Trade Mainstreaming and the IF Process in Africa: Some Reflections

1
Trade Mainstreaming and the IF Process in
Africa Some Reflections

• Graham Chipande-
• Economic Advisor-UNDP Sierra Leone
• At the Ad-Hoc Expert Group Meeting on
• Mainstreaming Trade into National Development
  Strategies
• Casablanca, Morocco
• 29-31 May 2006

2
Outline of Presentation

• Introduction
• Aims and Objectives of the IF
• Experience with the IF in promoting Trade
  Mainstreaming
• Constraints to Trade Development in Developing
  Countries
• The way Forward

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OBJECTIVES OF THE IF PROCESS

• Strengthen the Capacity of African Countries to
  Formulate Effective Trade Policies and Integrate
  them into National Development and Poverty
  Reduction Strategies
• To exploit potential opportunities created in the
  international trading system
• Promoting growth and Poverty Reduction
• Employment Creation
• Ensuring coherence between trade and domestic
  economic and social policies

4
The IF and Mainstreaming

• 1st Generation IF
• Introduced at time of Structural Adjustment/PFPs
• Ministries of Finance and Development, Central
  Bank
• Disconnect between trade policy and overall
  Development policy (too many development
  initiatives)
• Lack of coordination on trade policy issues at
  the national level- e.g. The Gambia
• Emphasis on Demand Side Constraints and little
  attention to supply constraints (Typical SAP
  package)
• Liberalization of domestic markets,
• Privatization
• Removal of barriers to international trade and
  financial flows
• Search for market based solutions/reduced role of
  public sector
• Collapse of many domestic industries, e.g..
  Textile, and edible oil industries in Malawi

5
The IF and Mainstreaming, cont.

• 2nd Generation IF
• PRSP/MDGS
• Many PRSPs are incorporating Trade issues,
• SL PRSP Pillar 2-Attaining Food Security and Job
  Creation in a Healthy Macro-economic Environment
• Promote the enabling environment for private
  sector investment
• Expand access to modern energy services for
  improved energy supply reliability
• Provide support for the creation of SMEs
• Provide effective financial services through
  promotion of micro finance schemes
• Promote and support investment in the tourist
  sector

6
The IF and Mainstreaming, cont.

• MDGs-Have given better prospects for
  mainstreaming trade in the development agenda
• Inclusion of Trade and Aid issues (goal 8)
• gt but not well articulated strategies in national
  PRSs
• Preoccupation with demand side constraints still
  predominate in many PRSs.
• Trade strategies in many LDCs still focus on
  expanding production of primary commodities, and
  extractive industries-little value added
• Eg. Recently concluded SL DTIS
• Donor support to trade development is scattered
  and uncoordinated

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The IF and Mainstreaming, cont.

• Focus on Social sectors,
• Emphasis on external financing, and less emphasis
  on domestic resource mobilization
• Fiscal policy reforms pay more attention to
  meeting public expenditure, rather than
  facilitating trade and private sector development
• Domestic borrowing and private sector crowding
• High dependence on international trade taxes for
  revenue
• Trade barriers still abound in many forms

8
Constraints to Trade Development in LDCs

• Structural Bottlenecks
• Poor infrastructure
• Power, roads, watsan, financial institutions,
  ITC, institutions for standards compliance and
  quality control
• Capacity building
• Lack of capacity for trade policy formulation,
  implementation, coordination and negotiation in
  LDC Ministries of Trade, Commerce and Industry,
  etc.
• Lack of capacity in LDC Chambers of Commerce and
  Industry to effectively participate in trade
  policy issues
• World Trade Situation
• Poor progress on world trade discussions

9
Implementation of IF in Sierra Leone

• A number of trade policies and strategies have
  been initiated or put in place in order to
  improve the enabling environment for trade
  facilitation,
• Investment Code,
• Trade Policy
• Pre-DTIS workshop held last year
• DTIS has been completed and reviewed by a
  technical committee-An Action matrix is being
  Developed
• Includes capacity building requirements
• A PRSP Pillar 2 Task force established to
  monitor trade related activities including the
  forthcoming action matrix to mainstream the IF in
  the PRS

10
The way Forward

• Need for Governments to come up with clearly
  defined trade development policies within the PRS
  and other development strategies
• Need for a well identified institution to
  coordinated national trade policy
• Donors to coordinate their support to trade
  issues in line with the PRS