The Least Developed Countries Report 2019

Least developed countries (LDCs), the world’s most impoverished nations, should proactively ensure external finance from all sources is directed to national development priorities. This approach is the best way to manage their aid dependency and eventually escape it, says UNCTAD’s Least Developed Countries Report 2019.

There are 47 countries currently designated by the United Nations as least developed countries (LDCs). They are:

Afghanistan, Angola, Bangladesh, Benin, Bhutan, Burkina Faso, Burundi, Cambodia, Central African Republic, Chad, Comoros, the Democratic Republic of the Congo, Djibouti, Eritrea, Ethiopia, Gambia, Guinea, Guinea-Bissau, Haiti, Kiribati, Lao People’s Democratic Republic, Lesotho, Liberia, Madagascar, Malawi, Mali, Mauritania, Mozambique, Myanmar, Nepal, Niger, Rwanda, Sao Tome and Principe, Senegal, Sierra Leone, Solomon Islands, Somalia, South Sudan, the Sudan, Timor-Leste, Togo, Tuvalu, Uganda, United Republic of Tanzania, Vanuatu, Yemen, Zambia.

LDCs account for 15 of the 20 most aid-dependent countries in the world due to persistent shortfalls in their domestic savings, among other factors, according to the report.

“For LDCs to attain the Sustainable Development Goals and escape aid dependency, they need external finance that is targeted at the structural transformation of their economies,” UNCTAD Secretary-General Mukhisa Kituyi said.

To make this possible, LDCs should take ownership of their development agenda and manage the allocation of external development finance in alignment with their national development priorities. The international community also needs to step up its support towards this common goal, the report states.

Official development assistance (ODA) disbursements to LDCs have increased by only 2% annually since the Istanbul Programme of Action of 2011 and remain far from internationally agreed targets, the report observes.

“Critically, the linkages between external development finance and national development priorities are weakening,” said Rolf Traeger, chief of UNCTAD’s LDC section.

The sectoral composition of ODA continues to be biased towards social sectors, which absorb 45% of total aid, compared to economic infrastructure and production sectors, which receive only 14% and 8% respectively.

LDCs should adopt policies to adequately manage relationships with traditional and emerging development actors, including traditional donors, non-governmental organizations (NGOs), philanthropists, private sector entities involved in development cooperation and Southern sources of development finance.

In addition, the report recommends that LDCs clarify decision-making on the allocation of financial resources, project selection and the determination of priority areas and issues. They should devise mechanisms for the efficient disbursement, allocation and use of external finance to safeguard their fiscal space.

UNCTAD urges the international community to take action at the bilateral and multilateral levels to reinforce measures by LDCs at the domestic level and to address systemic issues of the international financial architecture that affect LDCs’ access to development finance.

Read and download the: Least Developed Countries Report 2019.

Original source: UNCTAD
Published on 19 November 2019