Global financial crisis hurts least developed countries

The world financial and economic crisis has reversed recent growth trends in the world's poorest nations, dampening the prospects that half of the 48 least developed countries (LDCs) will be able to 'graduate' from that status by the end of the decade, as called for by last year's international conference on LDCs, UNCTAD research shows.

Case studies on Zambia, Benin and Cambodia show that "the recent economic and financial crisis severely weakened the abilities of many LDCs to maintain steady income and spending," an UNCTAD expert told the organisation's Trade and Development Board at a meeting recently.The findings are contained in a report presented to the Board titled "Enabling the Graduation of LDCs: Enhancing the Role of Commodities and Improving Agricultural Productivity."

Director of the organisation's Division on Africa, Least Developed Countries, and Special Programs, Teffere Tesfachew ,said that in Zambia, "it was estimated that the loss in mining production and reduced exports - which meant low royalty payments and temporary closure of some production activities - led the country to lose up to 22 percent of its government revenue between 2009 and 2010."

He said that the largest copper mining company in Zambia reported a 40 percent reduction in all supplier contracts. Between June 2008 and June 2009, the total job loss in Zambia's mining sector amounted to 30.4 percent of the total labour force engaged in mining.

In Cambodia, the case study found that "the share of households that did not have sufficient income for food and other essential expenses increased from 62 percent to 69 percent between June 2007 and June 2008. It was also estimated that 63,000 jobs were lost in the country's garment sector during the same period, and that employment in the country's construction sector sank by 30 percent."

In Benin, Tesfachew told the meeting, the case study had shown that the proportion of people living in absolute poverty increased from 33.4 to 34.4 percent between 2007 and 2009.

The fourth United Nations LDC Conference, held last year in Istanbul, resulted in a Program of Action that sets a target of having at least half of LDCs on track to graduate from the category by 2020. It was acknowledged even at the time that the goal poses a stiff challenge for the countries and for international efforts to help them.

In the 40 years in which the LDC category has existed, only three countries have graduated - Botswana, Cape Verde and the Maldives. One more - Samoa - is slated to exit in 2014. Meanwhile, a new country - South Sudan - is expected soon to officially join the ranks of LDCs, raising the global total to 49.

The Program of Action assigns a broad mandate to UNCTAD to carry out research and analysis, consensus building, and technical cooperation work related to LDCs.