Building back better: the challenges facing LDCs in the lead-up to LDCV

London, 26 July (LDC News) —  “We are in the midst of an unprecedented crisis. The severity of its impact is felt globally, the LDCs are bearing its heaviest brunt”. This is how Rabab Fatima, Permanent Representative of Bangladesh, and Co-chair of LDCV Preparatory Committee (PrepCom) described the challenges facing LDCs.

The upcoming UN Conference on Least Developed Countries (LDCV) next January is a crucial moment to take stock of progress and challenges for LDCs. So how does the balance sheet look? Not good. Sadly, most of the progress made since LDCIV in 2011 has been eradicated by Covid-19, with UNCTAD estimating it will take more than five years for the poorest LDCs like Benin, Sudan and Timor-Leste to recover.

“Inequalities between countries have grown so much that the richest 10% in developing countries now has an income below that of the poorest 10% in the rich countries,” says Roberto Bissio, Coordinator of Social Watch.

This has meant that progress on the Sustainable Development Goals, which were seen as important targets has been lost. This calls for a new approach and a new economic model.

A new approach: Global public goods…..

The onset of the Covid 19 pandemic has focused people’s minds on how our world is interconnected, and on the existence of ‘global public goods’, whose benefits cross borders and are global in scope. Each country benefits from global public goods, without preventing others doing so as well. In this context, two public goods that relate to LDCs are vaccines and keeping global warming to 1.50C.

“The pandemic has demonstrated that all aspects of our planet…

are inextricably linked,” said Volkan Bozkır, President of the UN General Assembly.

Vaccines – a global public good

Recent events have clearly demonstrated that a vaccine for Covid-19 is a global public good and vaccine nationalism does not work. The UK, a rich country, spent £12 billion buying up vaccines to protect its population, while Africa has less than 2% of its population fully vaccinated. Then in May 2021, the Covid-19 wave which decimated India’s health system mutated into a new variant, that hit the UK, causing new cases to rise to 50,000 a day.

“The new Programme of Action should come up with some concrete actions to enable LDCs to recover from the pandemic …. access to vaccines at an affordable cost is the number one priority,” said Perks Ligoya, Malawian Permanent Representative to the UN.

To defeat Covid-19, we must vaccinate globally. Developed countries must increase their financial support to COVAX and they must support a TRIPs waiver that would allow developing countries to develop and produce their own vaccines, at a cheaper price, which will help the provision of vaccines to LDCs.

Keeping global warming to 1.50C: another global public good

 

Cutting CO2 emissions is another public good. Every country will eventually suffer because of global warming. At present, because of their geographical location LDCs are the first countries to experience the effects of climate change. Their emissions are 30 times lower than those from high-income countries, but they suffer most.

In the longer term these changes will start to effect high-income countries. The recent flooding in Germany prompted chancellor Angela Merkel to say: “We have to up the pace in the fight against climate change”.

The first call is for developed economies to stick to the agreed targets of reducing emissions by 50% by 2050 and to end subsidies to fossil fuels, and transfer funds to green technology. The second is to urge developed economies to stick to their pledges to contribute funds for developing countries mitigation and adaption costs.

 

…….. changing the economic landscape

The current economic model for LDC development has been drawn up by the more powerful nations and are skewed in their favour. Economic norms need to be redrawn.

“The international economic models, norms and institutions are often rigged against the billions living in the developing world,” said Sophia Tesfamariam Yohannes, Permanent Eritrean Representative to the UN.

Debt cancellation: For years the poorest countries have been forced to repay loans, some of which are “illegitimate” – i.e. borrowed by previous dictators, which current governments have to repay. It is estimated that in 2021 debt service payments will amount to nearly $1.1 trillion, money that otherwise could be spent on building up LDCs’ health systems to fight Covid-19. Most measures – such as the DSSI – only suspend debts, putting off problems until tomorrow.

“The G20 ́s “DSSI” in practice just means kicking the can down the road. Many LDCs require actual debt cancellation,” said Bodo Ellmers of Global Policy Forum.

What is needed is debt cancellation – not suspension, relief, nor ‘forgiveness’ but full cancellation of bilateral, multilateral and private debt service payments.

 

Global Tax Reform: Taxing revenue helps a country to garner resources to build up its services and support its citizens. However, to avoid paying local taxes, corporations move their companies’ assets daily across the global. As a result, every year a minimum of $425 billion in taxes is lost.

To stop this from happening, loopholes must be closed to prevent individual corporations moving their declared profits around the world, so LDCs get their rightful taxes to build up their country’s assets and services.

 

Increase ODA: ODA, an important support measure for developing economies, but has stalled over the years and, coupled to this, the pandemic has resulted in cuts to development support – recently the UK, which had retained its ODA at 0.7%, halved it, citing national priorities. It is important that development partners stick to their pledge of 0.7% of GDP and stop changing the way ODA is accounted for in a way that inflates the figures without adding any extra monies. This is also the moment to increase grants to LDCs to help them over the current abyss.

“We need more aid. This is not charity, but justice. ODA matters to LDCs making up a full 1/4 of the external finance”, said Gabriela Bucher of Oxfam International.

 

Support for Digital development

A growing concern for LDCs is to ensure they can take advantage of the benefits that Information Technology offers for development, so that digital access could enable them to ‘leapfrog’ economic and industrial development through gaining access to global markets.

“The adoption of digital technologies by LDC firms would bring great benefits, but most firms lack the required technological capabilities and skills” (UNCTAD).

At present these countries lack the infrastructure, such as access to electricity and to the Internet. They also need the tools of literacy and computer knowhow.

To take advantage of the digital world, LDCs need an injection of sustainable development finance so they can improve their infrastructure and purchase equipment and expertise.

Access to the digital world could promote gender equality, so it is important to reinforce education programmes that improve literacy and computer literacy for women as well as men.

 

Graduation

Graduation is considered as a measure of success for LDCs – showing they are now sufficiently strong economically to move out of this category. However, graduation also means the loss of certain advantages, like trade preferences, development financing, technical assistance and other forms of support. So graduation is often a shock to most LDCs.

“Upon graduation, LDCs are likely to lose LDC specific support, potentially in addition to the impacts of the pandemic. Continued support is required to sustain the development trajectory,” said Volkan Bozkır, President of the UN General Assembly on 18 Jun.

There is concern that LDCs which were doing well before Covid-19 hit them, have slipped back and this is not being considered in putting their names forward for graduation, so they will struggle if made to graduate. All current graduation should be delayed and reassessed.

Harpinder Collacott of Development Initiatives called for a departure “from the insistence that countries graduate after achieving a relatively low level of per capita income to thinking…long term”.

In addition, in order that LDCs do not lose their advantages immediately on graduation, the graduation transition period should be extended, and graduating LDCs be closely monitored so they can be given more support when needed.

Conclusion

This paper has outlined some of the key issues to be discussed during the next LDC Conference (LDCV). Papers fleshing out the details on these will be published in the run-up to this Conference: August: Overcoming the digital divide; Vaccines as a public good; September: Climate change: cutting global emissions, another public good; and Graduation, the need for a more nuanced approach.

Author of paper: Daphne Davies, Editor, www.ldcnews.com Email:  ldcnewsservice@gmail.com

 

To discuss the issues raised in this paper, please contact Roberto Bissio, Coordinator, Social Watch: rbissio@itern.org.uy, WhatsApp/Tel: +33 6 1279 4750.

Bookmark the permalink.

Leave a Reply

Your email address will not be published. Required fields are marked *