An economist and lecturer at the University of Ghana, Dr. Priscilla Twumasi-Baffour has advised government to insulate the Ghanaian economy from its dependence on commodity exports to mitigate price volatility shortfalls on the global trade market.

According to her, an over-reliance on commodity exports can destructively affect economic growth and well-being in the short and medium terms which increases the vulnerability of commodity-dependent countries to negative commodity price shocks.

“I think that the government needs to think critically of ways of trying to insulate the economy from commodity dependence. Generally, commodity price falls are not surprising. But economies are basically demand-driven, so once the demand is dampened, there is a rippling effect, then a multiplier effect.”

“This, however, brings us to the old advice that we keep indicating that Africa needs to be strategic and insulate its economies away from commodities because when you look at the data, you can observe that countries that are less commodity-dependent are a bit more insulated or in a way they are able to adjust to external and internal shocks better than countries that are not,” Dr. Twumasi-Baffour said on CitiTV’s ‘Point of View’ programme.

Dr. Twumasi-Baffour recommended government to devise policies that emphasize on domestic production, revenue mobilization of natural resources to curtail commodity dependence.

Currently, Ghana’s main exports are cocoa, gold, and timber products.

Meanwhile, figures released from the Bank of Ghana (BoG) indicated that the country’s total exports surpassed imports by US$780 million as of February 2020.

According to the central bank, the Balance of Trade for Ghana represented 1.1 percent of the total value of all goods and services produced in the country.

The figure is also an increase compared to the US$378 million or 0.6 percent of Gross Domestic Product (GDP), recorded in February 2019.

The BoG attributed the increase to the fact that the country’s imports declined for the period, while it also benefited from the increase in some prices of commodities like cocoa and gold.