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Rwanda will still be least developed by 2025, says Unctad

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Andrew Mold, acting director of the UN Economic Commission for Africa, Eastern Africa sub-regional office, presenting the report. PHOTO | CYRIL NDEGEYA

Andrew Mold, acting director of the UN Economic Commission for Africa, Eastern Africa sub-regional office, presenting the report. PHOTO | CYRIL NDEGEYA 

By KAYITESI KAVEN

Posted  Saturday, January 7   2017 at  14:03

In Summary

  • In a report titled, The Least Developed Countries Report 2016, Unctad states that by 2025, Least Developed Countries (LDCs) will only be found in Africa.
  • But even with this grim picture, Rwanda and a few other countries including Uganda and Ethiopia are reported to have made considerable progress in export diversification which is a step in the right direction.

Rwanda will still be categorised as a least developed country by 2025 according to new projections by the United Nations Conference on Trade and Development (Unctad).

This assertion is at variance with Rwanda’s Vision 2020 which set a per capita income target of $1,240 by 2020, which government officials say is still achievable.

In a report titled, The Least Developed Countries Report 2016, Unctad states that by 2025, Least Developed Countries (LDCs) will only be found in Africa.

“Almost all of the Asian and Island LDCs are projected to graduate by 2024, implying that 32 countries comprising the LDC group in 2025 would only include one Small Island Developing State (SID) and two other countries outside Africa. The majority of the LDCs will remain in Africa,” said the report.

But even with this grim picture, Rwanda and a few other countries including Uganda and Ethiopia are reported to have made considerable progress in export diversification which is a step in the right direction.

Rwanda’s finance minister was recently quoted by local media saying the targets under Vision 2020 could still be delivered on schedule because of past investment in enabling infrastructure which was expected to stimulate growth.

Challenges affecting LDCs

The report describes three major challenges affecting LDCs and hampering their progress towards graduation, the biggest of which is poverty.

“Many LDCs suffer from a poverty trap, with low income and limited economic growth, giving rise to high levels of poverty, which in turn acts as a brake to economic growth,” states the report.

Half of the total population living in these countries is said to be living in extreme poverty.

The commodity trap is described as the second challenge, where LDCs are said to be dependent on commodity production and trade for employment, income, savings and foreign exchange.

“Commodity dependence increases vulnerability to external shocks such as diverse terms of trade movements as well as climate change impacts,” the report says.

Weak productive bases and limited export diversification in LDCs is also listed as a challenge facing the countries and forcing them to have high import content and chronic current account deficits.

According to the acting director of the Uneca, Eastern Africa sub-regional office, Andrew Mold, intra-regional trade is a stepping stone for East African countries to graduate from LDCs to middle income countries.

“Integration and intra-regional trade is the way forward for EAC countries and other African countries as well. These countries cannot quite compete with giant economies, but intra-regional trade is where the EAC countries best achieve their diversification excellence and reduce their dependence on single export commodities,” said Mr Mold.

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