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Least Developed Countries and Vulnerability

CFC Support for LDCs
A few numbers

Total number of projects involving LDC since BPoA: 127
Total value of projects involving LDC since BPoA: USD 189mln
Total direct contribution from the CFC: USD 105mln
In implementing its measures under BPoA the CFC supported commodity dimension in programmes of practically all international agencies, including UNCTAD, UNDP, UNIDO, FAO, IFAD, UNFCCD, World Bank, ITC, etc.

 

The significance of commodity sectors for LDCs

Commodity dependence is prevalent among LDCs today. A conservative estimate is that over 3/4 of African LDCs depend on commodity production for over half of their export earnings, and there’s some 800 million people at the lowest income level who depend on commodities and commodity-related jobs for their livelihood. UNCTAD is maintaining a close watch on the data, and could probably give you more details on the subject.

We see two-way connection between commodity dependence and poor development outcomes:

  • commodity dependence is a major source of economic vulnerability of LDCs;

  • commodity dependence is a symptom of lack of competitiveness in other sectors.

Closing the vicious circle, elevated vulnerability resulting from commodity dependence limits LDCs capacity for wealth accumulation, investment and productivity driven economic growth.
Graduation from LDC category is all but impossible without solving the problem of commodity related vulnerability.

CFC work in LDCs

CFC finances projects addressing specific weaknesses of commodity dependent developing countries, with particular focus on LDCs. Interventions can be aimed at any stages of commodity value chain, including, inter alia, productivity and quality improvements, various price risk management systems, marketing and marketability of commodity products, etc.

The main benefits of pilot projects supported by the CFC come not from “flooding a problem with money” but from making strategic interventions through modest expenditure to put together effective measures to address particular problems affecting commodity production and marketing. This way, the CFC seeks to create new opportunities for income generation and wealth accumulation in Least Developed Countries.

Seizing the opportunities created by commodity markets stimulates sustainable economic growth through emergence and development of profitable enterprises. Recognizing that problems of commodity dependence, volatility, and other complicating features of commodity markets also create development opportunities for LDCs should, in our view, remain part of the next decennial Programme of Action for LDCs.