The private sector connection: EIF & Aid for Trade

7 December 2011
ITC News

I met Judith, heading up her household in Monze, on a recent trip to southern Zambia to see first-hand the type of projects that the Enhanced Integrated Framework (EIF) programme is looking to support in the dairy sector. It was both humbling and inspiring to see what local trade can mean for people’s livelihoods. With backing from the Golden Valley Agricultural Research Trust (GART), Judith started off with only two cows but now has ten. She bought a bicycle to transport milk to her buyers and, with the income she generated, was able to improve the family’s nutrition, build up her household and send her daughter to school.

Here on the ground, you can see just how trade is working in the fight against poverty. I also met a grandmother in Bakota named Esnert who joined a dairy cooperative and is now earning ZMK 10 million (US$ 2,000) per year with her 100 goats, having started from an annual salary of ZMK 480,000 (US$ 96). She is now diversifying into herding cows. As a result, the family has a house; the grandchildren are getting an education, and the rest of the community benefits, particularly vulnerable groups such as those affected by HIV/AIDS, through free milk deliveries.

By building up smallholder farmers’ ability to increase production and operate competitively, a more self-sufficient, secure and sustainable future becomes possible. Cooperation between the private sector, government, donors, agencies and other partners can kick-start this process, with the EIF helping to lay the right foundations.

Acting on trade and development priorities

Operating in 47 of the poorest countries in Africa, Asia and the Pacific, the EIF programme brings together all those who have a stake in trade and development to identify and act on priority trade sectors, such as dairy, that will make the most impact on the ground. The Diagnostic Trade Integration Study (DTIS) and Action Matrix tools provide the framework for countries to jointly take forward priority activities and projects to promote trade. The EIF Trust Fund, supported by 23 donors, also gives assistance to strengthen trade institutions, and to put trade and development at the heart of government agendas. In Liberia, for example, customs reforms and cutting red tape helped boost the country’s ranking in the World Bank’s Doing Business Survey by 15 points in two years. And, as the engine of growth for the economy, the private sector needs to be fully engaged from the start.

At the country level, the programme’s National Steering Committee (NSC) is driving improved coordination on trade, alongside the government Focal Point, National Implementation Unit and Donor Facilitator. The committee brings together line ministries, the private sector, civil society, development partners and other interested groups. In Zambia, the NSC is chaired by a private-sector representative. In Cambodia and Lao PDR, this role is championed at a senior ministerial level. What matters is the focus on clearly agreed trade priorities and outcomes that have positive results for communities, as in Monze and Bakota, raising incomes and creating opportunities for the next generation.

The EIF supports the next steps, which are about turning agreed priority actions into workable and sustainable projects, with funding available from the EIF Trust Fund to help farmers, traders and businesses get ahead. There are funds now available for countries to use and, while small in scale, they get the process started for other support to follow through the national budget process or with development partner assistance. This is all part of the wider Aid for Trade approach, with countries using the EIF as a platform to attract Aid for Trade funding from other sources. In Cambodia and Lao PDR, the Trade Sector Wide Approach and Trade Development Facility have raised US$ 16.5 million and US$ 6.8 million, respectively, in additional assistance.

Overcoming obstacles to trade

So this is where initiatives such as those supporting smallholder dairy farmers in Zambia come in. The EIF already has more than 20 projects in the pipeline focussing on tackling obstacles to trade in sectors targeting export growth, compliance with standards and value addition, and in services such as tourism. EIF Partner Agencies (International Monetary Fund, ITC, United Nations Conference on Trade and Development, United Nations Development Programme, World Bank, World Trade Organization and United Nations Industrial Development Organization) provide technical input into project development, offer training, and assist in the delivery of projects when asked to do so.

Considering the well-known example of the mango sector in Mali, it makes good sense to build on what works. Here, with EIF support – which involved training producers in global norms and production quality, and providing expanded access to credit – partners helped export volumes increase by 257% in five years, promoting public-private partnership all the while. Now the move up the value chain to mango-based products, such as jam, means additional support going to women’s cooperatives with the private sector getting involved. This model will soon be replicated in other priority sectors, including gum Arabic and Shea butter.

Given the financial pressures of the current global climate the importance of showing value for money, tracking what works – and how – is vital. That means reaching for innovation and synergies, while making sure trade and development are given more of a push than ever, especially for countries that continue to experience the most challenges to trade globally. At the Fourth United Nations Conference on Least Developed Countries in Istanbul in May 2011 and the Third Global Review on Aid for Trade in Geneva in July 2011, the EIF was shown to be a key part of the picture in helping the poorest countries integrate into the global trading system.

But more results now need to be delivered. This will take renewed effort and commitment from the EIF partnership of countries, donors, partner agencies and in-country stakeholders, including private-sector engagement at the national level as well as at the grassroots. We cannot afford to let people like Judith and Esnert down. With a little help, they are carving out a bright trading future on their own terms.