The role of energy in boosting

productive capacities, commodity

diversification and fostering

structural transformation

in LLDCs

Mussie Delelegn

Chief, Landlocked Developing Countries' Section

Division for Africa, Least Developed Countries and

Special Programmes, UNCTAD

24-25 October 2016, Vienna, Austria

Division for Africa, Least Developed Countries and

Special Programmes ( ALDC )

UNCTAD

I. LLDCs and Energy: some basic facts

II. Energy , PCs and structural economic

transformation in LLDCs

III. Key challenges and opportunities

IV. Policy conclusions and recommendations

Structure of the presentation

I.LLDCs and Energy: some basic facts

Access to modern, affordable and sustainable energy is key to realize economic, social and environmental objectives, particularly:

Achieve accelerated economic growth and development;

Expand employment opportunities;

Enhance the provision of social services; and

Reduce poverty levels and improve an overall wellbeing of peoples and societies

Without energy the realization of Sustainable Development Agenda will be unthinkable.

LLDCs and Energy: Some basic facts

(Continued)

• 16 out of the 32 LLDCs are energy importers;

• 8 are exporters of energy (in varying degrees);

• 8 are both importers and exporters of energy;

• More than 300 million people ( two thirds of their total population) rely on traditional use of biomass for cooking (IAEA)

Country specific policies are needed

Energy, PCs and structural transformation

in LLDCs High energy cost and unreliability of

electricity provision are endemic in LLDCs;

In some LLDCs #days of power outage is excessive (in some cases 140 days a year);

This made diversification and transformation agenda a challenge;

Undermined export competitiveness; and

Entrenched commodity dependency of these countries

LLDCs & commodity dependency (2013-2015)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

KGZ (2)NPL (0)

MDA (2)

MKD (0)

UGA (2)

SWZ (2)

ARM (2)

AFG (3)

UZB (3)

ZWE (3)

LAO (3)

BTN (1)

PRY (3)

ETH (3)MWI (3)

BOL (3)BDI (3)MNG (3)

RWA (3)

LSO (1)

CAF (3)

TJK (3)

KAZ (2)

ZMB (3)

NER (2)

BFA (3)

MLI (2)

BWA (3)

TKM (3)

AZE (3)TCD (3)

Share of Commodities in total exports of LLDCs (1993-2014)

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

LLDCs

Transit countries

Other developing countries

Export Concentration Index (ECI) Vs Energy Development Index (EDI): 2013

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1

Exp

ort

co

nce

ntr

atio

n

Energy Development Index

LLDCs Transit countries Other developing countries OPEC members

Productive Capacity Index Vs Energy Development Index (2013)

0

10

20

30

40

50

60

0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1

Pro

du

ctiv

e ca

pac

itie

s in

dex

Energy Development Index

LLDCs Transit Other developing OPEC members

Productive Capacity Index (Ranking): selected LLDCs (2000-2015)

Structural transformation: Selected LLDCs and ADCs: ( 2000 - 2015 Ranking)

IV. Key challenges and opportunities

• There is weak linkage between the energy sector and

productive sectors;

• There is slow or no structural economic transformation (i.e. the process of shifting resources and policies):

FROM

- traditional sectors

- traditional activities

- low-productivity

- low-technology

To

New sectors

New activities

Higher productivity

Higher technology

Has not occurred in LLDCs: Neither

within sectors/ nor across sectors

V. Policy conclusions and recommendations

Concluding remarks:

• The crucial role of energy in development is undeniable;

• In LLDCs (including energy producing and exporting ones) fostering structural transformation poses exceptional challenges;

Synergies and complementarities between energy policies and those aimed at boosting productive capacities, commodity diversification and structural economic transformation are critical;

Recommendations

To leverage energy for development, UNCTAD advocates four pronged policies aimed at:

1. Increasing energy for all (access and affordability);

2. Promoting efficiency in national energy use or consumption (including minimizing production, transmission and consumption losses);

3. Facilitating the gradually phase-in of renewable energy technologies (RET); and

4. Scaling up of international support to LLDCs to finance and transfer RET