Regionally Owned Funds: Mechanisms for Delivery of EU Aid for Trade in ACP Regions?

Background

The creation of regionally owned funds to support integration processes and regional Aid for Trade (AfT) agendas is currently being discussed in all African, Caribbean and Pacific (ACP) regions. Similarly on the European side, the European Commission (EC) and the member states of the European Union (EU) are exploring the potential of such funds as one of the delivery mechanisms to implement their AfT commitments. Intentions to make use of regional funds have been expressed in the context of the ACP-EU negotiations on Economic Partnership Agreements (EPAs) as well as in the joint EU Aid for Trade Strategy.

Key Purpose of ECDPM Study

In an effort to assist efforts ACP regions to make effective use of aligned EC and EU AfT, this study aims to contribute to structuring the ongoing discussions on the use of regionally owned funds for AfT including EPA support, to facilitate exchange of experiences and ideas across ACP regions and to inform the decision-making process by providing an overview of different experiences and opinions of ACP and European stakeholders.

Key Findings of ECDPM

• The discussion on establishing regional funds seems to be mainly driven by political motivations of different actors, which include considerations of ownership, donor coordination, showing follow-up on commitments on aid effectiveness and AfT, the need to foster and accompany regional integration processes and address regional imbalances, locking in AfT promises obtained during trade negotiations and tapping new innovative sources of funding.
• Efforts towards creating regional funds to support Aid for Trade and regional integration agendas are ongoing in all ACP regions, but appear to have a long way to go for this ambition to materialise. More reflection is required both on the desired purpose of the regional fund and on the appropriate design to operationalise this purpose.
• Although it may be useful to allow sufficient time for such reflection and to give priority to a well thought out concept instead of aiming at setting up a regional fund as fast as possible, all ACP regions and countries are already experiencing major AfT needs and addressing them becomes even more urgent as integration processes gain speed in several regions and EPA implementation is expected to begin soon.
• Strong political will, leadership, a coherent regional development strategy as well as clear political guidance are prerequisites before addressing a number of more technical questions in order to successfully create a regional fund.