Commodity-rich African countries should act wisely in order to benefit from the prevailing global boom for the sector, because it will not last, South African Finance Minister Trevor Manuel has warned.
Manuel said in a speech at the University of Namibia late on Thursday that the current upswing in commodity prices would ”stay in the short-to-medium term”.
”The current commodity super-cycle and boom has lasted for some seven years, and we cannot predict when the trend will be reversed,” he said in the speech, posted on the South Africa Treasury
website.
Demand from growing economies such as China and India has pushed up prices for commodities like gold, platinum and oil, which Africa is rich in.
Manuel said African countries had not fully taken advantage of commodity booms in the past, and warned: ”To assume that current prices and the current boom phase reflects a permanent shift, rather than a temporary opportunity, would be a naive and risky approach.”
”If our analysis is correct, then the slump will come and it will bring with it a significant decline in commodity prices. This could spell disaster for many developing countries,” Manuel added.
Millions of people in mineral-rich African countries still live in poverty, with critics pointing partly to national governments’ mismanagement.
”The suggestion that commodity price upswings might be a curse and not a blessing is an uncomfortable reminder of our responsibility, now, to act wisely and prudently in the interest of future growth,” Manuel said.
Oil-rich African countries such as Angola and Nigeria have experienced unprecedented economic growth from the windfalls of international oil prices, which have risen to record highs. – Reuters