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Ahead of COP 28, ECA releases policy advice on economic diversification amid crisis and uncertainty

By Economic Commission for Africa
Climate Ahead of COP 28, ECA releases policy advice on economic diversification amid crisis and uncertainty
DEC 1, 2023 LISTEN

The Economic Commission for Africa (ECA) has published findings on how to promote economic diversification during times of crisis and uncertainty.

The policy report, “ Exogenous shocks and commodity dependence: how diversification can fuel the green economy in Africa ”, intends to assist policy makers in harnessing natural resource endowments, particularly minerals which are growing in importance due to the global energy transition, to fuel industrialization and job creation.

The findings are based on an analysis of trade and economic diversification data leading up to and following the impact of the COVID-19 crisis. This analysis revealed that Africa witnessed a diversification of its export basket in 2020, with five countries witnessing significant diversification. A closer examination, however, notes that this reflects both a fall in traditional commodities, such as oil and gas, and a rise in the role of gold as global gold prices spiked. This reveals the risk of continued commodity dependence, which can be exacerbated by the effects of exogenous shocks.

These findings have influenced key policy recommendations, such as channeling the infrastructure, skills and investment in the established mining sector towards new, productive and transformative activities upstream and downstream across mineral value chains. The policy advise is particularly relevant in the context of the COP28 discussions and events tackling the ‘green’ minerals boom which is tapped to bring new opportunities for mineral producers to add value.

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