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Trade in Times of COVID-19 pandemic: Effects of global primary Commodity Market Disruption on Growth and Poverty in Western Africa
1. TRADE IN TIMES OF COVID-19 PANDEMIC:
EFFECTS OF GLOBAL PRIMARY COMMODITY MARKET
DISRUPTION ON GROWTH AND POVERTY IN WESTERN AFRICA
Ismael FOFANA
AKADEMIYA2063
Director for Capacity and Deployment
AKADEMIYA2063 Webinar – December 10, 2020
2. AKADEMIYA2063 COVID-19 Workstreams | www.akademiya2063.org
Mapping
Vulnerability
Hot Spots
Staple Food
Price Tracking
Food
Production
Systems
Disruption
Macro Effects of
Trade Disruption
2
5. Why is the analysis of the effects of global primary
commodity market disruption important ?
The COVD-19 pandemic affects African economies
through several channels including,
World market disruptions and variations in
international prices of primary products.
High contribution of primary products in total exports of
Western African countries.
5
6. The COVID-19 pandemic has driven most primary commodity prices down in 2020
-50
-40
-30
-20
-10
0
10
20
Coal,Australia
Crudeoil,avg
Naturalgas,Europe
Naturalgas,US
NaturalgasLNG,Japan
Cocoa
Coffee,Arabica
Coffee,Robusta
Tea,auctions(3),average
Coconutoil
Groundnutoil
Palmoil
Soybeanmeal
Soybeanoil
Soybeans
Barley
Maize
Rice,Thailand,5%
Wheat,US,HRW
Bananas,US
Meat,beef
Meat,chicken
Oranges
Shrimp,Mexico
Sugar,World
Logs,Cameroon
Logs,Malaysia
Sawnwood,Malaysia
CottonAIndex
Rubber,Malaysian
Tobacco
DAP
Phosphaterock
Potassiumchloride
TSP
Urea,E.Europe,bulk
Aluminum
Copper
Ironore
Lead
Nickel
Tin
Zinc
Gold
Silver
Platinum
Changes in predicted prices in 2020 for primary commodities prices between April 2020 and October 2019 forecast
7. High Contribution of Primary Commodities in Exports of West African Countries
Primary commodities, share of total IMPORTSPrimary commodities, share of total EXPORTS
0 10 20 30 40 50 60 70 80 90 100
Guinea-Bissau
Nigeria
Ghana
Sierra Leone
Mauritania
Burkina Faso
Niger
Côte d’Ivoire
Benin
Guinea
Cabo Verde
Mali
Senegal
Gambia
Liberia
Togo
0 10 20 30 40 50 60 70 80 90 100
Gambia
Benin
Senegal
Côte d’Ivoire
Burkina Faso
Mali
Guinea-Bissau
Nigeria
Guinea
Togo
Cabo Verde
Sierra Leone
Mauritania
Ghana
Niger
Liberia
8. Objective
Assess the effects of changing international commodity
prices and global market disruptions on economic growth
and poverty in Western Africa
Case studies from the 16 West African countries
Benin, Burkina Faso, Cabo Verde, Côte d’Ivoire, Gambia, Ghana,
Guinea, Guinea-Bissau, Liberia, Mali, Mauritania, Niger, Nigeria,
Senegal, Sierra Leone, Togo.
8
12. Scenarios
Changes in the international price of primary
commodities (Price Shocks)
Disruption of global trade conditions and
international market access (Trade Shocks)
Sensitivity tests on trade elasticities, from
“no disruption” to “severe disruption”
13. Scenarios (Cont’d)
2019 price estimates
2020 price forecasts
Baseline (or BaU) scenario
Price forecasts for the year 2020 in October 2019
COVID scenario
Price forecasts for the year 2020 in April 2020
Changes in the international price of primary commodities
14. Export price scenario is based on the composition of the basket of primary
commodities exported by each country
Changes in predicted Prices for Top Primary
Commodities Exported by Cote d’Ivoire
Share of Top Primary Commodities in Cote
d’Ivoire’s Total Exports, 2019
15. Share of Top Primary Commodities in Cote
d’Ivoire’s Total Imports, 2019
Changes in predicted Prices for Top Primary
Commodities Imported by Cote d’Ivoire
Import price scenario is based on the composition of the basket of primary
commodities imported by each country
16. The COVID-19 pandemic has a mixed effect on the prices
of primary commodities exported by Western Africa
16
Nigeria -36.6
Ghana -9.9
Senegal -9.0
Niger -8.9
Côte d’Ivoire -8.8
Sierra Leone -5.3
Togo -4.6
Benin -3.6
Liberia -0.9
Guinea 0.3
Gambia 2.6
Mauritania 2.6
Cabo Verde 3.6
Burkina Faso 4.8
Mali 6.2
Guinea-Bissau 7.9
Changes in Export Price Indices Between October 2019 and April 2020
Forecasts, Western Africa (Percentage Point)
17. Export price index for each country is based on the structure of its export basket
18. The COVID-19 pandemic has lowered the prices of
primary products imported by Western Africa
18
Liberia -28.8
Nigeria -25.9
Gambia -23.3
Burkina Faso -22.0
Mauritania -21.9
Mali -20.4
Senegal -18.9
Côte d’Ivoire -17.0
Guinea-Bissau -14.5
Cabo Verde -14.3
Togo -13.3
Guinea -12.0
Benin -6.2
Ghana -5.4
Sierra Leone -3.2
Niger -2.5
Change in Import Price Indices Between October 2019 and April 2020
Forecasts, Western Africa (Percentage Point)
19. Country-specific international price changes considering the contribution of primary
products in total exports and total imports
Percentage point change in export and import price indices, COVID vs. baseline scenarios
19
-40
-30
-20
-10
0
10
NGA CIV NER GHA SLE BEN TGO LIB GIN GMB CBV MLI SEN MRT BFA GNB
Export Price Index Import Pric Index
A CB
21. Real Exchange Rate Depreciation
Change in Real
Exchange Rates,
COVID vs. BaU,
Price Shocks
Change in Real
Exchange Rates,
COVID vs. BaU,
Price & Trade
Shocks
-10 -5 0 5 10 15 20 25 30 35
NGA
CIV
NER
GHA
SLE
BEN
TGO
LIB
GIN
GMB
CBV
MLI
SEN
MRT
BFA
GNB
AAAAABBBCCCCCCCC
-10 -5 0 5 10 15 20 25 30 35 40 45 50
NGA
CIV
NER
GHA
SLE
BEN
TGO
LIB
GIN
GMB
CBV
MLI
SEN
MRT
BFA
GNB
AAAAABBBCCCCCCCC
22. Positive growth effects of primary commodity price shocks in a majority of countries
Percentage point change in GDP growth, COVID vs. BaU, Price Shocks
-2 -1 0 1 2 3 4 5
NGA
CIV
NER
GHA
SLE
BEN
TGO
LIB
GIN
GMB
CBV
MLI
SEN
MRT
BFA
GNB
AAAAABBBCCCCCCCC
23. Understanding the growth effects of primary commodity price shocks
Share of primary commodities in total imports
Coted'Ivoire
Coted'Ivoire
Ghana
Ghana
Nigeria
Nigeria
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Intermediaite Consumption Final Consumption
25. Percentage point change in GDP growth, COVID vs. BaU, Price and Trade Shocks
-3 -2 -1 0 1 2 3
NGA
CIV
NER
GHA
SLE
BEN
TGO
LIB
GIN
GMB
CBV
MLI
SEN
MRT
BFA
GNB
AAAAABBBCCCCCCCC
Negative growth effects of primary commodity price and trade shocks in a majority of countries
26. Change in Poverty
Headcount Ratio,
COVID vs. Baseline,
Price Shock (pp)
Change in Poverty
Headcount Ratio,
COVID vs. Baseline,
Price and Trade
Shocks (pp)
Increased Poverty Effects
-7 -6 -5 -4 -3 -2 -1 0 1 2 3
NGA
CIV
NER
GHA
SLE
BEN
TGO
LIB
GIN
GMB
MLI
SEN
BFA
GNB
AAAAABBBCCCCCC
-3 -2 -1 0 1 2 3 4 5
NGA
CIV
NER
GHA
SLE
BEN
TGO
LIB
GIN
GMB
MLI
SEN
BFA
GNB
AAAAABBBCCCCCC
27. Increased rural poverty
relative to urban poverty
Change in urban
and rural poverty,
COVID vs. Baseline,
Price Shock (pp)
Changes in urban and rural
headcount poverty rates,
COVID vs. Baseline, Price
and Trade Shock (pp)
-8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3
NGA
CIV
NER
GHA
SLE
BEN
TGO
LIB
GIN
GMB
MLI
SEN
BFA
GNB
AAAAABBBCCCCCC
Rural Urban
-4 -3 -2 -1 0 1 2 3 4 5
NGA
CIV
NER
GHA
SLE
BEN
TGO
LIB
GIN
GMB
MLI
SEN
BFA
GNB
AAAAABBBCCCCCC
Rural Urban
29. Key findings
• Negative effects on economic growth in Western African
countries (except BFA, MLI, GMB).
• Negative effects on poverty in Western African countries (except
BFA, MLI, GMB, SRL).
• Increase in rural poverty relative to urban poverty in West Africa
(7/11 countries).
30. Policy Options (Short run)
Protect rural and urban populations
• Scale social protection schemes
Support the rural economy
• Increase public agricultural investments
• Accelerate the implementation of agricultural policies
31. Policy Options (medium-long run)
Export diversification
Increase the contribution of agricultural and
food commodities in the export basket.
Increase the number of agricultural and food
commodities in the export basket.
32. Agricultural commodities are recovering faster from the pandemic than non-
agricultural commodities in recent price trend
Changes in predicted prices in 2020 for primary commodities prices between Oct 2020 and Oct 2019 forecast
-50
-40
-30
-20
-10
0
10
20
Coal,Australia
Crudeoil,avg
Naturalgas,Europe
Naturalgas,US
NaturalgasLNG,Japan
Cocoa
Coffee,Arabica
Coffee,Robusta
Tea,auctions(3),average
Coconutoil
Groundnutoil
Palmoil
Soybeanmeal
Soybeanoil
Soybeans
Barley
Maize
Rice,Thailand,5%
Wheat,US,HRW
Bananas,US
Meat,beef
Meat,chicken
Oranges
Shrimp,Mexico
Sugar,World
Logs,Cameroon
Logs,Malaysia
Sawnwood,Malaysia
CottonAIndex
Rubber,Malaysian
Tobacco
DAP
Phosphaterock
Potassiumchloride
TSP
Urea,E.Europe,bulk
Aluminum
Copper
Ironore
Lead
Nickel
Tin
Zinc
Gold
Silver
Platinum
33. Export price index for each country is based on the structure of its export basket
34. THANK YOU
Alhassane CAMARA (AGRODEP)
Mariam A. DIALLO (A2063)
Ismael FOFANA (A2063)
Yaya KI (AGRODEP)
Leysa M. SALL (A2063)
Boureima SAVADOGO
(AGRODEP)