Africa should redefine its role in global economy AFRICAN governments are looking for the most feasible ways for their nations to flourish in the global economy while avoiding the susceptibility and economic anxieties created by volatility in commodity prices.
African economies are commodity-reliant, with highly volatile income owing to the market’s price bust and boom cycle.
The adverse effects of disruptions frequently exacerbate the vulnerability of African economies. The disruptions include the 2008-2009 global financial crisis, the 2020 COVID-19 pandemic as well as perhaps the more recent political tensions in Eastern Europe, that is Russia’s invasion of Ukraine. These shocks cause disturbances in international trade, greater financial volatility and food insecurity.
The consequences of these crises have thrown light on an ancient developmental concern in Africa: Commodity dependency, which indicates a high reliance on primary products in nations’ exports. When a country’s percentage of primary commodity exports to total merchandise exports exceeds 60%, it gets classified as commodity-dependent as per the United Nations Conference on Trade and Development definition.
For a long time, the fundamental policy prescription for dealing with this situation has been for commodity-dependent nations to utilise their export revenues to design structural transformations that would lead to economic diversification. As realistic as this policy proposal may appear, implementing it would be challenging.
The African Continental Free Commerce Area (AfCFTA) was recently established to promote intra-African trade and industrial growth by diversifying exports and developing regional value chains.
However, suppose the AfCFTA is to realise its full potential in diversifying and inclusively transforming African economies.
In that case, countries must establish innovative export strategies and policies, identify fresh opportunities for export diversification, and work towards greater and much more diversified involvement in global trade.
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Many resource-rich economies in Africa have poor inclusive growth and development results. One defining trait of African resource richness is the lack of economic and export diversification.
On average, the export structure of resource-rich nations in Africa is more concentrated than that of resource-poor ones.
There has been considerable economic progress in many regions of Africa. The observed expansion emanated from a commodities super-cycle for over two decades.
Despite attempts and initiatives to address such concerns, many African nations have found it challenging to sustain robust development, particularly during times of shocks and other vulnerabilities, and, more crucially, to translate such progress into more inclusive change.
The necessary policies, laws and institutional capabilities must be in place.-The Exchange
Steep depreciation of Zimdollar driving price spikes ACROSS deficit-producing areas, Integrated Food Security Phase Classification (IPC, Phase 3) outcomes are beginning to emerge as these areas enter into the 2022/23 lean season months earlier than normal due to significantly below average 2021/22 crop production and macroeconomic instability.
Meanwhile, relatively better 2021/22 harvests and above average 2020/21 carryover stocks in surplus-producing areas will continue to drive minimal and stressed outcomes through January 2023.
Urban areas are expected to continue to be stressed throughout the outlook period due to price volatility.
In July, the Zimdollar continued to depreciate sharply against the United States dollar with the auction exchange rate climbing to $416 as of July 29 from $366 at the end of June and the interbank exchange rate increasing over the same period to $443 from $365.
However, parallel market exchange rates saw the steepest increases, jumping to around $800 at the end of July from $650 a month earlier.
Although the Zimbabwean economy is a multi-currency system, with the Zimdollar, South African rand and US dollar in regular use, there is a growing demand in both the formal and informal sectors for payments to be only in foreign currencies, given the volatility of the Zimdollar.
Despite government’s calls to benchmark commodity prices using interbank rates and despite the increasing risk of losing operating licences if they use exclusive US dollar pricing, most businesses have continued to pursue US dollar transactions to limit financial losses.
However, limited supply of forex is forcing them to use parallel market exchange rates to access US dollars and this increased demand has contributed to spiking parallel market exchange rates and sharp Zimdollar price increases for food and non-food commodities.
Furthermore, there are fears of shortages for some commodities if manufacturers, wholesalers and retailers hold back supplies and chose not to sell unless they are able to do so in US dollars.
As most poorer households typically earn income in Zimdollars and have limited access to US dollars, exclusive US dollar pricing and high Zimdollar price volatility is reducing purchasing power and access to food.
Due to these liquidity challenges, households in rural areas are slowly resorting to bartering using grains and livestock to access certain goods and services.
In addition, most poorer households have, therefore, begun intensified existing livelihood strategies to cope.
This includes petty trade, such as the selling of smaller re-packaged food and household items, the intensification of vegetable production for those with access to water, and artisanal mining activities.
However, most livelihood strategies remain constrained by low demand, limited capital and high transportation costs.-FEWS NET
Zim blows chance to improve health sector post-Mugabe IN November 2017, President Robert Mugabe was forced to resign after 37 years in power.
He left behind a legacy of disastrous government campaigns and policies which rolled back social, economic and cultural progress for Zimbabweans.
His successor and former Vice-President Emmerson Mnangagwa, during his ascent to power, indicated that genuine change was coming, pledging to rebuild the country and “protect and promote the rights and people of Zimbabwe”.
However, some were sceptical after Mnangagwa made his Cabinet appointments, expressing worry that his government would be a continuation of Mugabe’s.
Further, Mnangagwa was associated with many of the harmful reforms committed under Mugabe’s rule that led to the collapse of the healthcare system.
Mnangagwa was supposed to make good on his lofty, post-Mugabe promises by promoting economic reforms in order to have a shot at transforming the healthcare system.
He was supposed to address the key challenges in public health.
Currently, Zimbabwe’s health sector is understaffed and overburdened.
Since 2000, an estimated three million people, including many health care workers, have left the country in search of economic opportunities and better working conditions abroad.
According to the World Health Organisation, there is an overall density of only 1,23 health workers per 1 000 people, which is half of the estimated minimum density of health workers needed across sub-Saharan Africa.
In 2008, for instance, the health workforce was so small that a fast-spreading cholera outbreak contributed to over 4 000 deaths and an estimated 90 000 infections within months.
Zimbabweans continue to experience challenges in combating communicable diseases such as tuberculosis, diarrhoeal diseases and HIV and Aids.
The HIV and Aids pandemic continues to be a significant public health problem in Zimbabwe, placing a tremendous strain on the health sector.
In 2016, approximately 14% of the adults in Zimbabwe were living with HIV and Aids, the sixth highest HIV and Aids prevalence in sub-Saharan Africa.
The Health and Child Care ministry estimates that 45% of women who died of pregnancy-related complications were HIV positive.
Although maternal mortality has declined from 960 deaths per 100 000 live births to 614 deaths in recent years, the ratio is still unacceptably high.
The high disease burden from preventable diseases is characteristic of most low- and middle-income countries, and is particularly a result of inadequate health financing.
With billions of dollars in domestic debt and millions more in stolen public funds, Zimbabwe has in recent years relied on funding to support public services.
In fact, the United States Agency for International Development has invested nearly US$100 million annually in Zimbabwe to support health programmes that provide treatment for and prevention of diseases and help make healthcare services more accessible.
To address these challenges, government will need to first establish economic stability.
Second, Mnangagwa must ensure government prioritises financing the public healthcare system and developing a comprehensive health strategy that targets the greatest health problems.
Such investment in improving health services will require international support.
Zimbabwe is facing considerable challenges, but if Mnangagwa takes re-engagement seriously and if global partners continue to work with the health sector, the country will have the tools to make remarkable progress.-Michelle Gavin
