Africa and Latin America Still Shackled by Commodity Dependence, UNCTAD Warns

By Danilo Desiderio

A stark new report from the United Nations Conference on Trade and Development (UNCTAD) underscores a persistent and perilous reality: despite decades of development efforts, Africa and Latin America remain deeply entrenched in commodity dependence – a structural vulnerability that continues to undermine economic resilience and long-term growth.

Released in 2025 as part of its biennial The State of Commodity Dependence series, the report reveals that two-thirds of all developing countries globally rely on commodities for more than 60 percent of their merchandise export earnings. This threshold – defined by UNCTAD as the benchmark for “commodity dependence” – includes unprocessed or minimally processed agricultural goods, minerals, and unrefined hydrocarbons.

For nations trapped in this cycle, prosperity hinges on the volatile whims of global commodity markets, exposing them to boom-and-bust cycles beyond their control.

Nowhere is this dependence more pronounced than in Africa and Latin America.

Of Africa’s 54 nations, 46 are classified as commodity-dependent. The situation is especially acute in Central and West Africa, where 80 percent and 75 percent of countries, respectively, derive over 80 percent of their export revenue from primary commodities.

Meanwhile, all 12 countries in South America are commodity-dependent, with 11 falling into the “high dependence” category – a sobering testament to the region’s limited economic diversification.

A Shifting, Yet Still Fragile, Global Landscape

While the global composition of commodity exports has evolved, the underlying risks remain. Energy products – chiefly oil and gas – still dominate global commodity trade, accounting for 44.5 percent of total exports between 2021 and 2023, down from 52.1 percent a decade earlier.

This decline reflects both market volatility and the accelerating global energy transition.

However, the dip in energy’s share has been offset by sharp increases in other sectors:

• Agricultural commodity exports rose by 34 percent.
• Mining products surged by 33.4 percent.

For Africa, this shift has produced mixed results. The continent saw a 5.6 percent contraction in total commodity export value, falling from US$494.2 billion to US$466.6 billion during the same period.

This decline was driven primarily by a US$107 billion plunge in energy exports, particularly from oil-dependent economies. Partially cushioning the blow were gains in agricultural and mining exports – highlighting a growing, albeit fragile, diversification within the commodity sector itself.

Notably, agriculture now plays a far more significant role in Africa’s export economy. Its share of commodity exports has climbed from 13 percent in 2012–2014 to 19 percent in 2021–2023 – the highest regional contribution globally.

Six African nations, including Nigeria and Angola, remain heavily reliant on energy exports, underscoring the uneven nature of the continent’s economic structure.

The High Cost of Dependence

The UNCTAD report is more than a statistical snapshot – it’s a warning. Commodity dependence constrains industrial development, limits job creation, and weakens fiscal planning.

When export revenues swing with global prices, governments struggle to fund stable public services, infrastructure, and innovation.

As modern development thinkers like John Cary have echoed – economies structured around exporting raw materials while importing finished goods are inherently disadvantaged. They lack the value-added processing, technological upgrading, and domestic manufacturing capacity needed to climb the development ladder.

This “raw material trap” perpetuates a cycle of underdevelopment, where wealth is extracted but not reinvested in transformative growth.

The Path Forward: Diversification and Industrialization

UNCTAD’s findings reinforce a clear imperative: economic diversification is not optional – it is essential. For African and Latin American nations, the road to resilience must include strategic investments in manufacturing, agro-processing, renewable energy, and digital infrastructure.

Regional value chains, strengthened trade policies, and targeted industrial strategies can help convert raw materials into higher-value exports, retain more income domestically, and create skilled employment.

Policymakers must also leverage the growing prominence of agriculture and mining not as endpoints, but as springboards. Processing cocoa into chocolate, refining copper for electronics, or turning cassava into bioplastics – these are the kinds of value-adding transformations that break the commodity curse.

International partners, too, have a role. Fair trade terms, access to green financing, and technology transfer can empower developing economies to build sustainable, inclusive growth models – rather than remain at the mercy of distant commodity exchanges.

The Bottom Line

The 2025 UNCTAD report is a wake-up call. While the global economy evolves, too many developing nations remain stuck in a 19th-century export model.

Africa and Latin America possess vast natural and human capital – but unlocking their true potential requires moving beyond dependence on what the earth provides, toward building what industry and innovation can create.

The time for transformation is now. The cost of inaction is measured not just in lost revenue, but in lost decades.

Danilo Desiderio serves as the CEO of Desiderio Consultants Ltd in Nairobi, Kenya, specializing in African customs, trade, and transport policies. He is a customs and trade expert at the World Bank and a senior associate to the Horn Economic and Social Policy Institute (HESPI).