Value-addition will spur faster industrialisation of our economy

The latest UNCTAD data show that more than 90 developing economies around the globe are dependent on commodity exports, and form a major discussion point at UNCTAD’s eighth Gobal Commodities Forum slated for Geneva on April 23-24.

Participants will be looking at building human skills to add value to raw materials, and in the process provide decent work for them. President Akufo-Addo has reiterated his government’s firm belief that if the economy’s structure is not transformed from a raw commodity exporter to one of value-addition, our fortunes will perpetually be tied to penury.

According to organisers of the conference, moving up the value chain will help commodity-dependent developing countries achieve SDG Goal 4 on professional education, as well as Goal 9 on industrial development.

The theme of the conference is ‘Building Skills for Sustainable Development’, and this theme could not have been more appropriate.

Many developing countries add little value to commodities by transforming them into finished or semi-finished goods, and struggle to diversify into other manufacturing sectors – which constrains industrialisation of their economies, UNCTAD has observed.

It goes on to add that “these countries rely on exports of unprocessed commodities – such as agricultural produce, mineral ores or crude oil – for 60% or more of the total value of their merchandise exports”.

With volatile prices wreaking havoc on the macroeconomic stability of these economies, one realises that the remedy lies in transforming their economies to ones which produce finished and semi-finished goods in order to stay competitive.

UNCTAD however notes that the mineral, oil and gas sectors usually provide these developing economies with some limited technology transfer and skilled jobs which we are able to tap into – but it is not significant enough to transform the structure of these economies.

It however notes that for both agricultural and mineral value chains, value-added activities generally offer the greatest potential for technological and human capital development. Hence, we ought to pursue this line of action so that we can gradually industrialise the economy.