F ailure to address logistics and other trade-related obstacles has seen the share of least developed countries (LDCs) in global trade remaining at less than 1% since 2008, according to the 2018 United Nations Conference on Trade and Development (Unctad) Least Developed Nations report. In addition to inadequate infrastructure and poorly functioning trade-related institutions, many LDCs face specific trade-related obstacles such as landlocked positions, distance from large and dynamic markets, and small domestic markets that limit potential economies of scale, according to the report. Nine of the world’s 47 LDCs are South Africa’s trade partners in the Southern African Development Community region – Angola, Comoros, Democratic Republic of Congo, Lesotho, Madagascar, Malawi, Mozambique, Tanzania and Zambia. The participation of LDCs in global value chains (GVCs) is “significantly affected by trade and investment agreements”. Little value is being added to export commodities as “tariff escalation is a major barrier, both to the processing of agricultural products and to manufacturing, and tariff peaks continue to affect important sectors such as agriculture, apparel, textiles and leather goods,” says the report. This is despite preferential trade agreements, whose value has eroded over time, according to Unctad. The report adds that transport and trade facilitation infrastructure also need to be improved, especially in rural areas. It says entrepreneurs in LDCs face “formidable impediments” in the form of infrastructure deficits, underdeveloped logistics industries, high trade transaction costs, underdeveloped input markets and climate risks. Landlocked LDCs, in particular, should engage in regional transport and transit facilitation projects with their coastal neighbours to expand market opportunities for their firms.
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