Monitoring of Aid For Trade at regional and national level

By Calvin Djiofack Zebaze, International Lawyers and Economists Against Poverty

(ILEAP)

Outline of presentationI. Why to monitor A4T

II. How to monitor A4T

Conclusion

I. Why to monitor A4TStrengthening the confidence among

stakeholders

create conditions of efficient utilization of aid: By allowing the recipient countries to extract

lessons from the experiences and integrate them into the country’s overall development plans

To manage risk linked to aid: like other forms of Aid flow, Aid for trade have a

theoretical risk of Deutsch disease (see Adams et al,

2005) : the form of aid and its utilization is therefore essential

II. How to built Indicators for the monitoring in Recipients Countries?

Our approach consists to examine the channel through which the A4T initiatives can achieve its main objective of Poverty Reductions, and

Identify intermediate indicators for each stage of the channel. propose Mean Indicators and Performances

Indicators for each objective.The illustration is as follows:

How to monitor: Channel of A4T to poverty

Channel of A4T to poverty

Needs identification

Mainstreaming

Donor responses

Sound trade policy and trade capacity

Price decreasing

Increasing in growth

Poverty reduction

Employment creation in pro-poor sectors

Imports of technologies trough the FDI

Increased and diversified trade

Increasing in productivity

11 objectives identifiedobjective Mean indicators Result indicators

1.Mainstreaming Extent to which the DTIS is introduced in DSRP

Share of total Public aid allocated to Aid for trade

2.donor responses

Flow of Aid Share of aid directed toward the country priorities

3.Sound trade policy

Ranking of countries among developing countries in terms of applied tariffs, number of tariff peaks and the NTB

4.Trade capacity Increase in share of total public aid allocated to offer side constraints: trade infrastructure and development trade

Change in country trade facilitation, perceived by aspects of trade such as customs, transport/logistics, services efficiency and standards

5.Price decreasing

CPI on poor consumed goods

6.Trade increasing -Increase in volume -increase of number of product -Increase in number of products from pro-poor sectors - decreasing of destination dependency -Increasing in regional trade

7.Employments -change in employment in rural area -change in employment in unskilled sector

8.Technology imports

-increasing in FDI

9.Productivity gains

- Increasing in FDI

10.Growth - The share of growth attributed to poor sectors

- The increasing inequality as result of growth

11.Poverty reduction

FGT0, FGT1, FGT2

Suggestion of indicators

We focus on two Objectives:

Mainstreaming andDonors responses

Sugestion of indicators: MainstreamingMean Indicator:

the Extent to which the DTIS is introduced in PRSPs: “number of priority projects included in the PRSP”.

However, merely mainstreaming trade into PRSPs is not enough to improve A4T outcomes. World Bank (2006) evaluation of IF find that the

relatively few Bank lending operations have directly resulted from mainstreaming.

An ongoing evaluation of IF by ILEAP found that LDCs who have completed their DITS and are more advanced in mainstreaming are receiving more aid compared to others.

Sugestion of indicators: MainstreamingResult Indicator: This allow to capture the effective weight of

A4T in the country strategy:“the share of total Public aid allocated to Aid

for trade”.

Suggestion of indicators: Donor responsesMean indicator:

Increasing in amount of AFT flow

However, this could not work without satisfying some conditions:

Suggestion of indicators: Donor responses

Result indicators (1) Increasing in flow toward priorities identified

by the beneficiaries in DITS for example in LDCs

(2)Increasing in flow toward supply side projects. This is essential to outweigh the potential Dutch disease

resulted from augmenting foreign currency that could lead to appreciation of exchange rate

Pycroft (2008) in the case of Ethiopia shows that the extra inflow of aid of 3 % of GDP without any compensating effects on the supply side, cause an 11 % fall in exports

Sugesttion of indicators: Donor responses

(3) Share of A4T which is not linkedThere are important donors maintaining their

aid linked notably to: Donor enterprises

Literature shows strong link between aid and economic interest of donors (numbers of enterprises)

Donor entrants origin Increased cost of maintenance

Donor employees Increasing practice from some donors

Sugesttion of indicators: Donor responses (4) pro-poor orientation of flow:

Share of A4T allocated to rural infrastructure (appropriate in Africa context)

(5) stable and predictable flow:Gap of aid flow with the average of the last five

year

ConclusionsInternational community should mobilize effort

to render beneficiary monitoring of A4T effective ( As recommended by task force)

Regional institutions may have comparative advantage to assume this responsibility in some regions

Monitoring A4T should not focus only on mean deployed but also on results through intermediate objectives.