1. Perspectives of the Donor Community and International Organisations Aid for Trade/Trade Facilitation Crown Agents Experience of Project Funding Mechanisms Workshop on Trade Facilitation and Aid for Trade 12-13 March 2009, Addis Ababa Trevor Simumba - Senior Advisor- Customs & Trade Facilitation

2. THE CONTEXTUAL CHALLENGE  Donors have come to recognise that recipient country ownership is essential to the effectiveness of aid and development efforts.  This can only be achieved if recipient governments begin to take a more proactive role in determining how aid is allocated and managed.  To date there are relatively few examples of recipient governments taking a lead in their relationships with donors.  This is perhaps not surprising given the asymmetry of resources, power and capabilities which characterises most of the links between donors and recipients.  This presentation highlights the efforts and experience of Crown Agents to help bridge this gap

3. Donor Funding (in response to EOI’s and RFP’s)  Normally time consuming, laborious and hugely resource intensive  Not unusual to find the project objectives already part- resolved by other projects by the time implementation starts  As a result duplication of efforts from different donors arise and, on occasion, even conflicting objectives through misunderstanding of the needs or changes in circumstance  The requirements for proposal completion are becoming more and more prohibitive  The complexity of the proposal results in a longer evaluation period

4. Part Donor/Part Self-Funding  A donor may contribute to a project’s funding in the initial stages but assumes some form of financial commitment from the recipient client  The ‘pump-prime’ funding by the donor gets the project up and running  Success of the project (particularly with trade/revenue enhancement projects) may even mean minimal input from the client which may result in lower political commitment

5. Self-Funded Projects  Self-funding demonstrates real commitment and high level political will  Self-funding projects can be implemented more quickly with the end-receiver client talking directly with the service provider  CA projects in Public Finance Management have demonstrated that financial commitment from the client can reap rewards from enhanced revenue generation

6. Private Public Partnership  Crown Agents has been exploring the possibility of private public partnerships (PPP), where banks or other financial institutions take the place of donors  In Customs/Tax modernisation projects, as long as there is high level commitment it is possible for bank funding to pump/prime a project and repayment to come from increases in revenue collected

7. Challenges experienced  Low technical capacity of those requiring funding to draft an appropriate request to donors  Reluctance to take necessary accountable decisions to apply for funding  Lack of understanding about funding options  Inadequate country public finance systems that would allow more direct budgetary support  Poor macro-economic environment

8. Aid for Trade as a new Aid Funding Mechanism ‘Partnership’ and ‘Mutual Accountability’ should be the foundations of the new aid relationship?  Aid for Trade is a major part of this new aid relationship  Required to assist developing countries take advantage of the liberal global trading environment that is the expected outcome of the Doha Development Agenda.  However, there is also a political economic dimension to it  Although all countries should benefit from a liberalised trading system in the long run, in the short run there will be winners and losers  An Aid for Trade mechanism should assist with the buy-in of the short-term losers

9. Useful Lessons Learned  Business has a central role in developing trade “Governments may create trade rules, but it is business that actually creates jobs and opportunities” (ITC)  It is important that AfT initiatives focus more on the supply side constraints and infrastructure needs for trade  There is also need to carefully consider the political economic dimension in all these AfT initiatives  It is unlikely to expect that bilateral donors (wealthy nations) are willing to provide advice on trade negotiating strategies or export development which conflict with donor nations’ economic interests.

10. Our Approach to Aid for Trade  “Ownership” means that key players — business, government and non-governmental organizations (NGOs) — need to work together closely  CA has a unique focus on developing trading activity and building confidence between business and government  Our approach to Aid for Trade is based on ‘leadership’ and ‘ownership’ by beneficiary countries  It is a process in which countries actively engage, with CA support, in assessing trade development needs, defining priorities and designing highly targeted projects.

11. The Focus of Aid for Trade Going Forward In Conclusion, we recommend three broad areas on which to apply aid for trade in Africa:  Policy: National and intra-regional policies to support trade development. At the national level, cross-border trade facilitation; export strategies; rule-making in conformity with international standards  Supply side: Trade-related technical assistance that helps countries develop the skills and capacity to export in competitive global markets.  Infrastructure: Trade Corridors, one stop border posts, roads, ports, utilities and other infrastructure necessary for trade