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Regional aid for trade 'effectiveness' and corridor approaches


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Presentation made by ECDPM Programme Associate Dan Lui at the ECOWAS Aid for Trade Expert Group meeting, 21-23 May 2013, Abuja

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Regional aid for trade 'effectiveness' and corridor approaches

  1. 1. Regional Aid for Trade‘Effectiveness’ andCorridor ApproachesDan Lui – Programme AssociateECOWAS Aid for Trade Expert Group MeetingAbuja, 21-23 May 2013
  2. 2. • Independent and non-partisan foundation• Mandate: improve relations & cooperationbetween the EU and ACP/African actors• Areas: Development Policy & InternationalRelations, Trade & Economic Cooperation,Governance• Board of governors: ACP and EU, mainly ACPAbout ECDPM
  3. 3. I. Regional AfT: Rational, Context,Evaluations so far, EffectivenessII. Corridors as an approach to regional AfTIII. Some potential lessons for ECOWAS AfTstrategyStructure of the presentation
  4. 4. I. Regional AfT:Rational, Context, Evaluations so far,Effectiveness
  5. 5. • Study conducted by ECDPM for ODI and Bill andMelinda Gates Foundation• AfT at regional level is growing in importance butrelatively ignored; few studies done so far• Focus within TORs on effectiveness of regional AfT:what works and what doesn’t?Background to ECDPM Study
  6. 6. • Cross-border element to trade has beenrecognised since start of AfT initiative• Small size of economies  pooling resources create effective markets  stimulate production• Yet progress on regional integration has beenslow until recently• Currently a push for greater integration atregional level (e.g. tripratite) and continentallevel (CFTA, CAADP, PIDA, etc)• Regional AfT can ensure no duplication occursRationale for Regional AfT
  7. 7. Regional AfT Flows by ContinentPage 7
  8. 8. • Unlike national AfT, regional AfT data is scarce– Big definitional problems (level of delivery, spillovers)– OECD data is highly aggregated (no data on reg blocs)– Creates a distorted picture• However regional AfT appears to be growing– Grown from $215m in the baseline period of 2002-05to approximately $690m in 2010– Share of total AfT in SSA increased from 4.9% to8.4%Regional AfT Flows Overall
  9. 9. Regional AfT Flows by SectorPage 9
  10. 10. • Reg’l delivery more common in some sectors– Trade Policy & Regulations: 47% of all TPR is reg’l– Infrastructure (transport, energy) much less so• This may be due to number of factors…– Data problems: capturing regional infrastructure– Regional bodies lack the mandate or capacity toimplement infrastructure projects independently Need for institutional capacity and legal frameworkRegional AfT Flows by Sector
  11. 11. Regional AfT by DonorTotal AfTAllocationto SSADonors % delivered asRegional AfT< US$10m New Zealand, Greece, Australia, Luxembourg 1.3%US$10-50mAustria, Finland, Korea, Switzerland, Ireland, Italy,Portugal 14.1%US$50-150m Netherlands, Sweden, Spain, Arab Fund, Belgium 16.2%US$150-350m Norway, Denmark, Canada, France, Germany, UK 7.5%>US$350mJapan, US, African Development Fund, EUinstitutions 8.0%Page 11
  12. 12. • Some evidence that medium-sized donors pooltheir resources more at regional level– This is in line with the Paris Declaration that calls forless aid proliferation, greater coordination• Biggest donors by volume are still EU, AfDB,Japan, US and bigger EU MS– Some donors have recently created new windows (andvehicles) to support regional programmes– RECs still suffer from multiplicity of proceduresRegional AfT Flows by Donors
  13. 13. • Very few studies of the conditions in whichregional AfT works best, no systematic reviews• Some ad hoc evaluations point to mixed results– USAID (2010 points to success of Trade Hubprogrammes in facilitating trade and investment– AfDB (2012) highlights a number of successfulregional infrastructure projects– But EU Court of Auditors (2010) reviewed support toregional Integration and East and West Africa’ in 2010found that in overall terms ‘project effectiveness wasdifficult to assess, but in most cases limited’Evaluations of Regional AfT So Far
  14. 14. • Most evaulations pointed to factors for success– Strong country commitment and ownership– Scope matched to national and regional capacities– Delineation and coordination of responsibilities: linkingactivities at the regional and national levels– Accountable governance arrangements, includingbetween regional bodies and MS– Project objectives which are SMART (specific,measurable, achievable, relevant and subject to arealistic time-frame)– Conducive policy environment for sustainability:including genuine commitment to regional integrationRegional AfT: Success Factors
  15. 15. • Analysis suggests that regional AfT strategiesshould avoid ‘grand AfT masterplan’ approach• This is already covered in other developmentplans  avoid duplication!!• Instead they should focus on the narrow goal ofimproving AfT at regional level institutional strengthening and capacity improving coordination solving bottlenecks in AfT delivery delivering programmes only where RECs have capacityand mandate (e.g. implementing reg’l commitments)Improving Regional AfT: Role of Regional AfTStrategies
  16. 16. II. Corridors as anApproach to RegionalAfT
  17. 17. • Regional cooperation and coordination isdifficult: an additional layer of complexity• Need for coordination between countries (MoUsetc, sequencing issues, )• Often a need for specialised institutions– authorities (e.g. corridor management authorities)– support units (project preparation:needs many skills)– Funds (PPPs are not widespread due to risk)Corridors: When Do They Work Best?
  18. 18. • Project preparation as an ongoing challenge– Cost of prearing a large infrastructure project istypically around 10% of final cost (i.e. millions of $)• Stages in project prep process include:– Enabling environment (legal, policy consensus)– Project definition (outputs, action plan, prefeasibility)– Project feasibility (economic, engineering, environ’tal)– Project structuring (modelling, assessing options)– Transaction support (tender process)– Postsigning support (e.g. tariff reviews, renegotiation)Corridors: Key Features
  19. 19. III. Potential Lessons onEffective Regional AfT nECOWAS
  20. 20. I. Revised Background Paper ProducedII. Final AfT strategy and activity plan neededIII. Endorsement and implementationECOWAS AfT Strategy So Far
  21. 21. • Initiatives and projects already underway inagriculture, industry, services, trade facilitation,transport, etc. (section 3.1-3.6)• AfT already being received (section 4.1)• Regional integration initiatives underway(section 2)• Regional policies already exist: Vision 2020,ECOWAS RSP, CDP, EPADP (section 4.3)Review of Key Points of BackgroundPaper (1)
  22. 22. • AfT strategy to focus on improving AfT, esp. atregional level:– ‘support the articulation of ECOWAS region’s AfTpriorities and approach’• Vertical pillars + horizontal objectives– HO1: Improve Knowledge, Comms, Outreach– HO2: Strenghten collaboration, complementarity– HO3: Resource Mob’n and Project preparation– HO4: Strengthen Capacity BuildingReview of Key Points of BackgroundPaper (2)
  23. 23. • Regional strategy needs to be supported with animplementation plan that defines activities– but AfT strategy is not an aid programming tool so wefocus on strategy objectives not programming projects• Need to be achievable, realistic and matched tocapacity– Balance between furthering objectives and resourceconstraints: activities should be costed– Need to build on existing activities: alignment withexisting directorate workplansDefining a Set of Actions and Activities
  24. 24. • How can ECOWAS achieve the strategyobjectives? What activities are required to…– Improve Knowledge, Comms, Outreach (HO1)– Strengthen collaboration, complementarity (HO2)– Resource Mob’n and Project preparation (HO3)– Strengthen Capacity Building (HO4)• To what extent are these activities already beingpursued?– Where are we now and where do we want to be? Whatcan be achieved and what resources are required?– Think carefully about institutions (e.g. RegionalCoordinating Mechanism) but don’t get ‘bogged down’Relevant Questions for Developing theImplementation-Activity Matrix
  25. 25. • Implementation Plan could be ‘light’ or ‘heavy’– given that nature of the AfT strategy, probably betterto be ‘light’• One option could be to focus on mainstreamingthe strategy into other frameworks:– Rather than have a separate AfT programme, raiseawareness and build in to exist plans / policyframeworks and directorate workplans• Another option would be a heavier ‘logframe’Possible Approaches to theImplementation / Action Plan
  26. 26. Thank you!Dan