A lecturer with the Department of Economics at the University of Ghana Dr. Priscilla Twumasi-Baffour, is urging government to reduce the continued dependence on commodity exports and seek diversification strategies to mitigate the adverse effects of price volatility on the international market post COVID-19.
According to her, commodity dependence can negatively affect economic growth and welfare in the short and medium terms, as it increases the vulnerability of commodity-dependent countries to negative commodity price shocks.
Speaking on Citi TV’s current affairs programme, The Point of View, she called on government to come up with strategic ways to develop domestic production and formulate government policies to safeguard the economy in unpredictable circumstances.
“I think that government needs to think critically of ways of trying to insulate the economy from commodity dependence. Generally, commodity price falls are not surprising. But economies are basically demand driven, so once demand is dampened, there is a rippling effect, then a multiplier effect. And it brings us to the old advice that we keep indicating that Africa needs to be strategic and insulate its economies away from commodities because when you look at the data, you can observe that countries that are less commodity dependent are a bit more insulated or in a way they are able to adjust to the shocks better than countries that are not,” she said.
On the economic potential of the African continent, she said countries needed to focus on how to mobilise domestic resources as the continent was under-utilized.
She however expressed optimism that the situation could be reversed, and stressed the need for developing countries to escape commodity dependence.
Ghana’s main exports are gold, cocoa beans and timber products. Others include tuna, aluminum, manganese ore, diamonds and horticulture.