Rencently the Dept. of Foreign Affairs and Trade consultation meeting on Irish Aid Policies in Africa, the Irish Exporters Association (IEA) called for a radical Review of the current practices, stating;
Irish Government policy so far has shown;
- Low attention to trade as a tool of development in African countries.
- Lack of sufficient private-sector involvement in identifying trade needs.
- Lack of data on, and analysis of trade and their impact on development.
- Lack of easily-available information on existing Aid-for-Trade.
- Limited support for trade-related programs and projects.
- Insufficient resources for infrastructure and productive capacity building.
- Lack of coordination and coherence in trade-related response.
- Inadequate trade related activities such as technical assistance training.
John Whelan, Chief Executive of the IEA stated at the consultation meeting;
‘’We have an Aid strategy for Africa but no Trade strategy. The OECD has pointed out in recent releases that aid for trade policies are now considered the preferred and most successful means to development of Africa.’’
Mr. Whelan went on to say
‘’We have eleven well-staffed Irish Embassies across Africa, but only one of them has a trade attaché—South Africa. There has been rapid economic and trade growth in Africa over the last 5 years. Many other countries are rapidly building up strong business relationships, with Ireland losing out.’’
He concluded by saying;
‘’ Ireland’s long standing Aid supports could now be best utilized by enabling sustainable trade growth to flourish between Ireland and the various African countries where we have an embassy. ‘’
The IEA Submission to Government as part of the Consultation process on Aid Policies in Africa advised the following specifics for consideration of its demand for a Trade policy for Africa:
Growth in African Continent
Over the last decade Africa’s economic growth has more than doubled compared to the 1980s and 90s, with Real GDP growing at 4.9% p.a. from 2000 to 2008. Africa’s fast growing GDP reached $ 1.7 trillion in 2010, and is expected to reach US$2.6Tr in 2020 with a rising emerging middle class. Further growth is expected to 2050 with African becoming the most populace continent in the world with just fewer than 2 trillion inhabitants.
As the African economies grow, so have Irish exports. In appendix A we show Irish exports to the African continent has grown from € 810 million in 2009, to €1062 million in 2010 and is on track to reach €1,221 million by the end of 2011- a 50 % growth in the past two years.
Yet Irish market share has fallen in the period. A recent report by Value Added in Africa has shown that Ireland’s share of the markets of the Irish Aid programme countries in Africa is declining. This is despite them being the countries where Ireland has the strongest diplomatic presence. Irish exports to these countries lagged behind the overall growth of Irish exports through the 1990’s, though there was some improvement in recent years. Measures are needed to ensure Ireland holds and grows its share in these growing markets.
Private sector development is internationally recognised as being central to development and an essential means to sustainable reductions in poverty in Africa. Irish companies have considerable expertise that can be brought to enhance this process in a manner which will contribute to development and create additional business opportunities for Irish companies.
Opportunities also arise, particularly in the services sector, for building partnerships between Irish and African companies in a manner which will strengthen the capacity of the African economy and bring business to both Irish and African companies.
TRADE DEVELOPMENT, CAPACITY BUILDING AND TECHNICAL ASSISTANCE
Government policy could, the IEA advice, adequately address an number of trade development areas, and offer more sustainable benefit to the African inhabitants than current straight aid by;
- Setting up testing facilities which will help ensure that products from African countries can meet Irish, EU and international technical, sanitary and photo-sanitary regulations and standards
- Strategic partnerships between Irish transport, shipping and logistics service providers.
- Linking Irish brand development companies/ advertising agencies and other professional business, with local African partners to bid for major contacts across the African continent.
- Consultancy partnerships in accounting and legal services could be partnered in the same way –offering knowhow transfer for market entry opportunities.
Government policy in Africa has not focused adequately on Investment promotion activities, analysis and institutional support for trade in services, business support services and institutions, public-private sector networking for Irish and African businesses, e-commerce, trade finance, trade promotion, market analysis and development.
The Government policy should be enhanced to provide information on trade-related technical assistance and capacity building projects in Africa so that Irish businesses are enable them to fully participate in the African continent development. They key benefit of this to Irish businesses is that it would accelerate the entry into Africa which is set to be a global player after China and India.
Trade related programs (including train the trainer) for policy officials of African countries to enhance their knowledge about WTO Agreements and on how the organization functions in practice has lacked proper attention.
BOOSTING TRADE FINANCING
More than 90% of international trade flows involve some kind of credit, mostly short-term but African countries face stringent lending standards adopted by international banks. Fees and rates on what is normally inexpensive finance are raised, country limits are reduced and tenors (maturities) were cut.
Irish Government policy should be directed towards providing short-term guarantees to international and regional banks (confirming banks) to cover both the commercial risks of international trade credit transactions emanating from local banks (issuing banks) or to provide directly to specified companies and banks.
Such trade facilitation programs have a proven track record of producing results in support, particularly, of small and medium-scale producers and traders in developing countries. Examples are the success of this program has been demonstrated by EBRD which trained several personnel in banks from 15 countries in South-East Europe and the CIS free of charge.
TRADE RELATED ADJUSTMENT
A key part of Trade related Adjustments policy is training of trade officials, analysis of proposals and their impact, support for national stakeholders to articulate commercial interest , dispute issues, institutional and technical support to facilitate implementation of trade agreements and to adapt to and comply with rules and standards.
To achieve this Government policy should be to train (including train the trainer) officials from African countries here in Ireland in Trade related WTO issues such as Trade Facilitation, Trade in Services and an analysis of the impact of Non-Tariff Barriers on African trade.
The need for capacity development in value chains is a cornerstone of Aid for Trade therefore this and trade information should be at the forefront of Government policy which would enable businesses participate in supply chains.
COMMERCIAL PARTNERSHIPS CONTRIBUTE TO DEVELOPMENT
Partnerships between Irish and African businesses, particularly in the area of B2B services, can enhance the capacity of the African company, strengthen its competitiveness, and result in a skills transfer to the African company. These commercial partnerships would involve joint ventures by the Irish and African services companies in bidding for contracts in the African region.
Aid for trade would have a valuable role in facilitating the coming together of compatible Irish and African companies who would then form commercial partnerships. Aid for Trade would also have a role in supporting training or technology transfer under the capacity building elements to the partnership.
Such partnerships will engage additional Irish companies in selling their services into the African region and once there they would be better placed to identify additional commercial opportunities.
Pilot programmes in the area of B2B services in the food sector (e.g. food safety compliance, training and certification, food marketing, packaging) may be a valuable place to start as it builds on a core Irish expertise that would match Ireland’s prioritisation of the reduction of hunger in Africa.
Conclusion and Recommendations
Many other countries in Europe have long experience and learning in the area of Aid for Trade. Many have well developed programmes which engage business in contributing to development in a manner which also makes commercial sense for the home business and enhances their markets. It would be valuable for Irish Aid to learn from this good practice.
The IEA recommend the setting up of an Irish African Trade Committee to ensure trade development strategies are based on specific country needs, sets priorities and assist in matching “demand” and “response” inclusive of the Irish businesses dimension.
The IEA respects the principle of untied aid. However, it is legitimate to expect that development partners be required to advertise publicly (e.g. on the Irish Aid website) any contracts that they are putting out to tender that are financed through Irish taxpayers money. Access to such information would enhance the prospects of Irish companies winning the contracts.
Ireland is an exporting country which imports a significant amount of inputs in order to manufacture and export. Whilst Ireland leverages ties with its traditional partners Government policy can operationalize Aid for Trade for manufacturing inputs from African countries particularly those where there are increasing trade flows in the last years.
The Africa Trade Committee would ensure a system of data collection and value chain analysis at African country level by utilizing better the Irish missions abroad. This would strengthen the bridge between “demand” and “response and ensure the involvement private-sector/trade actors and expertise here in Ireland
Irish Aid for Trade technical assistance funds should be used for programs (train the trainer) to train officials from trade the related sector of African countries both here and in African countries and establish programs aimed at assisting African business’s activities and efforts at their up-stream market activities in order to be successful and competitive here in Ireland. These programs should be directed through but not limited to trade organizations and consultants/professionals based in Ireland.
In this regard, the IEA recommend a closer tie with the WTO on the utilization of any further development programmer contributions.