The number of people living in extreme poverty continued to grow in the world’s poorest countries, despite the 49 least-developed countries (LDCs) showing growth of about 7% over the last decade, a report by the United Nations Conference on Trade and Development (Unctad) showed.

The Unctad report, which was released on Thursday, showed that the number of people living in extreme poverty in LDCs increased by about three-million every year.

Unctad economic affairs officer Rolf Traeger said in Johannesburg that this trend was mainly as a result of low-income countries’ heavy reliance on the exports of extractive resources and their inability to diversify their economies.

“The type of economic growth generated by these countries are for the larger part underpinned by commodities, however, the wealth that is generated from the mining and extractive industries are not being used to increase their productive capacities and do not filter down to the majority of the population.”

Currently, more than 50% of people living in LDCs are living on less than $1 a day.

Traeger pointed out that fixed investment was essential to growing a sustainable economy, yet, LDCs only spent 20% of income on such investment. “A country such as China that has been growing at a rate of around 10% a year for the past ten years, spends at least 40% of its income on fixed investments.”

Consequently, LDCs are unable to structurally build their economies and continue to suffer from a lack of infrastructure and minimal industrialisation.

Meanwhile, the income gap between advanced countries and LDCs is growing. In 1980, the gross domestic product (GDP) per capita in developed countries averaged $1 000 and $150 in LDCs. In the last 20 years, the average GDP per capita in developed countries grew to $2 000, while it increased to $350 in LDCs. However, if all monetary aspects were taken into account, LDCs had proven to be income divergent, with GDP per capita actually decreasing by 11%.

Traeger said that efforts from the international community to mitigate extreme poverty over the past decade had for the larger part been fruitless. He explained that while a number of efforts to assist LDCs had been launched, they had proven to be more symbolic rather than practical development efforts. In fact, only two countries, Botswana and Cape Verde, were able to escape their status as LDCs in the last 30 years.

Therefore, the Unctad study aimed to launch a New International Development Architecture (NIDA), specifically focused on LDCs, that would look at a reform in global economic regimes, but also on increased south-south development cooperation.

The strengthening of such cooperation should not only focus on the liberalisation of trade, but also on certain special differential treatment of LDCs, said Traeger.

He added that South Africa, as Africa’s richest and most industrialised country, could play a vital role in especially regional cooperation.

The Unctad report showed that of the 49 LDCs, 33 were in Africa, of which eight were in the Southern African Development Community (SADC) region.

“South Africa should focus on assisting these LDCs, especially in the SADC region, with things such as trade, technology, technical transfers and finance,” said Traeger.

He emphasised that climate change would also play an increasingly important role as far as the development of these poor countries goes.

The report showed that LDCs had experienced five times as many extreme weather conditions in the past ten years compared with the 1970s, and recorded economic losses of about $14-billion.

Traeger said that a great need existed for additional funding to allow LDCs access to renewable energy technologies.

Going forward, Traeger said that LDCs needed the appropriate technical skills to better negotiate and use ‘resources rent’. He suggested that this could then be used to add value to resources and that beneficiation could be a springboard into increased industrialisation. “Several countries such as Finland, Sweden, Norway, Chile and South Africa have successfully used this model to diversify and grow their economies.”

He added that LDCs also needed to revive their agricultural sector which had been severely neglected over the years. This neglect has led to an increase in urbanisation that could lead to a severe social crisis.

By 2017, one-billion people will be living in LDCs. “LDCs will face a difficult medium-term outlook as low investment levels and weak financial development continue to pose a serious threat and will largely depend on the speed of economic recovery in the rest of the world and increased support by international donors.”

However, Traeger noted that if the NIDA was properly implemented, the picture would look somewhat brighter by 2020.