturing base.[1]
In some cases, the extraction and export of resources have led to economic growth and infrastructure development. Countries like Angola, Nigeria, and South Africa have experienced periods of significant economic expansion due to their natural resource sectors. Foreign direct investment, job creation, and tax revenues from resource extraction have played a role in these countries economic progress.
However, there have also been challenges associated with resource extraction, where countries rich in natural resources experience economic stagnation or decline, which has affected some African nations. Issues such as corruption, mismanagement, lack of transparency, and limited diversification have hindered the transformative impact of natural resources on overall development.
WEEKLY AFRICA TRADE POLLS (THIRD WEEK APRIL, 2023)
As a result , Africa International Trade and Commerce Research (AITCR) conducted a trade poll for African countries to evaluate public opinion and obtain feedback on how well African countries and stakeholders have used their natural resource potential to propel growth and development. Findings from the poll reveal that 85 percent of the respondents assert that Africa’s utilisation of its natural resource potential to boost growth and development is “underutilised”, 7 percent opined that Africa’s utilisation of its natural resource potential to boost growth and development is “up to 30%”, 4 percent said that Africa’s utilisation of its natural resource potential to boost growth and development is “up to 60%”, while 4 percent averred that Africa’s utilisation of its natural resource potential to propel growth and development is “fully utilised”. Thus, the poll verified that most of the vast African resources are underutilised to support growth and development. The findings indicate that in order for African countries to transform their natural resources into a blessing, they must concurrently increase investments in human capital and battle against mismanagement and corruption.[2]
Africa’s abundance of natural resources has not led to the expected economic growth and development due to several factors, including
- Dutch Disease: where increasing exchange rates and wages push out current export and import-competing sectors;
- Rent-seeking by elites and others who could have otherwise focused on employment-creating and value-making ventures;
- Volatility of prices and the asymmetry of adjustment;
- Inflexibility in labour, product, and asset markets;
- Corruption, mismanagement and policy inconsistency.
The analysis thus demonstrates that resource-rich African countries have not completely reaped the benefits of having large natural resources. However, effective utilisation requires strategic policies and actions to promote diversification, sustainable resource management, value addition, infrastructure development, and regional cooperation. By adopting the under-listed recommendations, African countries can harness their natural resources to achieve inclusive and sustainable economic growth while preserving their natural heritage for future generations.
DIVERSIFICATION AND VALUE ADDITION:
African countries should focus on diversifying their economies beyond extracting and exporting raw resources. Governments should provide incentives and support for industries that add value to raw materials and promote local entrepreneurship and innovation. Emphasising value addition through processing and manufacturing can create more employment opportunities and increase the overall value derived from natural resources.
SUSTAINABLE RESOURCE MANAGEMENT:
African countries need to strengthen their resource governance frameworks to avoid the resource curse and ensure sustainable development. Transparent and accountable management of natural resources, including robust regulatory frameworks, anti-corruption measures, and revenue management systems, is crucial. The adoption of international best practices, such as the Extractive Industries Transparency Initiative (EITI), can enhance transparency and promote responsible resource extraction.
INFRASTRUCTURE DEVELOPMENT:
Investments in infrastructure are essential to unlock the potential of natural resources. Adequate transportation networks, power supply, and logistics infrastructure are critical for efficient resource extraction, processing, and distribution. Governments should prioritise infrastructure development in resource-rich regions to facilitate value chains, attract investment, and improve connectivity with domestic and international markets.
STRENGTHENING AGRICULTURE:
African countries should prioritise agriculture as a key growth and food security driver. Enhancing agricultural value chains and facilitating market access for farmers can contribute to income generation, employment creation, and poverty reduction. Policies should improve access to finance, support smallholder farmers, promote modern farming techniques, and invest in rural infrastructure.
CONSERVATION AND SUSTAINABLE TOURISM:
Countries should invest in conservation efforts and sustainable tourism management to protect natural resources and generate economic benefits. Strengthening protected areas, combating wildlife crime, and involving local communities in conservation initiatives can support sustainable tourism development. Governments should also promote responsible tourism practices and develop strategies to ensure that communities benefit equitably from tourism revenues.
RENEWABLE ENERGY TRANSITION:
African countries should accelerate the adoption of renewable energy technologies to address energy poverty, reduce carbon emissions, and promote sustainable development. Governments should create an enabling environment for renewable energy investments by providing incentives, streamlining regulatory processes, and encouraging public-private partnerships. Access to financing mechanisms and capacity-building initiatives can also support the development of renewable energy projects.
REGIONAL COOPERATION:
Collaboration among African countries is crucial for maximising the potential of natural resources. Regional integration and cooperation can facilitate cross-border infrastructure development, promote knowledge sharing, and enable resource-sharing agreements. Joint research and technology transfer efforts can enhance sustainable resource management practices and facilitate the exchange of best practices among countries.
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[1] https://www.afdb.org/fileadmin/uploads/afdb/Documents/Publications/(E)%20AfricanBank%202007%20Ch4.pdf
[2] https://www.sciencedirect.com/science/article/abs/pii/S0301420718304033
