Online Reporter
The Herald
22 April 1988
AFRICA’S economic vulnerability to volatile commodity prices, drought, the growing debt burden and environmental issues is highlighted in the latest economic report on Africa.
Prepared by the African Development Bank and the Economic Commission for Africa, the report was released this week and indicates that only if these issues were tackled, along with policy reforms, would sustained economic growth be possible in the continent. Drought, however, remains a major imponderable.
On commodity prices, it said that although some of these had recovered last year, prices were only at 70 percent of their 1980 levels and the purchasing power of exports was only 66,4 percent of the 1980 level. It was therefore estimated that between 1981 and 1987, developing countries in Africa had, in effect, lost US$89,7 billion in export earnings while their import gain, arising from the fall in import prices over the same period, amounted to US$44,4 billion.
The general outlook for this year was that there would be no major improvement in most commodity prices.
While this was happening the inflow of external financial resources such as credits and loans had been affected by mounting debt repayment obligations. This had forced many countries either to fall into arrears or cut back on imports, thereby further frustrating the recovery process. What was needed was a realistic debt strategy consistent with the aim of long term growth, as had been recommended by the Organisation of African Unity late last year.
This would be essential to allow the steps already taken, or planned towards policy reform to be kept in place until they could work, said the report. It recognised that some of these reforms posed social difficulties for the countries involved, but these could be lessened if debt service was set at a manageable level “taking into account the effective payment capacity of these countries as well as their development needs”.
Lessons for today:
- The report is saying that Africa’s economies were weak and vulnerable in the 1980s because of several interconnected problems. Africa depended too much on commodities. It relied on exports like minerals, coffee, tobacco, oil, cocoa, and cotton. When global commodity prices fell, African countries earned far less money. This meant countries earned less foreign currency, making it hard to buy imports like machinery, fuel, and medicines.
- Debt became a heavy burden, African countries had borrowed money earlier, but now export income had dropped while debt repayments were rising, as a result, many countries failed to pay debts on time, cut imports and slowed economic recovery.
- Drought worsened everything. Drought reduced agricultural output, exports, and food security and it was unpredictable, making planning difficult.
- Africa did not control world prices, global demand, weather patterns yet these factors deeply affected livelihoods. The report admits reforms cause social hardship, especially when people already struggle due to drought and unemployment.
- This article still matters today even though it was written in 1988, the challenges discussed, commodity dependence, debt vulnerability, climate shocks remain relevant. Africa’s development requires diversification, fair global trade, sustainable debt, climate resilience, and people-centred reforms.
