Malawi Aid for Trade Evaluation

Transcription

1 Malawi Aid for Trade Evaluation Thursday19 th May 2011 Pacific Hotel, Lilongwe, Malawi

2 Objective To facilitate a discussion about the effectiveness of Aid for Trade by presenting an application of an international Aid for Trade evaluation to Malawi

3 Definition of Aid for Trade AfT in Malawi Agenda 4 pillars of methodology, based on Task Force & research Pillar 1: Fundamental Principles Pillar 2: Effectiveness Pillar 3: Coherence Pillar 4: Principles based on research Case Study Conclusion

4 5 types of Aid for Trade Category Type Trade Policy and Regulations Trade Development Trade Infrastructure Building Productive Capacity Broad Institutional Framework Examples Malawi s capacity to negotiate trade policy and establish favourable outcome Building market linkages, export promotion, business climate etc Transport, Energy and Telecommunications Building capacity not necessarily to trade, but with implication on trade Macro stability, fiscal prudence governance, rule of law etc

5 Source: OECD Query Wizard for International Development Statistics. Note: This data excludes debt relief in 2005 and Malawi Aid for Trade Evaluation Workshop 19 May 2011 ODA in Malawi around 20% of GDP Malawi Total Official Development Assistance as a share of GDP 45% 40% 35% 30% 25% 20% 15% 10% 5% 0%

6 AfT totalled $255m in 2010 Malawi AfT a share of GDP, categorised by OECD economic sectors 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% Trade Policy and Regulation Trade Infrastructure Institutional Framework Other Aid Trade Development Productive Capacity All Aid for Trade Source: OECD Query Wizard for International Development Statistics.

7 Sources: OECD Query Wizard for International Development Statistics and Government of Malawi project database Note: GoM data for 2005 and 2006 is not exclusive, but merely indicative Malawi Aid for Trade Evaluation Workshop 19 May 2011 Malawi Aid for Trade, US$ million $300 AfT is gradually increasing $250 $200 $150 $100 $50 $ OECD International Development Statistics Government of Malawi Project Database

8 Pillar 1: Fundamental Principles

9 AfT in Malawi not additional in Total percentage growth of AfT, relative to % 200% 150% 100% 50% 0% -50% Trade Policy Trade Infrastructure Institutional Framework Trade Development Building Productive Capacity All Aid for Trade Source: OECD International Development Statistics

10 ...but Govt share of capex on the rise Govt contribution to Public Sector Investment Programme as % of total Govt & donor contribution 60% 50% 40% 30% 20% 10% 0% 2005/ / / / / /11 Trade Policy Trade Infrastructure Institutional Framework Trade Development Building Productive Capacity Source: Government of Malawi Public Sector Investment Programme

11 AfT fairly predictable, but conditionalities? Percentage of disbursed AfT relative to committed AfT, moving averages 300% 250% 200% 150% 100% 50% 0% Trade Policy Trade Infrastructure Institutional Framework Trade Development Building Productive Capacity Source: OECD International Development Statistics

12 Data suggests AfT sustainability, but.. Distribution of AfT funds by type of implementing agency, 2007/08 to 2010/11 100% 80% 60% 40% 20% 0% Government Local Private Sector Local NGO Local Civil Society Donor Foreign NGO Trade Policy Trade Infrastructure Institutional Framework Trade Development Building Productive Capacity Source: Government of Malawi Project Database. Note: Data only includes up to January 2011.

13 ...stakeholder views do not Government, NSAs and donors are doubtful about AfT sustainability, formally and substantively: limited long-term impact from many projects foreign exchange shortages deterioration of trade deficit strained capacity of implementing agencies: multiplicity of donor requests failure to tackle human capacity development comprehensively

14 Pillar 2: Effectiveness

15 Does Malawi truly own Aid for Trade? Trade is explicitly targeted in MGDS But is it mainstreamed in line ministries, civil society? Stakeholders suggest: NSAs, Gov t unaware of existence of AfT Lack of mainstreaming at programme level Limited specific budget allocations to AfT Not fully internalised in Ministry of Education, Lands, Justice, Youth, Gender, Local Government, Finance, Irrigation, Home Affairs But progress: ASWAp food security to commercialisation

16 Limited degree of alignment... Percentage of AfT implemented through Government systems, 2009/10 100% 80% 60% 40% 20% 0% In conjunction with Gov't Using Gov't accounts Using Reserve Bank system Trade Policy Trade Infrastructure Institutional Framework Trade Development Building Productive Capacity All Aid for Trade Source: Government of Malawi Project Database

17 ...& uncertain trend due to parallel PIU ban Distribution of AfT by type of implementation unit, average 2007/08 to 2009/10 100% 80% 60% 40% 20% 0% Embedded Parallel NGO None/ Unknown Trade Policy Trade Infrastructure Institutional Framework Trade Development Building Productive Capacity Source: Government of Malawi Project Database

18 Improvement in donor coordination Donor coordination has improved significantly due to: Ministry of Finance s Division of Labour Matrix Establishment of Sector Working Groups Common Approach to Budget Support Informal donor discussion forums But this coordination weaker at Trade Policy & Development levels of AfT: Degree of compatibility UNDP, WB, ADB etc No holistic approach to long-term AfT effectiveness Poor understanding of AfT by local donor offices

19 An apparent positive impact of AfT Gross Domestic Product per capita, Malawi Kwacha per person MWK 40,000 MWK 35,000 MWK 30,000 MWK 25,000 MWK 20,000 MWK 15,000 MWK 10,000 MWK 5,000 MWK Source: IMF World Economic Outlook. Note: In 2010, MWK 35,577 equated to US$237 (not purchasing power parity)

20 But growth supported by debt relief... ODA as a percentage of GDP, including debt relief 100% 90% 80% 70% Debt Relief 60% 50% 40% 30% 20% 10% 0% Sources: IMF World Economic Outlook and OECD International Development Statistics

21 ...& driven by consumption, not production Trade in goods deficit as a percentage of GDP 35% 30% 25% 20% 15% 10% 5% 0% Sources: IMF World Economic Outlook and Comtrade Trade Map

22 New export sectors remain in infancy Major exports as a percentage of total exports Nuts and fruit Rubber products Wood and wood products Soya beans, ground nuts, oil seeds Weighing equipment, pumps, airconditioning Cotton and cotton products Clothing Household plastic items, industrial packaging Vegetables - mostly beans and pigeon peas Sugar and molasses Coffee, Tea and Spices Uranium Tobacco 0% 10% 20% 30% 40% 50% 60% Source: Comtrade Trade Map

23 S holders: low impact but see improvements Increasing AfT focus on diversification but: difficult to decipher private sector vs donor drive limited private sector investment in infant export sectors limited comprehensive approach to tackling export constraints and cluster development Yet growing awareness of trade importance by smallholders

24 Pillar 3: Coherence

25 Difficulty in evidencing coherence South-South Donors Seems to be limited coherence with South-South donors Appears to be lack of ownership, alignment, results based, harmonisation & accountability Environment Malawi lacks active Environmental Policy Difficult to measure coherence Obligatory EIAs help mainstream environment in trade But is trade mainstreamed in environment agencies? DEA recognises importance of balanced approach

26 Pillar 4: Principles based on research

27 AfT appears to be non-debt creating... Grant and technical assistance financing as a percentage of total AfT 100% 80% 60% 40% 20% 0% Pre Trade Policy Trade Infrastructure Institutional Framework Trade Development Building Productive Capacity All Aid for Trade Source: Government of Malawi Project Database

28 ...but is it? For AfT to be truly non-debt creating it must not only be in grant form But must also not put downward pressure on trade balance by: incentivising imports through exogenous windfall that detach fiscal and monetary policy from a country s capacity to generate value add creating dependence syndrome

29 Existence of demand-supply mismatch? Government s view is that a lot of AfT is donor driven Only 1% of AfT in 2010/11 to MoIT Firms believe donors react to their demands for trade Mismatch driven by: lack of in-country awareness of AfT lack of mainstreaming in agencies & programmes implementation capacity of local institutions donor incentive to disburse donor difficulty in assuming longer term view

30 Failure to link AfT to develop local capacity Development of PS capacity e.g. OIBM, Agro-Input Suppliers Association of Malawi Delay in accessing EIF funding Business Growth Scheme only 40% disbursement rate Pro-Invest only recorded a disbursement rate of 20% Capacity development components of AfT projects tagged on the end to tick a box

31 Know-how is increasing, but... Capacity constraints in Gov t, Private Sector & CSO Technical and implementation skills over-stretched Piecemeal human capacity development Lack of skills & knowledge transfer by foreign advisors Limited strategic approach to institutional development

32 Case Study: Joint Integrated Technical Assistance Programme II

33 JITAP s objectives Develop national capacity to understand & address implications of Multilateral Trading System (MTS) Build capacity to implement legislation & measures to conform to MTS in most beneficial way Enhance readiness of national exporters to trade

34 In 2007 JITAP had a number of successes Successes of JITAP in 2007: built MTS capacities - it positively influenced trade policy provided notification interpretation training on Technical Barriers to Trade (TBT) & Sanitary & Phytosanitary Standards (SPS) built awareness & response to trade policy requirements increased involvement of women in international trade & in understanding the MTS supported strategies for cotton, textiles & garments supported National Working Group on Trade Policy

35 But permanency of impact in 2011? Lack of ownership private sector not represented on Steering Committee gov t provided $20,000 & 6 full time equivalent staff positions to the MTS activities. But on an annual basis no financial or human resource support Absorptive capacity JITAP Evaluation : JITAP created heavy workloads & competing priorities in Gov t. Lack of expertise/ experience in managing MTS activities placed constraint on MoIT No holistic long-term approach to capacity development National Enquiry Points and Reference Centres not running in 2011 due to breaking down of computers

36 Conclusion

37 Key issue to be addressed in AfT Developing in a permanent manner the human capacity required to allow for the permanent development of the institutional framework that sets the agenda for: trade policy trade development trade infrastructure productive capacity

38 Main recommendations 1. Develop strong nexus between AfT and secondary & tertiary education 2. Significantly increase attention to line Ministries for Aft: Finance, Education, Agriculture, Irrigation, Youth, Gender, Home Affairs, Justice, MRA, MBS & others Also through enabling MoIT 3. Increase Geneva s & multilateral donors advocacy capacity and focus with donors, so that HQ & in-country promote trade across different types of projects 4. Effectively define AfT to be understood and owned by all stakeholders

39 These are essential if we are to: Increase donor & government attention, drive & effort for holistic approach to staff development & capacity building Ensure sustainability, impact & alignment: effectiveness Develop productive capacity & enabling environment to: Translate comparative advantages into competitive advantages & significantly increase trade contribution to economic development & poverty alleviation

40 Thank you for your attention John McGrath: +265 (0) Jonathan Said: +265 (0)