The road ahead for the poor countries

At the global level, significant progress has been made towards meeting the MDGs by 2015. The latest United Nations Millennium Development Goals Report (2007) shows that the number of people living on less than one dollar a day in developing countries dropped by 270 million between 1990 and 2004.
In 2004, 20 percent of the people in developing countries were living in extreme poverty, compared to 32 percent in 1990. Enrolment in primary school increased from 80 percent in 2001 to 88 percent in 2005.

Based on these significant achievements, the general assessment is that the world as a whole is on course to halve extreme poverty by the deadline of 2015. The prospects for achieving the other goals, especially those relating to child and maternal mortality, nutrition, sanitation and disease are not quite as promising. Equally disconcerting is the fact that much of the progress acknowledged above has bypassed those whoneed it most – the world’s poorest countries. Indeed, major disparities exist among developing countries. The best performances in poverty alleviation have been achieved in China and in India.

As a result, it is projected that on current trends, the Least Developed Countries (LDCs) and Sub-Saharan Africa could miss all the goals. In the LDCs, a group of 49 countries characterized by the United Nations as the “poorest and weakest segment of the international community”, the number of people living in extreme poverty is predicted to rise from 340 million in 2000 to 470 million 2015. In other words, contrary to the MDG target of cutting by half the proportion of people in extreme poverty, the share of the population living on less than one dollar a day in these countries will have risen from 45 percent in 2000 to 50 percent in 2015.

While it appears quite likely that the majority of the LDCs will not meet the MDGs, the situation in these countries is not all gloom. There have been some positive indications in the last few years that with the right domestic policies and appropriate levels of international support, the situation could yet be rescued. Since 2001, economic growth in the LDCs has averaged 6.5 percent per annum. Some LDCs have also recorded impressive results in certain areas of human development, such as primary school enrolment (Uganda, Tanzania); controlling Malaria (Niger, Togo, Zambia), increasing access to drinking water and sanitation (Senegal, Uganda) and improving food security (Malawi). Unfortunately, these achievements have been not been shared across all the poor countries and across the eight MDGs.

The conclusion from this mixed picture is that attaining the MDGs in the poor countries is still possible, but a number of critical obstacles have to be tackled urgently and effectively if this is to happen.

Why, despite the reasonable rates of growth since the early 2000s noted above, have the Least Developed Countries and Sub-Saharan Africa failed to make a dent on poverty? Paradoxically, one of the main explanations for the impressive growth rates – economic liberalization – has also been one of the reasons for increased poverty in these countries.

In the short-term at least, economic and administrative reforms, characterized by opening the economies to competition, shedding jobs, eliminating agricultural and industrial subsidies and removing price controls among other reforms, have imposed economic hardships on large sections of society. The absence of social safety nets and lack of alternative sources of income in most cases have aggravated the situation. The benefits of economic reforms have tended to concentrate in a few sectors of the urban economy, yet the majority of people in the poor countries live in the rural areas. With greatly reduced incomes and increased prices for basic goods and services, including foodstuff and health services, many people in the LDCs and Sub-Saharan Africa have simply been unable to break out of the poverty cycle.

In some countries, weak governance practices and institutionsIn some countries, weak governance practices and institutions have remained a constraint to poverty eradication efforts. Without the effective participation of ordinary people in governance, the focus on fighting poverty may not be sustained. Moreover, without sufficient transparency and accountability, the resources that would otherwise be channeled towards poverty eradication efforts may be diverted to other uses or even lost through corruption.

The Programme of Action for the Least Developed Countries adopted in Brussels in 2001 emphasises good governance as an important factor in eradicating poverty. Similarly, the priorities of the New Partnership for Africa’s Development (NEPAD) include good governance.

Indeed, the African Peer Review Mechanism has been established under NEPAD to promote good political, economic and corporate governance. It should be noted, however, that the question of governance goes beyond the national level. Good governance at the international level, in terms of “an open, equitable, rule-based, predictable and non-discriminatory multilateral trading and financial system”, as agreed under the Programme of Action for the Least Developed Countries, is equally important. Obstacles to trade, including tariff and non-tariff barriers and domestic subsidies in the developed economies, continue to undermine poverty reduction efforts in the LDCs and Sub-Saharan Africa, as well as in other vulnerable groups such as the Landlocked Developing Countries and the Small Island Developing States. These barriers will need to be lifted for these vulnerable countries
to make the necessary progress towards the MDGs. There is a need for significant investments in basic social services, physical infrastructure and human resources in the poor countries. In particular, more attention needs to be paid to the agriculture, energy, transport and communication sectors, as well as to building institutional and technical capacities.

The resources needed for these investments are beyond the means of these countries, hence the crucial importance of international support. In general, international support to the vulnerable countries has improved in recent years, but more efforts are needed to achieve the agreed targets. The developed countries have committed themselves to providing 0.15 – 0.2 percent of their Gross National Income as aid to the Least Developed Countries and 0.7 of their Gross National Income to the other developing countries.

At the G8 Summit in Gleneagles in 2005, the world’s top donors pledged to raise development aid from 80 billion United States dollars in 2004 to 130 billion United States dollars by 2010. But as the Organisation for Economic Cooperation and Development noted in its report on development assistance for this year, “most donors are not on track to meet their stated commitments to scale up aid; they will need to make unprecedented increases to meet their 2010 targets.” While development assistance remains indispensable, it is equally important that the capacity of the vulnerable countries to generate their own resources, including through increased investment and participation in international trade, is enhanced.

The prospects for achieving the MDGs in the Least Developed Countries are further undermined by the high population growth rate. Although they account for 12 percent of the world’s population, the 49 LDCs will absorb a quarter of the world’s population increase between now and 2015. Nine out of the 10 countries with the highest average population growth rate between 2005 and 2010 will be LDCs. The challenge of population in the LDCs is not just one of numbers, but also structure. With a median age of 19 years, the LDCs have the youngest population in the world. The resulting high dependency ratio could increase extreme poverty, but it could also provide a unique opportunity as the large proportion of young people joins the labour force. But the LDCs will only be able to take advantage of this transition if they are able to generate productive work and to reduce the high fertility rates.

Another major transition taking place in the LDCs that needs to be given attention is the expansion of the non-agricultural labour force. According to a recent United Nations study, the growth of the labour force outside agriculture will outpace the growth of the labour force within agriculture during this decade. This calls for a rapid expansion of employment opportunities both within and outside the agricultural sector. Otherwise, as the study warned, “there will be increasing pressures for international migration from the LDCs and high levels of extreme poverty will persist."

In recent months, a lot of attention has been focused on the negative impact of climate change. The report of the Inter-Governmental Panel on Climate Change released last year identified the Least Developed Countries, Sub-Saharan Africa and the Small Island Developing States as the most vulnerable to climate change. This is not only because of the high levels of poverty and limited financial, institutional and technical resources, but also because many of them are located in ecologically fragile regions. Without the necessary resources to adapt, the development prospects of these countries will be diminished further by climate change. As the international community seeks solutions to this global challenge, it is imperative that these groups of countries are given priority.

With just under seven years left to 2015, it is clear that extraordinary efforts will be needed to achieve the MDGs in the most vulnerable countries. No doubt, the journey will be a grueling one, but it is one the world cannot afford to shy away from. The little progress that has been made in these countries should give us a good enough incentive to redouble our efforts. We have lost a lot of time, but it is not too late to catch up.