Hence, for African economies to achieve their growth potentials, they should be able to utilize their export earnings to broaden their production base and productivity. The primary commodities that are sources of export earnings have become highly susceptible to price volatility and adverse shifts in the terms of trade.
Price volatility has not only resulted from adverse weather conditions and other supply shocks, but also from the secular decline in real prices caused by structural oversupply in commodity markets from output in the advanced economies (Kahl, 2004). Furthermore, the lack of support for price stabilization through commodity agreements by the international community hinders favourable pricing.