Experts from the African Union reviewed the progress in the implementation of the Istanbul Programme of Action (IPoA) for least developed countries (LDCs) during a meeting at the end of March. In general they agreed that the pace of growth in LDCs has slowed, with the number of countries experiencing a growth rate of 7 percent or more declining from 14 in 2012 to 11 in 2013.

The plan’s main goal is to halve the number of LDCs by 2020, through a combination of strong economic growth, greater gender equality, decreased vulnerability to economic shocks and natural disasters, and better governance.

Since the 1970s, the United Nations has identified LDCs as states which, for reasons of very low income, poor human development, and high economic vulnerability, face more structural handicaps than other countries in rising out of poverty. But the increased focus on LDCs’ challenges has not been matched by solutions. In the three decades since the first UNLDC conference in 1981, the number of LDCs has almost doubled from 25 to 48. Only three countries have graduated from the LDC status: Botswana, Cap Verde and the Maldives.

The IPoA sets out specific objectives: 7 percent annual growth, driven by strengthened productive and human capacities, reduced vulnerability, increased financial aid, and better governance.

According to the LDC IV Monitor – an independent initiative established by several organisations to monitor and assess the implementation of the IPoA launched in October 2014 – the global economic and financial crisis further exposed the structural vulnerabilities of LDCs’ economies.

Trade

According to the report released by the AU committee of experts, LDCs have experienced only limited transformation and are still vulnerable to economic shocks.

LDC share of the world’s exports of goods and services was estimated by the UN at 1.1 percent in 2011 therefore “short of the target of 2 percent to be achieved by 2020” mentions the report. Primary commodities accounted for about 94 percent of exports from African LDCs, compared with about 40 percent from LDCs of the Asia Pacific region, states the AU report.

The LDC IV monitor report notes for his part, that given the “minuscule” share of LDCs exports in global trade, the IPoA goal of doubling LDCs share of world merchandise trade looks doubtful. The report recommends therefore the urgent implementation of international commitments including those related to market access of LDC goods and services.

Additionally the AU report recognises the “important role” played by non-reciprocal preferential schemes in promoting exports from LDCs to developed country markets and notes that the African Growth and Opportunity Act – the US trade preference programme that provide duty-free treatment to eligible sub-Saharan countries which is up for renewal this year – is an illustration of such initiative.

Some observers have however argued that the impact of the AGOA has had only limited effects owing to the legislation’s product coverage whereby for example, key agricultural products of interest for beneficiary countries are excluded.

“African least developed countries exports admitted duty free into developed countries have remained relatively flat, changing by less than 1 percent between 2010 and 2011,” states the AU experts report.

Reference is made to some of the commitments reiterated during the WTO Bali conference in 2013 such as duty free quota free market access to exports from LDCs, and the document stresses that to be in a position to fully benefit from these preferential schemes, African LDCs will need to address their supply –side constraints and trade related infrastructure deficits.

Vanuatu and Equatorial Guinea up for graduation

The AU paper states that they are currently 10 countries that are eligible for graduation based on the 2015 thresholds namely, gross national income per capita equal or above US$1, 242; human asset index (>66 or above) and economic vulnerability (32 or below). Of these countries, Vanuatu and Equatorial Guinea are scheduled to graduate in 2017, says the report.

On this point, the LDC IV monitor recommends that LDCs and their development partners, including international development agencies, should prepare an overarching framework for smooth transition toward graduation and a set of guidelines that promote sustainable post-graduation developments.

Equatorial Guinea and Angola have gross national incomes that are more than double the required threshold which makes them eligible for graduation based solely on the GNI.

The report notes however that the Ebola virus disease outbreak in West Africa has hampered the chances for graduation for Guinea, Liberia and Sierra Leone.

Productive capacity

According to the report, African LDCs continue to face infrastructure deficits and a under-skilled labour force, which constrain their on-going efforts and those of their development partners to promote sustainable development.

To this regard, the LDC IV monitor also underlines that progress on building productive capacities by investing in high-quality infrastructure and through technology transfer has been unsatisfactory.