Features

Voices from the Fourth Global Review of Aid for Trade

1 October 2013
ITC News
During the Fourth Global Review of Aid for Trade on 8-10 July, International Trade Forum spoke with participants ranging about their experience with the initiative and their hopes for the future.
THE GAMBIA: maximizing the impact of Aid for Trade

For Kebba S. Touray, the Gambia’s Minister of Finance and Economic Affairs, better regional integration holds the key to a better future for his country’s businesses and people. The Gambia was one of the first countries to qualify for Aid for Trade through the Enhanced Integrated Framework (EIF), a multi-donor programme that supports least developed countries in becoming more active in the global trading system by helping them tackle supply-side constraints to trade.

TF: What has worked well during the last couple of years within the Aid-for-Trade Initiative for the Gambia and why?

The Gambia was one of the first countries to qualify for Aid for Trade under the EIF. Aid for Trade has worked well for the Gambia because we have been able to leverage funding and we were able to direct these funds towards sectors that had the maximum positive impact on our economic development.

TF: What specific sectors are you targeting to improve your export opportunities?

First of all, we are targeting the tourism sector. But we continue to focus on the commodity and goods sectors, such as peanuts, which is one of the Gambia’s traditional crops. Recently we have diversified into cashew and sesame as well.

TF: How important is the role of small and medium-sized enterprises (SMEs) in building the Gambia’s export capacities?

In the Gambia, like in many small economies, the foundation of development is based on SMEs rather than large corporations. While access to funding is one of the major problems for small, developing economies, in terms of sustainability and the requirements for funding, it requires fewer funds to set up an SME.

TF: How would you describe the collaboration with ITC in achieving the Gambia’s goals of increased exports?

[It is] extremely important. Our collaboration with ITC has been very fruitful. We are not only collaborating with ITC on Aid for Trade, but on other programmes, too. ITC is helping us on diagnoses, on studies and on the implementation of the recommendations that come out of those studies.

TF: What are the main challenges you face in improving regional integration in the West Africa region?

As individual countries, it might be difficult for us to be able to compete, and that is why the focus is now on regional integration. A main challenge is infrastructure. As individual countries, we might have good work networks, but unless these are connected at the regional level, it will be difficult for us to have cross-border trade and interregional trade.

That is why at the level of the Economic Community of West African States, we have come up with institutions that are mandated to address these challenges. For instance, we have the West African Power Pool whose mandate is to see how there can be electricity interconnectivity. We also look at how we can connect our transport networks.

TF: What are your hopes for the future and where do you see the Gambia in 50 years’ time?

I would rather enlarge this and say where I would see Africa in 50 years’ time. Africa is the future, but this is still a theory. We must end the cycle of being just suppliers of raw materials and address the political, economic and social challenges we face. Unless we do that, it will never be possible to move on to the next level of development. If you manage your resources better, then you are on the right development path. We should be like the European Union or America or Asia, and this is what I expect Africa will be like in 50 years’ time or even before. Africa must take the lead, but we must invite our partners to move forward with us.

Latin America: working with SMEs to boost jobs and growth

The Inter-American Development Bank (IDB), in its efforts to reduce poverty and spur economic growth, is pushing policies to enable small and medium-sized enterprises (SMEs) to connect to global value chains and gain access to new markets. Antoni Estevadeordal, manager of the Integration and Trade Sector at IDB, explains the critical role of SMEs in creating jobs and growth across Latin America.

TF: How important is the role of SMEs in global value chains?

SMEs account for most of the employment and growth in many countries, but in Latin America, the participation of SMEs in global markets is relatively low compared with that of other regions. The bank promotes the internationalization of SMEs, in part through a platform called Connect Americas to link SMEs in the region using technology. Technology is going to be the big change factor that could bring SMEs into these global markets.

TF: What challenges do SMEs face in linking to global value chains?

There are barriers to knowledge about entering new markets and gaining access to finance. Latin America is still lagging behind in terms of infrastructure. IDB is working very heavily on this. We have a target to invest 15% of our lending in regional infrastructure projects to try to close some of the gaps. This is an agenda that is going to be important for years to come.

TF: What role does South-South trade play in Latin America?

South-South trade in our case is mostly a pattern of Asian countries trading their manufactured goods for our commodities, so it is a complementary relationship. The question is how sustainable is this going to be for our region? My view is that it is going to be much more stable than we have seen in the past.

TF: What will the economic state of Latin American countries look like in the coming years?

Countries are thinking in terms of investments in education, social development, technology, innovation and infrastructure. I think one of the great developments that we had in recent decades has been the consolidation of economic management in our region. And for the first time we have global companies that are playing a role in places such as China, India and Africa. Overall, I think we can have full confidence in the future.

TF: Any plans to work with ITC?

ITC is an important partner. We share a constituency – the export promotion agencies, the investment agencies – so we could work together on capacity-building programmes. I think a great advantage of ITC is its global reach. We are working in Latin America, ITC is working globally. So bringing together some of the experiences from other regions to our region, I think that is an area in which we will definitely be able to collaborate in the future.

GHANA: improving regional infrastructure for better trade

As Chief Director of Ghana’s Ministry of Trade and Industry, Nii Ansah-Adjaye has had the opportunity to do a close-up study of Aid for Trade. In his view, the impact has been significant. Speaking to International Trade Forum, the Minister sets out Ghana’s experience of the Aid-for-Trade Initiative and where he sees his country and Africa heading in the future.

TF: What has worked well during the last couple of years within the Aid-for-Trade Initiative for Ghana and why?

The potential impact of regional Aid for Trade is quite obvious. It can help us to increase export revenue to support public investment in education, health, child and maternal health, and social safety nets for vulnerable groups. It can enable us to create increased employment opportunities and reduce disparities in income distribution, which tend to persist despite our overall progress in poverty reduction.

TF: What are the main challenges you face in improving regional integration in West Africa?

It is clear that there is inadequate infrastructure. Most of the countries do not have enough roads, transport systems and so on, and we need to improve these. Improving national and cross-regional infrastructure will help us ensure that we improve and deepen trade within the region.

TF: What role do small and medium-sized enterprises play in helping Ghana achieve its development goals?

We have a very limited number of larger corpo-rate enterprises in Ghana. In fact, micro, small and medium-sized enterprises (MSMEs) account for up to 80% of our industry. MSMEs are the main vehicles of the economy, but they need to be provided with capacity-building initiatives and so enabled to integrate in the [global] supply value chain.

TF: How would you describe the collaboration with ITC in achieving Ghana’s goal of increased exports?

Our collaborations with ITC have all been within the regional Aid-for-Trade context. We have ACCESS!, for example, which has allowed us to empower women. We had the Programme for Building African Capacity for Trade (PACT) II. More recently, we have had the Ethical Fashion Initiative, which creates employment for women and at the same time links producers to the global supply chain: from the grassroots to the international level.

TF: What are your hopes for the future and where do you see Ghana in 50 years’ time?

The idea is that in 50 years we are expecting to be able to reach the middle-income to high-income level, not relying on [recently discovered] oil but using the revenue to be able to improve industrialization, entrepreneurship and [overall] development – especially for women.

CAPE VERDE: implementing economic visions for global integration

When Cape Verde gained its independence from Portugal 38 years ago, it was classified as a least developed country (LDC). Since then, it has not only graduated from its LDC status, but it did so in the middle of a global economic crisis. According to Humberto Santos de Brito, Minister of Tourism, Industry and Energy of Cape Verde, the pinnacle was reached in 2008, when Cape Verde joined the World Trade Organization.

TF: How has Cape Verde managed to lift itself from being an LDC to the next level on its own?

Since we gained our independence, we have invested a lot in education, in health and in the social and economic development of our society. With all the investments we made over the years, it is normal to achieve our goals.

We are very proud of the objectives we have achieved, and we think we can [do better] in the future. We have a clear vision of what we want for our country, and we have a strategy, we have a plan: to become a middle-income country. The challenge is very tough, but Cape Verde’s expectation is very high, too.

TF: What are the main challenges facing Cape Verde?

Cape Verde is an archipelago, and as such we are facing natural constraints. This requires a good strategy allowing us to link our [10] islands together economically, but also link the islands to the world.

At the same time, we need to provide goods, food and services to the tourism sector. Tourism is increasing a lot and we expect to receive a million tourists in 2017. So we have to work to reduce the import of products and instead increase our own production [to cater to] the tourism sector. We want to develop export capacity based in niche products, as we think that they are crucial for our development.

Developing micro, small and medium-sized enterprises will be important, and we have to increase our exports. We have promising potential in renewable energies and from the sea, of course. Cape Verde is more sea than land, and the sea is a strategic resource. We are talking about cargo transhipment, and about fisheries, sports and tourism [activities] linked to the sea.

TF: In what ways has the Enhanced Integrated Framework (EIF) benefited Cape Verde?

The EIF programme we have been working with is in line with our strategy of growth and poverty reduction. As a small economy, it is crucial for Cape Verde to integrate into the global economy. But this integration must bring benefits to the population, it must bring work, and it must bring a better quality of life. That is what we were looking for.

TF: What role does regional cooperation play in Cape Verde’s future development?

We want to play an important role in the region as a hub linking Africa, linking our region to the world and the world to our region. Integration is crucial as it will give us more market share. We have to look at our region [the Economic Community of West African States] not only as a market but as an investment in which Cape Verde can participate as a shareholder.

TF: What are your hopes for Cape Verde in the future?

We plan to be a middle-income country in the upper level by 2030. [The support] of the international community is crucial to achieving that goal. We believe we can achieve this level of development, so we are working towards that in partnership with our friends.

Switzerland: building bridges to developing countries

SECO is one of the many funders of the Ethical Fashion Initiative in West Africa. © Chloe Mukai/ITC

Switzerland’s State Secretariat for Economic Affairs (SECO) is a leading ITC donor. SECO provides funding that supports ITC’s export-promotion projects, in particular those related to the agro-industrial and textile industries in North and East Africa, Asia and South America. Hans-Peter Egler, head of Trade Promotion at SECO, has worked with ITC over the years and has seen the results of the partnership, including Aid-for-Trade-related development.

TF: What has worked well in recent years within the Aid-for-Trade Initiative?

One of the biggest elements was the decision to take value chains into consideration. If you do not have any subsequent buyers or someone to take over a step in the value chain, it does not make much sense to invest in a product. Therefore, it is important to keep in mind the perspectives of producers, manufacturers and retailers. Another decision has been to take into consideration not only the quality aspects of products, but also the environmental and social aspects.

TF: Switzerland has a strong small and medium-sized enterprise (SME) base and is home to many multinational corporations. Does SECO look to connect them to SMEs in developing countries?

Yes, on one hand, we work with traditional transnational companies in order to help SMEs and producers in developing countries win procurement contracts from those companies. But we also try to team up SMEs in Switzerland with SMEs in partner countries. There are also companies that are interested in developing partnerships with single-origin producers, and that helps many producers in developing countries and also subsequent manufacturers to gain access to smaller but more specialized and sometimes higher quality value chains.

TF: What should the priorities be for trade promotion organizations within the Aid-for-Trade context?

I think trade promotion organizations play a very important role. We always try to support these organizations so they are able to bundle local capacities and bring SMEs and producers together in the field, at international fairs, for instance. It is important to help companies to showcase what they are able to produce. Then you need ways to package and design the product. So there is this need for constant development of all these features. It is important that these agencies understand their role as catalysts for export-related services.

TF: Going forward, what are SECO’s priorities within the Aid-for-Trade context?

It is important to think more and more about import-related services because global value chains are not a one-way street. It means that you need to be flexible and have the right import and procurement in order to be able to produce the right thing for the next buyer.

TF: Are there any Aid-for-Trade programmes that you are particularly proud of, either SECO’s or the ones you have worked on with ITC?

I have to say that we are very happy with the work and collaboration we have with ITC. What I am very happy with, for instance, is the whole establishment of databases we were able to do with ITC, such as Trade Map, the work surrounding trade for sustainable development, and other trade statistics. I think that through this, ITC is offering a very valuable public good to its partner countries. It creates a base for additional programmes.