Contribution by the Commissioner for Trade, Customs & Free Movement ECOWAS Commission
The potential of Trade as an engine for economic growth can only be fully realized by addressing the supply side constraints of Developing Countries, especially in terms of production capacity and trade-related infrastructure.
Over the years, the central role of Trade in creating employment, generating wealth and accelerating economic development has been widely recognized. A number of countries have successfully lifted a significant proportion of their population out of poverty by adopting appropriate trade policies, including export led growth. However, for many Developing Countries, Trade is not fulfilling its full potential. Despite their numerous resources and the market access opportunities from preferential trade agreements, a number of constraints hinder their opportunity to integrate and compete effectively in global markets.
The Aid for Trade (AfT) initiative launched under the auspices of the WTO in December 2005, has successfully raised awareness on the importance of providing support to Developing Countries with the view of enabling them to benefit from the multilateral trading system. Worldwide AfT commitments rose from USD 24.6 billion in 2002 to USD 48.2 billion in 2010. Overall there has been an increase in global Official Development Assistance (ODA) flows over the last decade, of which Aid for Trade constitutes a stable share of approximately 25% of total ODA commitments.
The last decade has also seen partners working towards a better alignment of their support using the holistic AfT framework as a key reference. Partners such as the Enhanced Integrated Framework (EIF) and United Nations Industrial Development Organization (UNIDO) have developed models, tools and mechanisms to assist developing countries overcome supply side constraints. In cross cutting field such as Trade, which has a number of diverse actors and intervention areas, emphasis has been placed on improving coordination resulting in the creation of Clusters such has the UN Trade and Productive Capacity Cluster.
However, most of developing countries lack currently the capacity to take advantage of the expansion in global markets. The low performance of the developing countries in terms of trade flows can be, to a large extent, attributed to a lack of competitiveness. Infrastructure is identified as one of the main factors which affect the competitiveness in those countries, especially in West Africa. Recent studies show that trade-related infrastructure is up to 65% of the total Aid for Trade needs identified by West African countries. Therefore, the potential of Trade as an engine for economic growth can only be fully realized by addressing the supply aide constraints, especially in terms of production capacity and trade-related infrastructure.
The decline trend in Aft commitments over the last two years resulting from the economic crisis, will not contribute to improve the situation. It is now more important than ever that momentum and resources towards AfT should be maintained and even increased to facilitate the implementation of trade-related programmes. In order to deal with these challenges, West Africa is implementing a number of trade-related initiatives with the support of development partners.
Regional trade-related initiatives in West Africa
The Economic Community of West African States (ECOWAS), which was established in 1975, and is made up of fifteen member States, in collaboration with its partners, has been able to take advantage of a number of AfT strategies developed by partners and technical agencies. For example, the eleven Least Developed Countries (LDCs) in West Africa are eligible for support under the Enhanced Integrated Framework (EIF), which is supported by a multi-donor EIF Trust Fund.
There a number of AfT related programmes in the region, which fall within the categories defined by the WTO Task Force. These include the Regional/National Agricultural Investment Programmes of the ECOWAS Agricultural Policy (ECOWAP); the West African Common Industrial Policy (WACIP); Transport & Trade Facilitation Programme; the West Africa Power Pool; the ECOWAS Customs Union; and within the framework of the West Africa- European Union Economic Partnership Agreement (EPA), the EPA Development Programme (EPADP). These programmes are aligned with continental initiatives such as the Common African Agriculture Development Programme (CAADP) and the Programme for Infrastructural Development in Africa (PIDA). Furthermore, these programmes compliment the decision of the 18th session of African Heads of State and Government to Boost Intra Africa Trade with the objective of doubling Africa Intra Trade over the next decade.
ECOWAS Aid for Trade strategy
In order to maximize the opportunities of the AfT initiative, ECOWAS is working towards a regional AfT strategy in line with the ECOWAS Vision 2020 adopted in June 2007, and the Community Development Programme (CDP). The decision to formulate the Strategy was motivated by the inadequate levels of harmonisation and coordination of the delivery of AfT, as well as the perceived low level of coherence between the delivery of AfT projects and programmes at the national/ regional level.
Although AfT related programmes are operating at the sectoral level, an overarching AfT strategy for ECOWAS would provide the region an opportunity to articulate its approach in better managing AfT flows and to improve the effectiveness of such support. As a basic principle, AfT programmes will build on and strengthen existing integration agendas defined within the region.
The proposed strategy is based on the following four horizontal pillars, which cut across the AfT categories: (i) Improving knowledge, understanding, communications and outreach, (ii) Strengthening collaboration, coordination and complementarity, (iii) Increasing resource mobilisation and improving project preparation and design, and (iv) Strengthening capacity building.
In order to ensure sustainability, a number of institutional structures such as the ECOWAS Aid for Trade Expert Group have been established. The Expert Group, which is composed of officials from member States, is charged with strengthening instruments for the effective implementation of AfT. The group is supported by a number of technical partners including the AfDB, WTO, and UNECA.
For trade to have an impact on wealth creation and poverty reduction it needs to be an integral part of a country’s development strategy. We call on our partners to align their commitments and improve access to the existing Aft funds. In turn, West Africa will take the necessary measures to increase its absorption capacity. Together, with supply and demand responses from partners and beneficiaries within the framework of Aid for Trade, we can made trade a veritable instrument for economic development.
Ahmed Hamid is the Commissioner for Trade, Customs and Free Movement, Ecowas Commission.
This article was published in Great Insights Volume 2, Issue 5 (July-August 2013)