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International support measures and financial resources for LLDCs Gladys Mutangadura UN-OHRLLS

International support measures and financial resources for LLDCs Gladys Mutangadura UN-OHRLLS. Special needs of LLDCs. Investment in development and maintenance of hard infrastructure Investments soft infrastructure

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International support measures and financial resources for LLDCs Gladys Mutangadura UN-OHRLLS

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  1. International support measures and financial resources for LLDCs Gladys Mutangadura UN-OHRLLS

  2. Special needs of LLDCs • Investment in development and maintenance of hard infrastructure • Investments soft infrastructure • Enhance trade - productive capacities, value addition, diversification, global value chains, • Enhance trade in services • Enhance Human and institutional capacity building • Enhance regional integration • Mitigate and build resilience to climate change, desertification, and economic shocks.

  3. Support Measures to LLDCs ODA Aid for Trade FDI Market Access Debt relief South-South Corporation Technical assistance/advisory services, capacity building support Technology transfer Innovative sources of funding Remittances

  4. Official Development Assistance (ODA)

  5. Aid for Trade ($ millions)

  6. ODA • ODA to LLDCs and African LLDCs more than doubled between 2000-2010, from $11 to $25.1 billion (in real terms) • But fell by 3.2% in 2011 Challenges • Further tightening of donor budgets • Unequal concentration within LLDC group • High aid-dependency: 6 of the African LLDCs relied on ODA for at least 20% of the central government expenditure between 2003 and 2010

  7. Need to enhance the quantity, quality and impact of ODA for LLDCs • Need for increased ODA and aid for trade to LLDCs –particularly for infrastructure development • Integrate and align ODA with the national plans and priorities of LLDCs • Donors should strive to improve the distribution of ODA across LLDCs, based on country-specific priorities and needs of the recipient countries.

  8. FDI ($ millions)

  9. FDI inflows to African LLDCs • African LLDCs are poor destination of FDI • Only 2 resource-rich African LLDCs received more than $1billion in 2012; in 6 African LLDCs FDI declined (2011-2012) • Majority of FDI to LLDCs is in extractive industries ACTIONS • LLDCs should create a conducive business environment to attract FDI – Macro-economy; regulatory framework; governance; infrastructure • Promote use of FDI to support local processing; value addition, infrastructure development, trade facilitation and technology transfer. • International community should support LLDCs to improve their abilities to enter into investment agreements including with PPPs. • International and regional financial institutions, should continue to strengthen their efforts to help LLDCs put in place the appropriate incentives for enhancing private flows • International community should facilitate additional private flows to LLDCs

  10. Debt Relief Debt burden of African LLDCs has declined substantially in the last decade, mainly as a result of the HIPC Initiative and the MDRI. Debt servicing ratios have also declined in a majority of LLDCs. It is important to be on the lookout and to extend some form of debt relief assistance to LLDCs that are experiencing high debt burdens in order to prevent them from entering into unsustainable debt situations.

  11. External debt stock (% of GNI)

  12. Preferential Market Access • No preferential market access scheme specifically for LLDCs • Developed and some more developing countries extend preferential market tariff treatment to LLDCs’ exports under the Generalized System of Preferences (GSP) and special schemes such as African Growth and Opportunity Act (AGOA) – not necessarily targetted to LLDCs ACTIONS • Consider establishing a preferential market access scheme for LLDCs exports to mitigate high trade transaction costs stemming from their geographical disadvantages. • Apply transparent and development-friendly preferential rules of origin to increase the utilization rate of current schemes and serve as an additional incentive for FDI in LLDCs. • Negotiations under Doha Development Agenda - should aim for improved market access for agricultural and non agricultural export products of LLDCs.

  13. South-South Corporation • South-South and triangular cooperation important for overcoming the infrastructural, institutional, technological and other challenges • For example, corporations from the global South, in particular from China and India, accounted for 41 per cent of FDI to LLDCs in 2011. • Southern providers accounted for 47 per cent of official infrastructure financing in sub-Saharan Africa between 2001 and 2008. • South-South trade has expanded rapidly and developing countries now export more to the South than to the North. ACTION • Foster South-South cooperation through sharing of best practices and experiences and knowledge, increased investment, transferring of appropriate technologies etc • Accession and implementation of supportive agreements

  14. Technical assistance/advisory services, capacity building support • UN, regional commissions, multilateral institutions including WTO, World Bank, donors, regional development banks, and some sub-regional organizations have provided support: • Advocacy • Resource mobilization • Technical assistance/Capacity building (human and institutional) • Infrastructure development • Specific studies Trade negotiation, WTO accession, industrialization, trade facilitation, infrastructure development, development and implementation of legal instruments etc. ACTION • Need to continue and enhance the support.

  15. Enhanced Regional integration • Increased economies of scale • Improve regional infrastructure networks; and connectivity of LLDCs • Improved trade facilitation through adoption of common regulatory policies, harmonizing of policies, programmes and customs procedures • Promote development of regional technology centers and regional networks of excellence; ACTIONS Provide support to regional integration processes.

  16. Innovative sources of funding • Explore innovative funding • Regional infrastructure funds • Infrastructure PPPs • Diaspora bonds • Remittances have increased from $1 Billion in 2003 to $3.2 Billion in 2012 for African LLDCs equivalent to 23% of ODA. • Enhance remittances - Home and host countries need to lower transfer costs • Channel remittances into productive use – eg. Infrastructure and co-development schemes, entrepreneurship and develop incentive schemes for development projects (e.g., matching grants)

  17. Way Forward Increase financial support to LLDCs, including through ODA, Aid for Trade, and South South Co-operation Support and encourage FDI flows to LLDCs. Ensure enhanced and predictable market access for LLDCs products. Consider establishing a preferential market access scheme for LLDCs exports. Technical and capacity building assistance need to be increased.

  18. Thank you

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