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Africa: UNCTAD Documents, 1
Africa: UNCTAD Documents, 1
Date distributed (ymd): 971125
Document reposted by APIC
+++++++++++++++++++++Document Profile+++++++++++++++++++++
Region: Continent-Wide
Issue Areas: +economy/development+ +security/peace+
Summary Contents:
The UN Conference on Trade and Development, in its 1997 report
on "Least Developed Counries," reports economic advance in
about half of the 48 countries. Nineteen African LDCs have had
growth rates in excess of 4 per cent since 1994. However,
many countries, particularly those affected by civil strife,
have suffered disastrous economic declines in the same period.
+++++++++++++++++end profile++++++++++++++++++++++++++++++
For additional information on UNCTAD and UNCTAD studies
related to African development, see
http://www.unctad.org or contact:
Office of Secretary of the Board
Tel: +4122-907-4815; Fax: +4122-907-0056
E-mail: [email protected]
23 September 1997 -- Press Release TAD/1849 (Excerpts)
UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENT (UNCTAD)
ISSUES 'LEAST DEVELOPED COUNTRIES 1997 REPORT'
Finds Institutional, Economic Reforms Generating Growth in
Some Countries; Cites Impact of Agricultural Sector, Effects
of State Collapse
GENEVA, 1 September (UNCTAD) -- "The determined efforts to
implement economic policy reforms have led to improved
economic performance in about half the least developed
countries (LDCs)," the United Nations Conference on Trade and
Development (UNCTAD) states, in its new Least Developed
Countries 1997 Report. The report is 213 pages and includes a
42-page statistical annex.
The fact that the performance of many LDCs remained relatively
robust in 1996, despite generally unfavourable commodity
prices and stagnating external resource flows, is testament to
the progress of these economies, the report indicates. In the
short run, the external economic environment facing LDCs is
expected to be fairly stable. Thus, peace, security and
competent governance will be crucial if the economic recovery
which has begun for some LDCs is to be sustainable and
replicable throughout the LDC group.
Growth among the world's LDCs remained relatively robust at an
average of 4.7 per cent in 1996 compared with 5.2 per cent in
1995, according to preliminary estimates. The slight decline
is due mainly to a slow down in the average growth rate of the
33 African LDCs, from 5.4 per cent in 1995 to 4.6 per cent in
1996. For the group of Asian and Pacific island LDCs, the
average growth rate rose slightly, from 4.6 per cent in 1995
to 4.8 per cent in 1996.
The LDCs are, however, an extremely heterogeneous group and
the most significant disparities in performance exist not at
a regional but at a country level, with very large differences
between the highest and lowest gross domestic product (GDP)
growth rates for LDCs. ...
After a more or less stable first quarter in 1996, the
combined dollar index of primary commodity prices steadily
weakened during the remainder of the year due to sluggish
industrial activity in the major importing countries,
oversupply and speculative trading. The index fell from an
annual average growth rate of 2.6 per cent between 1990-1995,
to -4.3 per cent in 1995-1996.
Despite some successful attempts at diversification -- for
instance in Bangladesh, Madagascar, Uganda and the United
Republic of Tanzania -- many LDCs, including Burundi, Somalia
and Zambia, continue to be highly vulnerable to commodity
price movements. Of particular concern to LDCs were declines
in tropical food prices (15 per cent) and minerals (13 per
cent). Precipitous falls in the prices of coffee and copper
(over 20 per cent) were of special concern. ...
In 1992, the members of the Development Assistance Committee,
which comprises countries of the Organization for Economic
Cooperation and Development allocated 0.09 per cent of their
gross national product (GNP) to LDC development assistance. In
1995, that share had fallen to just 0.06 per cent, the lowest
on record. This was despite a commitment in 1990 at the Second
United Nations Conference on LDCs to increase the aid flow
level. The LDCs have also suffered because the purpose of aid
flows has shifted towards short-term emergency relief
projects, away from longer-term development programmes.
The LDCs' external debt burden continues to be a constraint on
their capacity to accelerate development. It limits imports
and dampens prospects for larger private capital inflows. In
almost half of the LDCs, outstanding debt continues to exceed
GDP.
The most important recent development in debt relief for LDCs
came at the annual meeting of the World Bank and International
Monetary Fund (IMF) in September 1996, with the endorsement of
"the HIPCs initiative" -- the heavily indebted poor countries
initiative. Unfortunately, few LDCs appear likely to benefit
from the initiative in the first instance. This delay will
represent a lost opportunity for the revival of output growth
in many of them.
...
Cautious Optimism
In light of the complex factors noted in the report, "there is
reason to be cautiously optimistic about the prospects for the
majority of the LDCs". Growth in the world economy is expected
to remain steady during 1997, and the current sharp rise in
tropical beverage prices will benefit many LDCs.
The UNCTAD adds, however, that internal factors are likely to
be at least as important as the external environment in
determining the economic performance of most LDCs. In this
regard, it notes that reform programmes have been successfully
implemented and savings and investment performance has
improved, which suggests that the present LDC growth rates
will be sustained for some time to come.
The report draws attention to the fact that many African LDCs
have experienced higher growth rates since 1994. Nineteen
African LDCs have had growth rates in excess of 4 per cent,
and 10 of those have had GDP growth rates higher than 5 per
cent. The UNCTAD foresees that "this trend is set to continue
... at least for those countries which are able to avoid civil
strife and political instability". In many countries, export
production has been increased, inflation rates have been
reduced and reform has been constantly well implemented since
the 1990s. Their future, therefore, is looking decidedly
brighter.
However, the most significant reservation to these generally
optimistic facts, is that many of the LDCs have suffered civil
strife leading to the regress of their economies. In large
part due to this conflict and the collapse of State
structures, one quarter of the 48 LDCs suffered falls in per
capita GDP of over 20 per cent between 1980 and 1994, while 22
suffered declines of over 10 per cent.
Problems of State Collapse Require Urgent International
Attention
"Urgent action by the international community to help least
developed countries (LDCs) tackle the widespread problems of
economic and social regress, State failure and internal
conflicts in LDCs should be a priority", UNCTAD states in its
report. ...
A significant number of LDCs have suffered a serious
retardation of development over the last decade -- a
phenomenon the report terms "economic and social regress".
Their economies have declined, social conditions have worsened
markedly, and they have become increasingly marginalized from
the mainstream of the world economy. Regress is not the result
of a temporary cyclical economic downturn but is a chronic
process with important structural characteristics,
particularly the degradation of State and social institutions.
In the worst cases of regress, the entire State apparatus has
disintegrated amid civil strife.
Some of the countries in the Great Lakes region of Africa
(Burundi, Rwanda, Democratic Republic of the Congo), together
with Somalia, Liberia and Afghanistan, provide the most
extreme and well-publicized examples of regress. The
phenomenon is not confined to these cases, however. Over one
third of the countries in the LDC group have experienced some
form of violent civil strife since 1980, with high
predominantly civilian mortality, the displacement of large
numbers of people from their homes and livelihoods, and the
destruction of infrastructure and productive assets.
Regress involves varied and often complex processes. There are
important differences between individual LDCs in terms of the
nature of regress, its scale and its causes, which means that
generalizations are not always appropriate. Regress is best
understood as a process in which the deterioration of State
capacities, the weakening of civil society and economic
decline interact to reinforce one another, fueling a downward
spiral of economic, social and political decline. ...
Regress Not Irreversible
Analysis of regress is essential, states UNCTAD, in order to
devise appropriate policies for halting and reversing it. Just
as we have learned from the experience of successful
development in developing countries, so it is important to
draw lessons from those developing countries in which
development has been retarded.
While recognizing that many of the problems faced by economies
in regress are highly complex and intractable, UNCTAD stresses
that the international community cannot afford to ignore the
problems of regress. Nor can it afford to delay effective
action until regress has degenerated into a humanitarian
crisis. The experience of several LDCs, such as Uganda, has
demonstrated that peace can be restored and that economies and
State structures can be rebuilt, even after prolonged and
devastating civil war.
Providing support for the building and strengthening of
institutions is clearly an important area in which the
international community can play a positive role. Where
institutional deterioration is not too advanced external
assistance can help to prevent State collapse in LDCs.
In countries afflicted by internal conflicts, the regional and
international community can play a vital role in brokering
peace and supporting the reconstruction of social and economic
structures necessary for development. The reconstruction of
war-torn economies will require the international community to
provide major financial and technical assistance programmes.
Higher Priority Needed for Agriculture
The world's most impoverished nations will have to prioritize
their often neglected agricultural sector if they want to
attain and then sustain high growth rates, UNCTAD stresses in
its report. Agriculture is the most important economic
activity in the LDCs. It provided about one third of their
collective GDP and employed two thirds of the labour force at
the start of the 1990s, but its performance has failed to keep
pace with population growth.
"A strong and well-developed agricultural sector is a means to
broader developmental ends", Rubens Ricupero,
Secretary-General of UNCTAD, says in an overview of the
report. A dynamic agricultural sector will make for healthier
populations with higher nutritional intakes. By increasing
rural incomes, it will also lead to an expansion of domestic
markets. A robust agricultural policy is also a key to an
integrated poverty alleviation strategy, given that the
poorest people in LDCs tend to live in rural areas.
The report focuses on five issues of importance to the 48 LDC
countries: the causes of agricultural sector stagnation; the
impact of the Uruguay Round Agreement on Agriculture; the
question of food security; environmental aspects of
agriculture in the LDCs; and rural credit markets.
Agricultural Stagnation
The long-term problems of LDC agriculture are partly explained
by historical factors. Traditional production relations,
rudimentary technology, the mode of access to and ownership of
land, and low and unreliable rainfall (particularly in African
LDCs) have all played a part in the underdevelopment of the
sector.
The primary weakness of LDC agriculture, however, lies in an
interlocking set of government policies that have been
inimical to the development of a strong agricultural sector.
These include overvalued domestic currencies, State
intervention in agricultural marketing, the over-taxation of
agricultural exports, and an urban bias -- the consequence of
which has been poor rural infrastructure and lack of basic
facilities in rural areas. ...
Impact of Uruguay Round Agreement
The Uruguay Round of the General Agreement on Tariffs and
Trade negotiations, which initiated a programme of
agricultural trade liberalization, was predicted at the time
to have significant consequences not only for the resolution
of the problems mentioned above, but also for more general
agricultural development in LDCs. However, analysis of the
impact of the Uruguay Round on traditional export commodities,
which represent the bulk of LDCs' agricultural exports,
suggests that the effects are likely to be modest. This is
mainly because the Uruguay Round Agreement on Agriculture
proved to be less comprehensive than had been expected when
negotiations began. While significant reforms of the rules
governing agricultural regimes in developed countries have
been carried out, the degree of overall trade liberalization
achieved has been limited.
Food Security
Although food security is primarily a problem of access by
individuals or households to food (entitlements), agricultural
growth -- and especially food production -- has a significant
impact on food security in LDCs. This is because the majority
of populations affected by food insecurity live in rural
areas, earn a substantial share of their income from
agriculture, and obtain at least some of their nutritional
requirements directly from their own food production.
Based on the most widely available measure of food security at
the national level -- the daily per capita energy supply, or
calories per day -- very few LDCs are able to provide even the
barest minimum level of food necessary for ensuring that all
of their populations have access to adequate nutrition. Daily
energy supplies are very low in more than half of the LDCs for
which data are available. In many LDCs, access to food has
become more difficult since the mid-1980s.
The main reason for chronic inadequate nutrition is widespread
poverty, household or individual incomes being insufficient to
enable people to command access to their daily food needs.
Equitable income growth is essential for the reduction of
chronic food deficiencies in LDCs. As the majority of the poor
are rural farmers, policies that promote agricultural and
rural development will also enhance food security by raising
incomes and reducing poverty. This is demonstrated by Burkina
Faso, which has made significant progress in improving food
security through rural development.
The LDCs should put in place mechanisms to protect the food
security of individuals and households in the event of adverse
shocks, such as droughts, by protecting the productive assets
and livelihoods of vulnerable groups. Recently, however, the
most significant threat to the food security of the
populations of LDCs has come not from deficiencies in
agricultural policy, but rather from complex emergencies
caused by internal conflict.
The most effective policy to increase food security in certain
LDCs is therefore the promotion of peace.
Environmental Aspects
Sustainable agricultural development in LDCs is inextricably
linked not only with food security issues but also with
environmental concerns. The greatest level of environmental
degradation in LDCs is to be found in those areas where
population pressure, poverty and food insecurity are intense.
The absence of any simple solution reflects the complexity of
the problem. A traditional response to agricultural land
degradation has been to increase the area of land under
cultivation, thus increasing the extent of environmental
destruction. Unless resources can be used more intensively and
sustainably, environmental degradation will almost certainly
continue in many LDCs, particularly in the more densely
populated areas of Ethiopia, Madagascar and Uganda and in the
Sahel.
Rural Credit Markets
A serious impediment to innovation in LDC agriculture is the
limited supply of formal agricultural credit. Despite
extensive policy efforts to enhance rural credit supply in
LDCs, rural financial markets remain very poorly developed,
with the majority of the rural population, including small
farmers, having very limited access to formal sector credit.
The UNCTAD report calls for the establishment of sustainable
rural financial institutions, in contrast to existing policies
whereby governments attempt to control directly resource
allocation in financial markets.
Creating a Viable Strategy
According to UNCTAD, a viable long-term agricultural strategy
would include at least six main components: -- Sound
macroeconomic policies, which stress the need for
liberalization and a realignment of exchange rates to
realistic levels;
- The development of appropriate agricultural technology, to
facilitate productivity increases in an environmentally
sustainable, socially and economically sensitive way; --
Removal of structural constraints on agricultural innovation,
such as credit shortages and weak rural physical and social
infrastructure; -- Reduced direct taxation of agricultural
output, particularly of export crops; -- An efficient
agricultural marketing system, including well-functioning
markets for inputs and outputs; and -- Strengthened
institutional support.
These policy measures are interdependent and react
synergistically with each other. While private investment may
be required in areas such as marketing of inputs and outputs
and credit provision, LDC governments must take the lead in
providing other facilities such as research and extension
services. Such services are public goods and, moreover, are
unlikely to be provided by the underdeveloped private sector
in the LDCs.
However, UNCTAD recognizes that almost all LDCs lack the
necessary skills and resources to undertake the huge
investments involved in the agricultural development strategy
outlined above without external assistance. Hence the need for
enhanced financial and technical assistance by the
international community.
The 48 least developed countries [33 of them in Africa] are:
Afghanistan, Angola, Bangladesh, Benin, Bhutan, Burkina Faso,
Burundi, Cambodia, Cape Verde, Central African Republic, Chad,
Comoros, Democratic Republic of the Congo, Djibouti,
Equatorial Guinea, Eritrea, Ethiopia, Gambia, Guinea,
Guinea-Bissau, Haiti, Kiribati, Lao People's Democratic
Republic, Lesotho, Liberia, Madagascar, Malawi, Maldives,
Mali, Mauritania, Mozambique, Myanmar, Nepal, Niger, Rwanda,
Samoa, Sao Tome and Principe, Sierra Leone, Solomon Islands,
Somalia, Sudan, Togo, Tuvalu, Uganda, United Republic of
Tanzania, Vanuatu, Yemen and Zambia.
This material is being reposted for wider distribution by the
Africa Policy Information Center (APIC), the educational
affiliate of the Washington Office on Africa. APIC's primary
objective is to widen the policy debate in the United States
around African issues and the U.S. role in Africa, by
concentrating on providing accessible policy-relevant
information and analysis usable by a wide range of groups and
individuals.
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