In this article, we will highlight the least developed countries in 2023 and the development funds that invest in them to uplift their economic status.
Least Developed Countries (LDCs), as defined by the United Nations, exhibit the lowest in indicators of socioeconomic development and possess the lowest Human Development Index ratings in the world. Investment funds operating in LDCs often navigate political instability, regulatory uncertainties, and underdeveloped financial markets. According to the UN, LDCs account for only 1.4% of global foreign direct investment and constitute 1.3% of the world’s GDP.
Furthermore, the United Nations Development Programme (UNDP) states that low-income economies require an additional $1.3 trillion by 2030 to meet sustainable development goals — a target they cannot achieve independently. This economic lag necessitates well-established funds to support these countries’ growing sectors and integrate them into the mainstream business world. In 2023, among the most impactful funds in LDCs are private equity funds, development finance institutions (DFIs), and impact investment funds. Each of these fund types operates with a distinct modus operandi and set objectives, exerting a unique impact on the economic landscape of LDCs.
Funds investing in Least Developed Countries in the World in 2023 aim to assist these nations significantly. Below are some funds that have yielded significant outcomes over the years through investment in LDCs:
1. Asia Frontier Capital Fund
AFC Asia Frontier Fund (AAFC) specializes in investing in high-growth Asian economies, employing a combination of bottom-up and top-down strategies to achieve long-term capital appreciation. The fund targets markets in Bangladesh, Bhutan, Cambodia, Georgia, Iraq, Jordan, Kazakhstan, Kyrgyzstan, Laos, Maldives, Mongolia, Myanmar (Burma), Nepal, Pakistan, Papua New Guinea, Sri Lanka, Uzbekistan, and Vietnam. Notably, Myanmar, Nepal, Laos, and Bhutan are categorized among the least developed countries. The fund’s broad portfolio diversification results in lower risk, with an annualized volatility of 10.5% and a correlation versus the MSCI World Net Total Return USD Index of 0.51. AAFC has returned nearly 30% since its inception in 2013.
2. International Finance Corporation (The World Bank Group)
The IFC is a highly impactful fund investing in some of the least developed countries, evidenced by its long-term investment in Africa, totaling $5.2 billion in FY 2022. This investment has generated over 347,000 jobs in Africa, a continent home to 400 million impoverished individuals. Established in 1956, the IFC aims to eradicate extreme poverty by empowering small businesses and farmers in low-development countries. In regions like Africa, where smallholder farmers lack access to quality agricultural inputs and are excluded from traditional banking, the IFC plays a crucial role. These farmers often have limited access to formalized financing, restricting their ability to invest in yield-increasing practices.
According to the IFC, agriculture accounts for 15% of Senegal’s GDP and employs 77% of its workforce. Despite this significant contribution, lending to farmers and farmer groups is only 1.2% of banking-sector lending. To address these barriers, the IFC’s Africa Agriculture Accelerator Program (AAAP) partnered with agCelerant (a business development platform) and the Bank of Africa. As a result, the initiative aided rice farmers in securing financing to expand their operations. The AAAP is merely one example of the IFC’s substantial engagement in Least Developed Countries (LDCs) and Landlocked Developing Countries, with investments spanning multiple sectors, including renewable energy, EVs, micro-financing, trade, and R&D.
3. African Agriculture Fund
The African Agriculture Fund (AAF), a strategic initiative of the Bill and Melinda Gates Foundation, focuses on alleviating poverty in underdeveloped nations. It primarily operates in three vital agricultural sectors: food production, processing, and distribution. In the food production sector, for example, the AAF dedicates substantial resources to empowering smallholder farmers, who form the majority of Africa’s agricultural workforce. It provides these farmers access to essential inputs, improved seed varieties, and valuable knowledge and training to boost productivity.
The AAF has a broad impact, benefiting economically vulnerable countries across Africa, including Uganda, Kenya, and Malawi, all of which have seen improvements in their agricultural sectors due to the fund’s interventions. For instance, in Kenya, the AAF has significantly promoted dairy farming, facilitating market access, quality feed, and veterinary services for smallholder dairy farmers.
4. Least-Developed-Countries Fund
Operating under the Global Environmental Facility (GEF), the Least Developed Countries Fund (LDCF) was established in 2001 by the United Nations Framework Convention on Climate Change (UNFCCC). The fund aims to assist LDCs in mitigating the impacts of climate change and promoting sustainable agriculture. Since its inception, the LDCF has allocated over $1.7 billion to more than 350 climate projects, addressing challenges faced by marginalized economies.
Among its achievements are strengthening climate information and early warning systems in Burkina Faso, building resilience in Comoros, and developing farm schools in Nepal, where farmers learn about sustainable practices. The LDCF operates in various countries, including Senegal, Togo, The Gambia, and Sao Tome and Principe. Moving forward, it plans to double its allocation to LDCs, providing $20 million per nation in alignment with the Glasgow Climate Pact, which calls for doubling climate finance by 2025.
These are a few examples of funds that invest in LDCs to provide the masses with basic life necessities and, in some cases, the capital to start/grow their businesses. If more entities turn their investment outflow toward nations with economic challenges, meeting development indicators will get easier for them.
30 Least Developed Countries in the World and Funds That Invest In Them
Our Methodology
We created a list of the 30 least developed countries in the world from the United Nations’ classification of LDCs and ranked them based on their GDP per capita to highlight the nations with the lowest development levels. We sourced the GDP per capita data for these LDCs from The World Bank and listed the nations in ascending order of their GDP per capita.
Based on our findings, here are the least developed countries:
30. Comoros
GDP Per Capita: $1484
Comoros faces widespread poverty due to its limited natural resources and a small $1.1 billion economy. As one of the most densely populated countries, this population density exacerbates its economic challenges. Nonetheless, international organizations contribute to developing infrastructure, healthcare, and education to promote sustainable growth and alleviate poverty.
29. Nepal
GDP Per Capita: $1336
Despite its natural beauty and tourism potential, Nepal remains economically disadvantaged with a nearly $45 billion economy. Its status as a least developed country primarily results from geopolitical challenges and susceptibility to natural disasters.
28. Benin
GDP Per Capita: $1303
With a 3.31% population growth rate, one of the highest globally, Benin is among the poorest countries in the world. It primarily relies on agriculture, notably cotton production, yet faces issues like corruption and inadequate infrastructure. However, foreign aid and internal reforms are progressively strengthening its economic base and governance structures for more stable growth.
27. Tanzania
GDP Per Capita: $1192
More than 44% of Tanzanians live in extreme poverty and face food insecurity. Although the nation has experienced consistent economic growth, widespread poverty and limited access to essential services continue to pose challenges. With its population expected to reach 128 million by 2050, Tanzania will be among the most populated countries in 2050.
26. Lesotho
GDP Per Capita: $1107
Lesotho, with its $2 billion economy, is closely linked to South Africa, its surrounding neighbor. Developmental challenges in Lesotho include a high prevalence of HIV/AIDS and limited access to quality education and healthcare. With 32.4% of its population living in extreme poverty, unemployment is a significant concern in the country.
25. Sudan
GDP Per Capita: $1102
Sudan, emerging from prolonged conflicts and civil unrest, has witnessed hindered development. The distressed economy of the country relies on international humanitarian aid and debt relief. Although the GDP has increased to $46 billion (with a $12 billion increase between 2021 and 2022), it remains among the least developed countries with high poverty levels.
24. Myanmar
GDP Per Capita: $1095
Due to internal conflicts and political instability, Myanmar struggles with stunted economic growth. In FY 2022, the US provided $204 million in humanitarian aid to Myanmar, with additional support from donor countries, including Japan, China, Pakistan, and the EU.
23. South Sudan
GDP Per Capita: $1071
With the global highest poverty level at 76.4%, South Sudan sees significant portions of its population living in extreme poverty despite its GDP growth from $3 billion in 2018 to $7 billion in 2023. While the country relies heavily on oil exports, it is plagued by damaged infrastructure and an ongoing humanitarian crisis.
22. Ethiopia
GDP Per Capita: $1027
Ethiopia, one of Africa’s most populous countries, faces poor infrastructure and limited exports. Nonetheless, due to its status as one of Africa’s fastest-growing economies, it received $1.907 billion in foreign direct investment in 2023. With projections showing it to be the 10th most populous country by 2050, the expected increase in manpower and capital inflow may change its status as a least developed country.
21. Rwanda
GDP Per Capita: $966
Focusing on technology and environmental sustainability, Rwanda allocates 1% of its $11 billion GDP to the tech sector. With aspirations to become a middle-income country by 2035 and a high-income country by 2050, Rwanda has developed a series of seven-year National Strategies for Transformation aligned with the UN’s Sustainable Development Goals (SDGs), as noted by the World Bank.
20. Uganda
GDP Per Capita: $964
Uganda faces multiple socio-economic challenges, including a young, rapidly growing population and infrastructural deficits. With a population of 45 million and a GDP of $49 billion, the country’s resources are continually stretched thin.
19. Togo
GDP Per Capita: $918
According to the World Food Programme, Togo faces prevalent malnutrition and food insecurity due to economic deficits accumulated over the years. The country’s economy heavily relies on subsistence agriculture, with phosphate mining as a significant industrial activity susceptible to external shocks.
18. Gambia
GDP Per Capita: $840
Tightly bound to peanut production, tourism, and remittances, Gambia’s economy struggles with high youth unemployment. International funds are concentrating on improving governance and enhancing tourism to stabilize the economy.
17. Mali
GDP Per Capita: $833
Despite its cultural wealth, Mali’s economic growth is hindered by persistent security issues and political instability. The rising population due to a high fertility rate makes the situation more challenging, further straining the country’s resources in the coming decades.
16. Burkina Faso
GDP Per Capita: $832
With a cumulative GDP of $21.067 billion in 2023 and an extreme poverty rate of 30.5%, Burkina Faso remains impoverished despite being the 12th largest gold-producing country in the world. The nation’s economic status is due to foreign companies leveraging its gold mines and landlocked situation.
15. Guinea-Bissau
GDP Per Capita: $775
Since gaining independence from Portugal in 1974, Guinea-Bissau has experienced political instability. Its economy, highly dependent on cashew nut exports, lacks diversification. This economic strain is worsened by limited infrastructure and public services.
14. Liberia
GDP Per Capita: $754
Once a significant exporter of rubber, Liberia saw its economy and social fabric severely damaged by prolonged civil wars. Currently, the nation faces economic challenges, relying heavily on iron ore exports and foreign assistance.
13. Chad
GDP Per Capita: $716
Chad’s Lake, formerly one of Africa’s largest freshwater lakes, has shrunk critically, affecting livelihoods dependent on fishing and livestock farming. The country has experienced a 60% decline in fish production and degradation of many pasturelands, resulting in a lack of animal feed and diminishing livestock.
12. Yemen
GDP Per Capita: $701
Engulfed in protracted conflict, Yemen sees its civilians and infrastructure suffering. With nearly 18% of its people living in adversity and limited capital available for development, the country has received $4.42 billion in humanitarian aid from the US over the past five years, primarily for reconstruction and hunger relief efforts.
11. Malawi
GDP Per Capita: $645
Known as the Warm Heart of Africa due to its friendly people, Malawi faces economic challenges stemming from corruption and an unskilled workforce. These issues are compounded by an over-dependence on tobacco exports. With a substantial rural population engaged in subsistence farming, the country also contends with food security issues.
10. Eritrea
GDP Per Capita: $643
A northeast African nation, Eritrea’s economy primarily relies on subsistence agriculture, engaging a significant portion of its workforce in this sector. Challenges such as a restrictive political climate and limited foreign investment impede the nation’s economic development.
9. Democratic Republic Of Congo
GDP Per Capita: $586
With 62% of its population living on less than $2.15 a day, the Democratic Republic of Congo experiences stark poverty. Mining, especially of cobalt and coltan, serves as an economic pillar. The international community actively supports initiatives for peacekeeping and humanitarian aid in the country. Notably, the population of DR Congo is expected to surge to 197 million by 2050, a significant increase from the current 98 million.
8. Mozambique
GDP Per Capita: $541
While Mozambique’s GDP has risen to $19.909 billion in 2023 (up from $14.8 billion in 2018), the extreme poverty rate of 64.6% overshadows this progress. According to the Borgen Project, a substantial percentage of the rural population remains impoverished, largely due to their exclusion from the broader economic landscape.
7. Niger
GDP Per Capita: $533
Niger, located in West Africa, is in a constant battle with ongoing desertification and climate vulnerabilities that adversely affect its main economic activities, pushing nearly half of its population into destitution.
6. Madagascar
GDP Per Capita: $505
Madagascar, the fourth-largest island globally, is renowned for its unique biodiversity, hosting many species not found elsewhere on Earth. However, challenges like severe deforestation and resource overexploitation persist. Thus, development initiatives in Madagascar focus on conservation and sustainable agriculture to improve its economic status.
5. Sierra Leone
GDP Per Capita: $461.8
Sierra Leone, situated in West Africa, is known for its resilient population and abundant mineral wealth, including diamonds. However, the legacies of a civil war and the 2014 Ebola outbreak have hindered its socio-economic development.
4. Somalia
GDP Per Capita: $461.4
With a largely nomadic population engaged in livestock herding, Somalia faces food insecurity and limited access to services. While international efforts focus on providing humanitarian assistance, additional capital is necessary to enhance the country’s workforce potential.
3. Central African Republic
GDP Per Capita: $427
The Central African Republic, with a GDP of $2.736 billion and a population of 5.5 million, has nearly 71% of its people living on less than $2.15 a day, experiencing extreme food insecurity. Despite witnessing some economic progress over the past decade, evidenced by a CAGR of 4%, the country requires substantial effort to exit the list of least developed nations.
2. Afghanistan
GDP Per Capita: $363
Decades of conflict and political instability have severely affected Afghanistan’s socio-economic landscape. International assistance in the country focuses on humanitarian relief, reconstruction, and development, with the US being the primary donor. While Afghanistan boasts valuable natural resources, including precious stones and minerals, ongoing instability impedes their systematic exploration.
1. Burundi
GDP Per Capita: $238
Burundi, one of the world’s poorest countries, struggles with high rates of malnutrition, illiteracy, and unemployment. The predominantly rural population relies heavily on farming, with coffee and tea as the main exports, significantly contributing to the economy.
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Disclosure: None. 30 Least Developed Countries In The World And Funds That Invest In Them was originally published at Insider Monkey.
