Commodity prices hurting Africa
Published On May 10, 2018 » 750 Views» By Evans Musenya Manda » Business, Stories
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By JAMES MUYANWA
in Abidjan, IVORY COAST –
COMMODITY producers in Africa will remain on the receiving end in terms of commodity prices for as long as the continental market continues to be undeveloped.
Africa has continued to produce huge amounts of commodities like copper, oil and other resources but has no say on the prices of its products.
The West and other developed superpowers, who are mainly the buyers, have continued determining and influencing the prices at which they are buying these commodities from Africa.
Ivorian Refinery Company (SIR) says this is hurting the African countries and the investors involved in activities like refining.
SIR head of trading, Kouassa Koffi said here that fluctuations in the prices of commodities on the international market are adversely affecting African companies like SIR.
Mr Koffi cited an instance in 2014 when the prices of crude oil were hovering around $140 per dollar but suddenly plummeted to beneath $50 per barrel.
This, he said, put the company in financial dilemma because after procuring the crude oil at as high as $140 per barrel, the company and other entities in similar position were forced to drastically reduce
the prices of their products in line with the international prices.
He said that for as long as players in the continent continued relying on the overseas market due to undeveloped local market such trends would continue, with adverse effect.
As a result of the 2014 drastic fall, the prices of oil, SIR was left with huge debts with suppliers and others because it would not realise enough from the crude procured at high cost.
Part of the solution is to encourage intra Africa trade so that the local buyers and traders of the commodities can determine their own prices within Africa.
That, however, calls for the need to grow capacities for both consumers and the investors to be able to fully meet the gaps as the result of the shift in the trade.
Mr Koffi said this in his presentation to a group of senior journalists from Zambia who are on a tour of West Africa, at the invitation of Sahara Group, Africa’s leading energy and infrastructure conglomerate, to learn more about the performance of the energy sector in the region.
The journalists learnt during the tour that the refinery company which was founded in 1962 and started operating in 1965 is owned by the Ivorian government, the Burkinabe government, Sahara Group, TOTAL and the Angolan government.
The company which produces about 3.8 million tonnes of oil per year, exports about 22 per cent of its products overseas while the host country account for 62 per cent of the total market.
As Africa’s second largest copper producer, Zambia is also affected by fluctuations in the prices of copper on the international market.

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