However, African countries must learn from the past on how well to manage commodity booms and ensure the productive use of financial resources generated from natural resources. African countries need to invest the resources arising from the exploitation of natural resources in domestic capital formation in order to generate a higher sustainable income that compensates for the depletion of a wasting asset. In this regard, it is important that commodity booms are managed in a manner that benefits African economies through careful planning and the deployment of appropriate strategies. Commodity swaps or barter system have been suggested in some quarters as an innovative way for Africa to get development finance taking into account the fact that most African countries are not able to borrow from the international financial institutions and are just coming out of heavy indebtedness. For this option of financing to be viable and profitable, there is need for commodity swaps to have a long-term positive impact of export diversification and economic growth for Africa. In this regard, commodities could be swapped for infrastructure development to address the large infrastructure gap that is inhibiting further growth and diversification, technology transfer and market access for manufactured goods. These commodity swaps would have to be carefully crafted so that future generations are not disadvantaged from the resources. Currently, China has entered into such deals with countries like the Democratic Republic of Congo, Sudan and Angola and it would be interesting to see how these work and then other countries can learn from these countries experiences.

But inflation remains well above the average of 2.5% seen in the decade before COVID-19 (2010-19). Moreover, global core inflation rose from 3.8% in Q3 2022 to 4.1% in Q4. With headline inflation coming off its peak, most central banks have shifted to a more moderate pace of tightening. But with inflation still well above targets, the tightening cycle has some ways to go. The US Fed, European Central Bank (ECB), and Bank of England have stepped down to a more modest range of 25 to 50 basis point rate hikes this year compared to the successive 50 to 75 basis point hikes last year. But expectations by some market participants that the tightening cycle will end soon and that central banks may even start easing are excessively optimistic. Forward guidance by advanced economy central banks indicates further tightening to cool inflation. Both the US Fed and the ECB have reiterated their commitment to achieve their inflation targets of 2%. The key challenge facing most central banks is to secure a return to low inflation without incurring too large a cost to growth or financial stability. Thus far, the disinflation process has taken place in an orderly manner, without dislocations to the functioning of the global economy and financial markets. But continuing to get this balance right will be a challenge, especially if inflation gets stuck at too high a level. There are complex spillover effects from synchronised policy tightening across countries. These effects could help dampen inflation domestically to the extent they reduce imported inflation.