28 Maio 2024

A governance hack aligns Aid for Trade support to country priorities

by Daniel K. Kalinaki / in Novidades

Countries receiving assistance from development partners to build internal trade capacity face the challenge of fitting that support into existing structures. If implemented without regard to ongoing initiatives, it can lead to duplication and lack of ownership. The efforts can also fail to create impact and become unsustainable. 

The National Implementation Unit (NIU) mechanism developed by the Enhanced Integrated Framework (EIF) provides a working model to solve that problem. At its heart are the principles of country ownership and demand-driven interventions. 

The EIF has been working to strengthen institutional and productive capacity as well as improve coordination within 51 participating least developed countries (LDCs) and recently graduated countries. It enables them to use improved trade policies and business environments to grow their economies. 

The NIU mechanism is a means to implement priorities identified by the governments through EIF support while functioning as a valuable public good that can be used by various partners active in the Aid for Trade (AfT) sphere. The key is to integrate NIUs into existing national government structures. A National Steering Committee (NSC) oversees the NIU work and involves many stakeholders, including relevant line ministries, private sector organisations, women’s associations, civil society, academia, key development partners and wider government institutions. A key development partner working in the Aid for trade space is generally selected by the government to act as the Donor Facilitator to coordinate the NIU work with other development partners' initiatives and EIF Focal Point such as the Permanent Secretary is selected to chair the NSC and ensure high-level government awareness and buy-in. 

This expanded pool of roles and stakeholders, which can broadly be defined as the wider EIF National Implementation Arrangements, ensures that AfT initiatives are effective and inclusive.

NIUs primarily play two broad roles that vary from country to country. Firstly, they implement projects and coordinate AfT initiatives. In Cambodia, for instance, the NIU (called the Department of International Cooperation) worked with the International Fund for Agricultural Development (IFAD) to implement a $62 million project on Accelerating Inclusive Markets for Smallholders. The project was identified through the EIF Medium Term Programming process and included scaling up investment in the cassava sector.

Secondly, NIUs support the mainstreaming of trade by providing technical advice on trade policy to other parts of government and sectors in society. Through the NSCs, NIUs also work closely with development partners as well as the ministries of finance, development and planning. The units also collaborate with chambers of commerce, industry associations, the private sector, and civil society, to ensure that the national trade agenda is well coordinated and prioritized in National Development Plans.

NIUs are customized to local contexts and priorities but generally take one of three forms. In the ‘government’ or ‘conventional’ model, most, if not all, NIU staff are public officials embedded within the ministry and paid by it.

This is the case in Tanzania, for example, where the NIU team sits in the Department of Policy and Planning in the Ministry of Industry and Trade. The team has implemented EIF-funded projects in collaboration with UNDP and the World Bank but the NIU and NSC have also led bi-laterally funded AfT projects such as the USD 5.5 million Swiss SECO-funded Responsible Tourism project in collaboration with the UNCTAD-led UN Inter-Agency Cluster for Trade and Productive Capacity which ran from 2013 to 2019.

In the ‘integrated’ or ‘hybrid’ model, the NIU has a mix of government officials paid through the national budget and embedded within the trade ministry structures, as well as project staff paid through other funding. 

This is the case in Lao People’s Democratic Republic where the NIU was a division under the Department of Planning and Cooperation in the Ministry of Industry and Commerce. Under this governance structure, which setup the EIF facilitated, the unit’s staff of about 20, included government employees and project workers funded through various donor projects. By pooling resources into a common implementation structure, investments in specialist skills for AfT delivery can be shared across different partners. For instance, a high-calibre finance specialist could oversee multiple projects, while the NIU could also invest in cross-cutting expertise, such as communications and monitoring and evaluation, to service the various ongoing projects.

This arrangement has allowed better coordination between governments, the private sector and donors. Improvements in project management skills (including fiduciary), trade-related knowledge and policy formulation have seen about $150 million leveraged for trade-related capacity-building projects in Lao PDR.

Beyond the EIF projects, the unit in Lao PDR has been instrumental in serving as a secretariat for the national working group on private sector development. The NIU has also played key roles in formulating, implementing as well and coordinating trade-related projects funded by various development partners such as Australia, the European Union, Germany, Ireland, Japan, Korea, the Netherlands, the United States, and the World Bank.

Under the third ‘project-leaning’ model such as that in Rwanda, the NIU is housed within the trade ministry, but most of the staff are primarily paid from project funds that are not necessarily related to the EIF. Nonetheless, the NIU still assumes the responsibilities typically associated with the ‘government’ and ‘integrated’ models.

Rwanda’s NIU, called a Single Projects Implementation Unit (SPIU), was set up in 2011 by the Ministry of Trade and Industry (MINICOM). It coordinates donor-funded initiatives related to AfT to ensure proper collaboration and long-term sustainability. Staff costs are shared between contributing projects, and staff members are expected to be absorbed into other interventions within the unit without being incorporated into the ministry. 

The SPIU has played a vital role in supporting the ministry to focus on cross-border trade, e-commerce, and value chain development, as well as giving the government improved oversight, ownership and coordination of development-partner-funded initiatives. With evidence from MINICOM and some other pilots, the model has been so successful that the Rwandan government is replicating it across other ministries.

The three NIU models reflect different approaches to staffing and financing, depending on each country’s context and priorities. However, they all work towards fulfilling the core responsibilities of project implementation, coordination, and trade policy advisory. 

Regardless of the model chosen, integrating NIUs into government structures and functions is crucial to ensuring the long-term impact of AfT initiatives beyond EIF funding. 

“Aid for Trade is a complex subject,” says Lattanaphone Vongsouthi, who heads the NIU in Lao PDR. “Every country has its own needs and priorities.” 

She points to three cross-cutting lessons that could be applied elsewhere for the success of AfT initiatives: strong leadership and political commitment; setting priorities; and mobilizing private sector participation. 

“No strategy to promote trade and private sector development will ever work unless we want it unless we ‘own’ it, and unless it supports our national development strategy,” she says. “The only successful trade-led development strategy is created and executed by countries themselves – and which is mainstreamed in national development plans and strategies.”

The private sector, she adds, plays a crucial role. “It is business, not governments, that trade. So, for this initiative to work, we need to involve the private sector directly in telling us where the problems lie, in helping to develop the solutions and, with a bit of creativity and the right incentives, in providing some of the resources through public-private partnerships.”

By the end of 2022, 42 NIUs out of the 51 countries supported by the EIF had been integrated into their government structures. The integration of NIUs is not without its challenges and the wide spectrum of countries alone serves as a clear hint of this, while the integration of NIUs has been possible in most cases, in some countries the need for support from the EIF and other development partners has been more pertinent. 

Going forward, countries will need to focus on strengthening the depth of integration, mobilizing resources, and embedding the AfT agenda into national plans. Once owned by a country and aligned with its priorities, the NIU mechanism is an effective dynamo for powering trade and economic growth.

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