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Kenya’s President William Ruto has asked his Cabinet Secretaries to act fast to deliver on his administration’s development programmes, “with…
Sierra Leone’s government may have to impose severe austerity measures. These measures will address inefficiencies and inadequacies in allocating and administrating public resources. However, all hands must be on deck within these economic management measures. This will secure the ring-fencing of money for essential objectives like education, livelihood preservation, and health. These objectives remain critical to maintaining social stability and a rapid return to the economic recovery path.
Ghana competes in the global economy primarily using natural resources. Other than the usual exports of cocoa, gold, lumber, and crude oil, Ghana has a competitive advantage in numerous product categories. Increasing the proportion of high-income commodities in the export basket hastens economic transition.
The opportunity is providing better, economically advantageous items to regional and worldwide markets. Cocoa processing, wood processing, aluminium products, palm oil, food and agro-processing, and fish processing are examples of manufacturing sub-sectors that fit these two requirements.
Manufacturing subsectors that capture considerable proportions of manufacturing value-added, such as food and drinks, chemicals, and textiles, have significant technology, knowledge, and skills inherent in them. These assets can be used to produce additional goods within the sub-sector or even outside of it. It is also easier to go up the value chain after you have mastered relevant technologies and markets.
The Gambia has a small economy that relies primarily on agriculture, tourism, and remittances for support. It remains heavily dependent on the agriculture sector. The Gambia can bank on these sectors for economic growth and to repay their debt.
Gambian agriculture has been characterized by subsistence production of food crops comprising cereals (early millet, late millet, maize, sorghum, rice), and semi-intensive cash crop production (groundnut, cotton, sesame, and horticulture). Farmers generally practice mixed farming, although crops account for a greater portion of the production.
Groundnuts are the traditional cash crop. The Gambia also exports produce to Europe; Gambian mangoes and other fruits may now be found on the shelves of the supermarket chains like Tesco and Sainsburys. The Gambia’s largest trade partner is Cote D’Ivoire, a fellow Economic Community of West African States (ECOWAS) member, from which The Gambia imports the majority of its fuel products. Other major trade partners include China and Europe.
South Korean industry began with the production of textiles and footwear and then moved into heavy industries like steel, heavy equipment, ships, petrochemicals, electronics, and automobiles by the 1980s.
Africa needs to follow the economic lead of countries like South Korea that developed into advanced states through export-led economic growth and the development of strong domestic economies. South Korea committed to rapid industrialization. This is what caused the economy to take off. However, it is important to note that economic development was also set in motion by leaders who implemented land reform and educational development.
Oxford Research notes, “Industrialization was characterized by a close pattern of cooperation between the state and large family-owned conglomerates known as chaebǒls. This close relationship continued after the transition to democracy in the late 1980s and 1990s but after 1987, labour emerged as a major political force, and rising wages gave further impetus to the development of the more capital-intensive industry.”
The rising commodity prices, surging inflationary pressures, and the contracting global financial situation have risked African trade and production capabilities. Moreover, the rising threat of sovereign defaults poses a severe risk to the growth of African trade. Thus, African trade prospects remain unclear, considering the challenging global economic scenario.
The Covid-19, energy and food shortages have hit with the countries having minimal or no policy space to respond. As a result, African countries have fallen into a real risk of debt distress and even possibilities for sovereign debt default.
In terms of foreign exchange reserves, according to HM Treasury, Britain has net official reserves of US$ 114 billion whereas it plans to embark on an economic plan to pull itself out of the stagflation quagmire by spending no less than US$ 173 billion dollars. If Britain were to use all its foreign exchange reserves to meet the cost of its economic plan it would run short of money and still have a deficit of US$ 59 billion dollars before fully implementing its plan.
Fair enough and granted, governments do not always have to spend cash that they have on hand. They can always borrow if they do not have sufficient cash to finance their operations.
Herein is the problem, the current economic environment does not support borrowing either by individuals, households, or governments. The cost of borrowing is just simply too high either by domestic debt or foreign debt. The Bank of England in acting against rising inflation has been raising interest rates. This translates to higher borrowing costs and reduced inflation.
The fastest growing export markets for raw copper of Zambia between 2019 and 2020 were Singapore (US$325 million), Switzerland (US$119 million), and Namibia (US$105 million).
Lowering mining energy tariffs would further help to restore the competitiveness of Zambia’s copper exports, and Zambia’s Chamber of Mines has been arguing for this too.
The outcome of debt restructuring with international creditors and negotiations for a new IMF programme are likely to determine how quickly and confidently the government can move ahead with such reforms.
Since he won the election last year, Zambian President Hakainde Hichilema has worked to repair relations with the IMF following tense times under his predecessor Edgar Lungu.
Under Lungu, who came to office in 2015, Zambia’s economy borrowed significantly to fund infrastructure projects. His unfriendly regulatory environment in the mining sector and a default on its Eurobonds in December 2020 shook investor confidence.
President Hichilema expressed his support for the agreement in a series of tweets, claiming that it helps to handle the nation’s debt load.