© Jean-Claude Chesnais, AFD
AFD AND THE COMMERCIAL CAPACITY BUILDING PROGRAMME
Combat poverty by developing trade and commerce
A FLEXIBLE TOOL FOR IMPROVING EXPORT CAPACITY
DEVELOPMENT INTERNATIONAL TRADE BOOST GROWTH AND FIGHT POVERTY Improved participation in global trade by developing countries is a powerful lever for growth and can cut poverty. Commercial opening encourages economic growth and helps create jobs by developing markets, creating economies of scale and boosting specialized production. Trade growth also encourages foreign direct investment as well as the transfer of expertise and technology. That said, trade liberalization does not produce all the benefits one might expect from it in terms of poverty reduction, particularly in the least developed countries where produc tion is disproportionately concentrated in the primary sector (agriculture, fossil fuels and extractive industries) and in products that have not undergone much processing and are vulnerable to volatility on the global markets. In these countries, the benefits of trade liberalization are all too often limited by structural inadequacies, a lack of professional training and local constraints that inhibit what can be produced, such as a lack of diversification, limited value chains, difficulties in adapting to the market, lack of structure in industrial chains, insufficient infrastructure, sub-standard products, lack of institutional capacity and so on.
Technical cooperation to build trade capacity underpins the evolution of the global trade system. A French aid plan to build trade capacity has been in place since 2002, running alongside multilateral contributions. A specific bilateral programme was created – the Trade Capacity Building Programme (TCBP). The TCBP is cofinanced by the Ministry for the Economy and Finance and the Ministry of Foreign Affairs and implemented by Agence Française de Développement (French Development Agency - AFD). Support from the TCBP has a positive impact both on beneficiary countries’ ability to assimilate the rules governing international trade and their export trade performance. It is part of the framework of national policy to support the development of trade. It responds to a specific need, identified by economic missions and AFD offices in close collaboration with State partners and representatives from the private sector. The actions implemented come in the form of technical assistance, training and awareness raising, sectoral studies and funding for equipment and small everyday items. The TCBP can be linked to other structural funding from AFD or other funding bodies.
© Bruno Bosle, Cefeb
To respond to these challenges, the international community is providing aid to help developing countries benefit more from trade.
BUILDING TRADE CAPACITY TO IMPROVE INTEGRATION INTO THE GLOBAL TRADE SYSTEM
Autonomous port at Pointe Noire, Congo-Brazzaville
TCBP projects cover four main areas of intervention:
Structuring the entrepreneurial fabric is a prerequisite for developing trade. To enable this, the TCBP increases the capacity of intermediary organisations that represent the production sector and supports the structuring and development of flourishing industries as well as systems for promoting exports;
The quality approach enables higher added value for exports with a constant volume. In particular, the TCBP helps develop protected geographical indications, an effective trade tool for positioning exports in niche markets with higher prices by leveraging heritage and diverse agro-industrial traditions.
TEN YEARS OF COMMITMENT
Over 10 years, the TCBP has supported 60 projects in 39 countries with a total value of EUR 72 million in grants. 60% of commitments were made in sub-Saharan Africa
2 3 4 5 6 5 6 2 5 6 2 5 6 GUINEA
SIERRA LEONE LIBERIA
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2 3 4 5 6 2 2 4 4 2 4 3 5 5 5 6 5 6 6 BURKINA FASO
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CENTRAL AFRICAN REPUBLIC
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TOGO EQUATORIAL GUINEA
GHANA SAO TOME
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The TCBP aims to lift non-tariff trade barriers (technical norms, SPS, certification etc.) that could present a serious hindrance to trade development in developing countries.
Fair trade enables the creation of economic opportunities for the most vulnerable producers. The TCBP supports collectively organising new production and distribution circuits for the international market, based on social, economic and environmental norms.
TO TRADE AID 1 2
SENEGAL NIGER MALI BENIN TOGO MAURITANIA CHAD CONGO
CENTRAL AFRICAN REPUBLIC GABON CAMEROON CÔTE D’IVOIRE EQUATORIAL GUINEA GUINEA GUINEA-BISSAU BURKINA FASO
SENEGAL BURKINA FASO MALI BENIN CAMEROON
BENIN BURKINA FASO CAMEROON CENTRAL AFRICAN REBUBLIC CONGO COMORES CÔTE D’IVOIRE
6 SENEGAL BURKINA FASO CÔTE D’IVOIRE
GABON GAMBIA GHANA GUINEA GUINEA-BISSAU EQUATORIAL GUINEA MADAGASCAR MALAWI
GHANA TOGO MALI
MALI NIGER NIGERIA UGANDA SENEGAL CHAD TOGO
BENIN BURKINA FASO CAPE VERDE CÔTE D'IVOIRE GAMBIA
GHANA GUINEA GUINEA-BISSAU LIBERIA MALI
SOUTH AFRICA BOTSWANA MALAWI MOZAMBIQUE
NAMIBIA SWAZILAND ZAMBIA ZIMBABWE
NIGER NIGERIA SENEGAL SIERRA LEONE TOGO
THÉMATIQUE DU PROJET PROJECT THEMES Others
Lifting non-tariff barriers to trade (controls, norms and certification)
Capacity building for intermediary organisations
Support for industry chains Quality / PGI approach
Export reinforcement component
Structuring the entrepreneurial fabric
SECTEUR / PRODUIT / FILIÈRE SECTOR/PRODUCT/INDUSTRY Fonio
PROJETS MULTIPAYS MULTI-COUNTRY PROJECTS 1
Support for regional IG implementation €1,500,000
TCBP Protected Geographical Indications (PGI) in Africa €1,000,000
Organic fair trade cotton project in West and Central Africa €1,300,000
Fair trade as a tool for sustainable development West Africa €2,900,000
Quality / PGI approach
TCBP IZF / Aid to the Africa Agro Export Association €400,000 (2005) - €1,500,000 (2008) - €1,500,000 (2012)
Phytosanitary campaign (fruit flies) in the ECOWAS area - €1,500,000
TCBP aid for exporting certified ingredients and natural products in southern Africa - €1,000,000
Intermediary organisations capacity reinforcement
Lifting non-tariff trade barriers
A FLEXIBLE AND INNOVATIVE TOOL
The TCBP has a structuring effect and is innovative. The TCBP aims to increase – qualitatively and quantitatively – the added value contained within partner country exports. To achieve this, the projects support different types of actors (State services, regional institutions and intermediary organisations representing the private sector and companies) via actions tailored to their specific needs (technical assistance, training, equipment etc.). The TCBP also has a dedicated support fund for project preidentification and complementary interventions. Innovative projects are selected according to the example they set and the potential they have to create a knock-on effect on the dynamism of the private sector
STRUCTURING THE ENTREPRENEURIAL FABRIC VIA THE CLUSTER APPROACH:
ELECTRICAL ENGINEERING IN TUNISIA A cluster is a collection of companies operating in the same sector or the same value chain and located in the same area. Faced with shared competitive challenges, they work with local and central public institutions, financial institutions, enterprise support services, universities and professional training centres. Support for clusters is part of AFD’s development strategy for small and medium-sized enterprises (SMEs) and its trade support strategy and represents one way of enabling SMEs to develop better, in a more balanced way and with stronger connections to the SME environment.
NORMS, MONITORING AND CERTIFICATION: LIFTING NON-TARIFF TRADE BARRIERS
WEST AFRICA SUPPORT FOR THE REGIONAL PLAN TO COMBAT AND MONITOR FRUIT FLIES The most visible phytosanitary problem for the horticultural sector in West Africa is fruit flies because it directly affects exports (particularly mangoes) to the European Union as well as trade in other products (citrus fruits, papaya, melons, peppers) in the subregion. As part of a common agricultural policy (regional agricultural investment plan), ECOWAS has decided to take certain measures. It has carried out this intervention using funding from the EU’s regional indicator programme, which handed responsibility for implementation to AFD. This regional intervention carried out by an international organisation and with collaboration from different funders is interesting for several reasons. The project makes it possible to intervene in the areas of hygiene and food security and to grow producer revenues by exporting quality products that meet international norms. The project helps organise monitoring of fruit fly infestation levels at national and regional levels. If necessary, it also helps in the process of issuing alerts and carrying out rapid reactions. Furthermore, the regional coordination of national actions against fruit flies is reinforced on three levels: preventative action by raising awareness of best practices across the sub-region; more intensive action in heavily infested areas identified by alerts; and highly intensive action/eradication in more limited areas but with great economic potential. In addition, a capacity building component aimed at national monitoring organisations is being implemented.
From an initial number of 16, the number of cluster members has more than doubled, with good geographic and subsectoral distribution (mechanical, electronics, new technology etc.). Ten collaborative projects have been identified and initiated.
© AFD, DR
In perfect synergy with Tunisia’s industrial strategy to 2016, AFD gave a grant in December 2010 to the Sousse Competitive Hub Company (SPCS) to facilitate and accompany implementation of a pilot electrical engineering cluster and to structure the sector by creating the Tunisia Electrical Engineering Cluster (CMT) in order to consolidate the clustering effect (events and cofinancing for collaborative projects).
© Jean-Claude Chesnais, AFD
PROMOTING FAIR TRADE Fair trade is a promising approach to increasing revenues for marginalized populations and structuring agricultural production chains in the South within the context of a growing willingness among consumers to look for meaning in their purchases. However, compared to other global regions, West Africa is a region with a limited quantity of certified volumes because fair trade production there is relatively recent. In this context, AFD, via the TCBP, and the French Global Environment Fund have decided to link up for a project funding the organization Fair Trade Africa (FTA) in order to give regional impetus to the development of fair trade in West Africa. This will also help support innovative new approaches based on fair trade and preserving biodiversity. This project with a total budget of €4.5 million (of which €2.9 million is from the TCBP) aims to:
H elp structure production chains in the South by developing fair trade; T est the development potential of South-South fair trade production chains; R einforce the role of producer organisations in the governance of international fair trade labelling;
Improve the visibility of fair trade as a sustainable development tool and in particular for protecting biodiversity. The project, which is targeting six countries (Burkina Faso, Côte d’Ivoire, Ghana, Togo and Senegal) and five production lines (cocoa, shea, fruit, cashew nuts and handicrafts), includes three elements: T he first element is support for “fair trade and biodiversity protection in West Africa”, which will fund, following a call for proposals, the reinforcement of producer organization capacities in production, quality management, market access and biodiversity preservation; T he second element aims to structure and reinforce FO representation networks and those of their regional and national platforms that are involved in fair trade and develop their activities; T he third element of the project envisages specific activities to measure and monitor the environmental impact of projects financed by the Facility, a study on the development potential of trade labelled South-South and the final project evaluation.
DEVELOP A SERVICE FOR EXPORTS:
© AFD, DR
THE EXAMPLE OF THE INTERNATIONAL TRADE BOARD OF MADAGASCAR (ITBM) Before 2010 Madagascar did not have a public or private organization dedicated to exports. AFD wanted to support an initiative by representatives from the big employers organisations and the main chambers of commerce to create what is now one of the eight organisations worldwide with a completely private base whose mission it is to provide export support.
Alongside the chambers of commerce and professional unions, AFD is financing a resident technical assistant whose job is to carry out a transfer of knowledge about international trade and to support ITBM in its strategy and functioning. ITBM’s aim is to become an information and training centre for exporting companies and chambers of commerce (it will compile a database of data on external markets and regulations) and a one-stop shop for the formalities Madagascan exporters have to go through. ITBM will support those companies wishing to restructure in order to export (forming or developing clusters of companies) and will also manage a start up fund to promote exports from provincial chambers of commerce and industry. ITBM is also collaborating with the Cap Export programme, which is also funded by the TCBP, managed by the Franco-Madagascan Chamber of Commerce and Industry (CCIFM), which is cofinancing the concrete actions that exporters are undertaking to conquer markets (market studies etc.).
UNIQUE PRODUCTS AND KNOW-HOW
SUPPORT FOR THE PGI APPROACH
© AFD, DR
AFD supports the development of Protected Geographical Indications (PGI), which highlight a region’s characteristic produce, guarantee its quality and fight against counterfeits by protecting the linking of a unique region’s name to a product (natural or manufactured). Thanks to technical assistance from the International Agricultural Research Cooperation Centre (CIRAD), AFD is helping the African Organisation for Intellectual Property (OAPI) to acquire the necessary skills for creating PGIs in Africa (elaboration and implementation of procedures enabling the official registering of products, support for the creation of GI in promising value chains). The same methodology for each product: A gree on the uniqueness of a product and its intrinsic quality, even if a further step to improve the final quality is necessary; D efine and limit the GI’s production area; O rganize producers and also other professionals connected to the product, meaning the whole producer-manufacturertrader/exporter chain, which has to adopt a charter (production, transformation and conservation rules etc.); S upport professional associations, which ensure the charter is respected and prepare their members for external controls enforced by the States or international organisations responsible for agreeing and maintaining or removing the designation.
Ziama coffee, Guinea
With respect to this, AFD attaches particular importance to technical training and training related to internal controls. Today, sub-Saharan Africa has three PGIs: Penja pepper, Oku white honey (both in Cameroon) and Ziama coffee (Guinea). AFD supported the whole process, in particular drawing up the charter and ensuring that the quality norms were compatible with European markets’ entry rules. The OAPI is a regional organization covering 16 African countries: Benin, Burkina Faso, Cameroon, Central African Republic, Congo, Côte d’Ivoire, Gabon, Guinea, Guinea Bissau, Equatorial Guinea, Mali, Mauritania, Niger, Senegal, Chad and Togo.
© Jean-Claude Chesnais, AFD
AFD is present on four continents where it has an international network of seventy agencies and representation offices, including nine in the French Overseas Provinces and one in Brussels. It finances and supports projects that improve people’s living conditions, promote economic growth and protect Earth, such as schooling for children, maternal health, support for farmers and small businesses, water supply, tropical forest preservation, and the fight against climate change. In 2012, AFD approved EUR 7 billion to finance activities in developing countries and the French Overseas Communities. Main outcomes of AFD’s funding are monitored every year. For instance, money delivered will help get 10 million children into primary school and 3 million into secondary school; they will also improve drinking water supply for 1.79 million people. Energy efficiency projects financed by AFD in 2012 will save nearly 3.6 million tons of carbon dioxide emissions annually.
PROPARCO, AFD’s subsidiary dedicated to private investment, promotes private investment in emerging and developing countries in order to boost growth, promote sustainable development and reach the Millennium Development Goals. Its financing is tailored to the specific needs of investors in the productive sector, financial systems, infrastructure and private equity investment.
FFEM is a bilateral public facility set up by the French Government in 1994 following the Rio Summit. It aims at promoting global environmental protection via sustainable development projects in developing or transition countries. The French Global Environment Facility supports physical projects in recipient countries. Its operations are learning-based and support experimental, innovative or exemplary approaches.
This publication was printed in an environmentally responsible manner using vegetable-based ink and PEFC™ paper, chain of custody n° 19-32-319 (sustainable forest management).
AGENCE FRANÇAISE DE DÉVELOPPEMENT (AFD) 5 rue Roland Barthes 75598 Paris Cedex 12 – France Tél. : +33 1 53 44 31 31 Fax : +33 1 44 87 99 39 www.afd.fr DEPARTMENT FOR ENTERPRISE, BANKS AND COLLECTIVE ORGANISATIONS (EBC) DIVISION FOR FINANCIAL INSTITUTIONS AND SUPPORT TO THE PRIVATE SECTOR (IFP)
Creation: Planet 7 – December 2013
Agence Française de Développement (French Development Agency – AFD) is a public development finance institution that has been working to fight poverty and foster economic growth in developing countries and the French Overseas Communities for seventy years. It executes the policy defined by the French Government.
Published on Jan 9, 2014