Least Developed Countries

ITC helps developing countries to achieve sustainable human development through export. We are the largest multilateral team dedicated entirely to trade-related technical assistance in developing countries, with a special emphasis on Least Developed Countries. LDCs accounted for 48% of ITC’s delivery in 2009, up by five percentage points from 2008.

Economic background, ITC’s unique role

The recent economic crisis has hit LDCs particularly hard. While between 2000 and 2007 their exports grew consistently in value, LDC exports contracted by 43% in the first half of 2009 compared to the same period the year before. This contrasts with a 32% decline in global trade during the same period. (See also ITC Trademap Factsheet 3/2010.) Though their exports have somewhat recovered in the second half of 2009, due especially to a rebound in the prices of fuels and minerals, the crisis has exposed the fragility and vulnerability of LDC economies.

Most LDCs, with the exception of oil exporting countries, have acute deficits in their trade and current accounts. As a result, they are not only significantly indebted, but are also caught in a debt spiral. Increasing their balance of trade is thus vital for lifting these countries out of poverty. This has been recognized by the international community – most recently the UN’s Millennium Development Goals (MDGs) Summit in September underscored the importance of Aid for Trade as the most effective means for reaching the MDG-s.
Increasing their foreign earnings by exporting higher value added goods has proven to be difficult for most LDCs: lack of access to technology and the difficulty of complying with quality standards in developed countries have kept them from moving up the export value chain. LDCs’ exports are still dependent upon a few products, typically primary commodities, where they have a natural advantage. The share of manufacturing, which propelled development in many middle income countries, has increased slowly. It is ITC’s mission to work with trade support institutions in LDCs to increase export capacities of Small and Medium Enterprises (SME-s) and help them move up the value chain.

While, according to the Organisation for Economic Co-operation and Development OECD, there has been a 35% increase in Aid for Trade development assistance in 2008, LDCs received only a quarter of the total USD 41.7 billion. TRTA funds are spent unevenly, with the top 20 countries receiving more than 70% of funding. Only six of these are LDCs: Afghanistan, Ethiopia, Mali, Tanzania, Mozambique and Bangladesh. In contrast, LDCs accounted for 48% of ITC’s delivery in 2009, up by five percentage points from 2008.

ITC has identified the following priority needs at LDCs:

To integrate SMEs into global value chains and to strengthen their competitiveness;
To enable SMEs to produce products with higher added-value;
To develop sectors with export potential;
To strengthen quality and standards management;
To enhance the capacity of Trade Support Institutions to support SMEs;
To integrate business and exports into trade policy and to promote public-private dialogue;
To promote economic integration and develop intra-regional trade;
To formulate national and sectoral export strategies;
To promote diversification from dependence on a single export commodity.

ITC fulfils a unique and important role in providing TRTA for LDCs, focusing on the private sector. A cross-country comparison of 29 Diagnostic Trade Integration Studies (DTIS), based on data from a 2009 UNDP study, has shown that there is a policy-oriented bias in TRTA. More than half of the references in the studies refer to support at the policy level, a quarter targets institutional actors and only around 20% focus on enterprises. There is a wide demand for ITC expertise from LDCs: Consultations with and the involvement of the private sector through public-private partnerships and transparent accountability are likely to play a bigger role in coming years. It is therefore important that ITC promotes the inclusion of export development and the participation of the private sector.

Ongoing ITC activities in LDCs
ITC works with LDCs on a number of different programs in order to enhance the role of trade in development. LDCs benefit from programmes that relate to all of ITC’s five business lines, namely Business & Trade Policy, Export Strategy, Strengthening Institutions, Trade Intelligence and Exporter Competitiveness. Programmes and projects supporting LDCs include :

Programme for building African Capacity for Trade (PACT II) aims at strengthening regional integration and export competitiveness in the Common Market for Eastern and Southern Africa (COMESA), the Economic Community of Central African States (ECCAS) and the Economic Community of West African States (ECOWAS), including their member LDCs. Funded by the Canadian International Development Agency (CIDA), PACT II encourages pan-African partnerships and networking, reinforces the capacity of regional and national Trade Support Institutions, fosters public-private dialogue, enhances business linkages and export revenues of African small and medium size enterprises with a special focus on women-owned enterprises.
The Ethical Fashion programme, with pilot projects in Kenya and Uganda, aims at involving groups of micro-producers from marginalized communities in an approach to reduce poverty and empower women.
The Trade at Hand programme, piloted in Uganda, Tanzania and Liberia, is a mobile phone-based business-matching service that facilitates transactions between agricultural producers and traders by linking the producers to markets and to market information.
The Intra-regional (“South-South”) Trade programme aims to promote trade and investment among developing countries and transition economies by creating linkages among them, identifying trade and investment opportunities and translating them into business transactions and by bringing importers and exporters together. The programme is aimed at business associations and national, regional and inter-governmental organizations promoting economical linkages among developing countries and transition economies.
The All ACP Agricultural Commodities Programme (AAACP), implemented jointly with the World Bank, UNCTAD, CFC and FAO, launched in 2007 under the joint coordination of the European Commission and the African, Caribbean and Pacific Secretariat. As part of the programme, ITC leads the design and implementation of food and cotton market development strategies that benefit most of the world’s LDCs in Africa, the Caribbean and Pacific.
The Export-led Poverty Reduction Programme (EPRP) aims at linking poor communities to world markets by integrating them into value chains of products and services from organic cultivation through handicrafts to inclusive tourism. Currently EPRP projects are implemented in 12 LDCs and have so far benefited 38,000 poor people by creating additional jobs and higher income.
The recently launched Tourism-Led Poverty Reduction Programme (TPRP) identifies existing tourist destinations surrounded by poor communities and identifies opportunities to link the poor to tourism markets. Pilot projects in Senegal, Mozambique and Lao PDR have led to nation-wide replication. Tourism generates significant economic activity through linkages with other sectors such as agriculture and manufacturing, and offers potential for local value chain development.
WTO accession support for LDCs is a priority for ITC, which also assists the business community in understanding the business implications of the accession. Our programme assists enterprises, including SMEs, in articulating their priorities and needs in the negotiations. A vital element in the accession process is building national support for the process among key stakeholders, particularly the private sector. The programme also assists in the smooth implementation of immediate post-accession commitments. In light of the still significant number of LDCs seeking WTO accession, ITC complements the work of WTO and UNCTAD by building the private sector understanding and partnership with the public sector to take advantage of membership.
Under the Enhanced Integrated Framework (EIF), ITC provides capacity building for LDCs’ National Implementation Units and is currently supporting seven LDC governments in the formulation of TRTA projects to be implemented by ITC. Additionally ITC has contributed significantly to the updating of the Diagnostic Trade Integration Studies in Rwanda and Nepal.

ITC services complement and enhance those offered by other key partners, such as UNCTAD, WTO, UNDP, UNIDO and the World Bank. While overlap between the mandates and interventions of UN Agencies certainly exists in some areas of work, a great number of country-specific or regional programmes and projects in LDCs are already delivered with joint coordination and implementation efforts among partnering Agencies. For example, ITC has a track record of successful cooperation on policy issues such as WTO accession (e.g. with WTO in Yemen, Ethiopia and Lao PDR), sector specific interventions (e.g. with UNCTAD on Tourism in Benin), on enterprise competitiveness training (with UNCTAD under the EMPRETEC Programme), and on trade facilitation developed with WTO, UNCTAD and the World Bank under The Aid for Trade Initiative. For a small organization such as ITC, the demands of collaboration and partnership are significant, especially during the initial setting-up stage when objectives, priorities and procedures have to be established.