Telling the trade stories of least developed countries

In Africa, the unique experience of each of the 16 million rural women who make a living from shea inspires us more and more every day. Shea is an important crop, both economically and socially. It employs 4 million women for export and generates USD 237 million a year in income at the community level in West Africa. At the household level, shea accounts for up to 12% of household income and up to 32% of cash available, which is earned during the lean season.

The environmental footprint of digital transformation could undermine efforts of containing global temperature rise to within 1.5°C by 2050. Just 35% of the population in least-developed countries used the internet in 2023, but LDCs are increasingly destinations of digitalization-related waste. Given the global volume of electronic waste, LDCs can support sustainable digital transformation through responsible e-waste management.

Digitalization has the potential to transform the way businesses achieve a triple bottom line – economic, social and environmental – to address the rising concerns of shareholders. One way to achieve this objective is to enhance transparency and meaningful integration of these dimensions into the entire supply chain, for which digitalization can be a powerful tool.

Digital technology touches every aspect of human lives and all the UN Sustainable Development Goals (SDGs). While digital transformation can help the 45 Least Developed Countries (LDCs) to sidestep traditional development pathways, the real challenge is the growing digital divide between the LDCs and the rest of the world. As richer parts of the world become increasingly adept at leveraging digital technology for value creation, the LDCs risk falling further behind.

• Although the services sector has emerged as a new engine of economic growth, the lingering effects of the COVID-19 pandemic have severely affected services exports from the least developed countries (LDCs), with an approximate loss of almost USD 29 billion in foregone exports over the past three years. • While global services exports have rebounded from the shock of the COVID-19 pandemic, the recovery in the LDCs is lagging, potentially with long-term consequences for achieving the ambitions of the Doha Programme of Action for the LDCs and several Sustainable Development Goals. • Urgent actions by the LDCs and their trading and development partners to improve utilization of the WTO Services Waiver, incentivize foreign direct investment (FDI) and technology transfer, promote regional trade initiatives, leverage Aid for Trade, and address the digital divide can help reverse this trend, enabling the LDCs to benefit from a services-led transformation.

The Doha Programme of Action for LDCs (least developed countries), adopted by UN member states in 2022, emphasizes that LDCs need assistance to help them graduate from their least-developed status and outlines a smooth transition plan. Some LDCs, however, are using their own proactive strategies to not only graduate from the LDC category but to do so on a solid footing that ensures a sustainable and irreversible graduation. Cambodia, which is projected to graduate from LDC status by 2027, is one such country. The country has even taken bold steps to expedite its transition to an upper-middle-income country by 2030 and a high-income country by 2050.

The Enhanced Integrated Framework (EIF), which helps developing countries become more active players in the global trading system, supported the development of QI by co-financing the Pacific Quality Infrastructure (PQI) Initiative.

Of the 46 least developed countries (LDCs), 16 are at different stages of graduation. And, though graduation offers many opportunities, it also presents its own unique challenges for countries in this category. As such, various international support measures (ISMs) have been put in place, or extended, to ensure smoother transitions and sustained developmental progress in the post-graduation phase.

Gaps in technology, infrastructure and skills, especially in Least Developed Countries (LDCs), highlighted the need to help entrepreneurs grasp the possibilities of digital transformation.

At their core, these challenges are inter-related and point to the importance of promoting a more active industrial policy, together with the ongoing trade policy effort at the heart of the AfCFTA. This is particularly key for Least Developed Countries (LDCs) situated in Africa.

There are three key advantages that e-commerce offers to women. First, it offers lower barriers to entry than traditional brick-and-mortar businesses. Second, it can enable women entrepreneurs to reach customers all over the world. Third, it offers a degree of flexibility in terms of work hours and location.

Building forward and backward production linkages between agricultural and manufacturing sectors by adding value to primary commodities should be a priority for LDCs. Taking incremental steps towards industrialisation through increased productive capacities, with the support of development partners, will ensure that progress will be sustainable and robust, truly leading LDCs along the path of development. 

Climate change also impacts trade. Extreme weather events can reduce productivity, increase costs and supply chain disruptions in the short term and alter countries' comparative advantages and specialization in long term. The WTO World Trade Report 2022 finds that a rise of 1°C has been found to reduce the annual growth of developing countries' exports by between 2.0 and 5.7 percentage points. 

Most of Rwanda’s cross border traders are women and rely on cross-border trade as their sole source of income. According to a recent assessment by Pro-Femmes/Twese Hamwe, the Rwandan umbrella organisation for women’s associations, most cross border traders have experienced not only a large loss in revenue due to border closures but also a complete depletion of their savings.

“Ethiopia has huge potential in honey if we increase our capacity in terms of some value addition of the honey products and identifying new markets. In terms of capacity in Africa, I think we are the leading country, so we can develop this as a new area to get export earnings,” said Mesgenu Arga Moach, State Minister of Ethiopia’s Ministry of Trade and Industry.

There was space to enhance this system – by improving the quality and packaging of the potatoes Bhutan puts up for sale, making prices more competitive and shortening the transaction times for farmers.

Having identified this potential through analysis of the country’s trade situation, the Government of Niger and the Enhanced Integrated Framework (EIF) have been working to lay the foundations for trade in hides and leather that is formalized and up to standard, and in which citizens can share in the proceeds.

Originally published by Thomson Reuters Foundation News on 11 September 2019

In countries where farming sustains families and economies, sustainable trade in agricultural products means everything

And the government and NASFAM are searching out even more markets for the country's agricultural production, looking to trade with neighboring countries and to Europe with processed items.

The Government is targeting its precious ylang-ylang, vanilla and cloves – key cash crops with global demand. Through the partnership with EIF, cooperatives, trainings for female entrepreneurs like Houria and small business support in the form of vats, labels and processing items have laid the foundation for increased trade for the country.

In The Gambia, one of the industries ripe with potential for growth identified by EIF and the government was the cashew. By supporting the cashew’s entire chain of production – from farmers’ fields to the development of a new cargo facility – the EIF equipped cashew farmers with new skills and the food safety certification needed to export to markets such as the European Union (EU).

By investing in modern rice milling facilities, Cambodia could produce higher quality milled rice for growing international markets and gain international recognition for its milled rice standard.

Like many small island states, Vanuatu and its economy are particularly vulnerable to extreme weather events and climate change. In March 2015, a category 5 tropical storm, known as Cyclone Pam, ripped through the archipelago, destroying 90 percent of the buildings—including the Port Vila seafront—and leaving dozens dead.