Wednesday, March 20, 2013

African Commodity Export profile

While the African continent is saturated with tapped and untapped natural resources, oil is today its leading export commodity. In 1956, Nigeria’s Niger Delta
(Oloibiri, in today’s Bayelsa State)became the first place oil was drilled in commercial quantity in Africa by the Anglo-Dutch company, Shell.

Crude oil has since remained Africa’s biggest commodity export with the continent holding 9.6 percent of total global reserves. Five countries – Libya, Nigeria, Angola, Algeria and Sudan control 90 percent of the continent’s oil reserve. Libya and Nigeria control over 60 percent of this, and account for 3.3 and 2.8 percent respectively, of the global reserve, according to a recent African Development Bank report. The same report also estimates that Africa’s reserve of crude oil rose from 53.3 billion barrels in 1980 to 117 billion barrels in 2005 and 127.7 billion barrels in 2009. New oil discoveries are still being made in the continent, with the latest in Ghana.

Africa is also a major exporter of gold, accounting for up to 30 percent of total global production of the precious metal. South Africa is the largest gold exporters in the continent add among the top three in the world Ghana is the continent’s second largest gold producer. Other major exporters include Zimbabwe, Tanzania, Mali, among others.

Diamond is another key commodity export from Africa. There are 10 major diamond producing nations in Africa, including Botswana, Democratic Republic of Congo, South Africa, Angola, Namibia and Ghana. Botswana is Africa’s biggest producer in the global diamond industry valued at an estimated $158bn per annum.

Also, Cocoa is another commodity export where Africa’s excels. Ivory Coast, Ghana and Nigeria are the biggest exporters in the continent. Ivory Coast is the world’s largest cocoa exporter, accounting for about 30-40 percent of the world market. The three West African countries above are ranked among the top five global producers and exporters of cocoa, a thriving commodity that has become treasured around the world especially for the manufacture of chocolate, pastries and other highly sought after consumables.

Uranium is yet another major export commodity from the continent, with Namibia and Niger Republic as the continent’s biggest producers and occupying the 5th and 6th positions in the list of the world’s biggest exporters, according to the world Nuclear Association.

So much controversy surrounds the management of proceeds from African natural resources. Agitations for resource control and more equitable distribution of earnings from commodity exports have resulted in civil wars and socio-political unrests.

These bloodsheds have earned Africa’s vast natural wealth the derogatory description of natural resource curse’.

However, several African economies are making progress in changing this unpleasant perception with some significant improvements in the management of these resources. In the last decade, a good number of them have leveraged on this natural capital to achieve strong, uninterrupted growth, resilient in the face of severe global recessions. Improving production capacities at home and favourable prices of their commodities in global markets have helped commodities exporters to build much needed socio-economic infrastructure and nurture their bourgeoning democratic processes. Though they are also often set back by price slumps, some of them are now better placed to translate their robust export earnings o strong economic growth.

While questions persist on how far Africa’s improving economic fortune has helped in poverty alleviation, the continent at least now has greater economic prospects. For those that succeed in entrenching visionary, transparent and purposeful leadership, strong economic advancement sustained over the last decade could signal the beginning of greater things to come.

Culled from Zenith economic quarterly July 2012 and written by Eunice Sampson

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