PRESIDENT Edgar Lungu’s call for Common Market for Eastern and Southern Africa member states to start trading in value-added products among themselves is not only timely but critical for the continent’s economic transformation and development.During a two-day COMESA Heads of State and Government Summit held this week, President Lungu expressed concern that COMESA members have continued to trade in raw materials among themselves while relying on markets outside Africa for finished products.
President Lungu said it is time Africa started benefiting from its raw materials.
We could not agree more with the President’s sentiments. Africa must start enjoying the full benefits of its raw materials and the time is now.
It is indisputable that Africa is one of the richest continents in terms of raw materials.
Africa is blessed with vast natural resources and rich environments.
It boasts of productive land and renewable resources such as water, forestry, and fisheries.
The continent is also endowed with non-renewable resources such as minerals, coal, gas, and oil.
Despite its rich natural resource base, Africa has failed to utilise it to spur its own development.
One of the major reasons is that for a long time, Africa has depended on exports of raw materials for foreign exchange.
Raw materials by nature fetch low income unlike finished products with added value.
For instance, in the mining sector, Africa exports raw minerals such as copper and gold, only to import finished products like bullets, cables and jewellery from the Western world at 10 times more the price.
This means Africa is not getting the real value for its raw resources but the Western world is. No wonder the difference in the levels of development.
In other words, the Western countries are capitalising on Africa’s raw materials to build their economies by simply adding value and thereby earning more revenue.
COMESA, as an economic community of 21 countries which plays a pivotal role in boosting Africa intra-trade, is better placed to push this agenda.
While COMESA has been working towards enhancing intra-trade, there’s certainly need to ensure that member states deal in value-added products as opposed to raw materials.
This will ensure that money being lost through import of finished goods from the Western world and Asia is kept within the continent thereby spurring development.
It is estimated that since the launch of the COMESA Free Trade Area in 2000, there has been an increase in growth of intra-COMESA exports from US$1.7 billion to US$8 billion in 2017.
It is possible to raise the intra-COMESA exports value far much higher than current figures. Collective efforts by member states can, and should, get an even higher figure on intra trade.
Zambia under the leadership of President Lungu is currently working towards an industrialised economy which translates into more industries and value addition.
This is definitely the way to go for Africa.
However, for COMESA member states and Africa as a whole to realise full benefits of its raw materials through value addition, there is need to invest in development of human capital.
Countries like Japan and Korea have proved that human capital plays a pivotal role in the development process. This is because to be able to produce high-value finished products, there is need for high expertise.
There is also need to massively invest in hi-tech machinery and infrastructure as this is the main driver of industrialisation.
Above all, there is need for unity of purpose among COMESA member states and the continent as a whole if Africa is to harness the full benefits of its abundant natural resources through industrialisation and, subsequently, intra trade.