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We are providing catalytic resources to boost capacity of LDCs for export

Dr Ratnakar Adhikari, is the Executive Director of Enhanced Integrated Framework (EIF) — a mechanism established by the World Trade Organization (WTO), the World Bank, International Monetary Fund (IMF), United Nations Development Program (UNDP), International Trade Centre (ITC) and United Nations Conference on Trade and Development (UNCTAD) for supporting the trade-related capacity development of the Least Developed Countries (LDCs). Among 46 LDCs and three recently graduated countries, Nepal is one of the countries receiving assistance for three projects to build its supply capacity. We talked with Adhikari on the various aspects of EIF’s cooperation in trade capacity development of the LDCs including Nepal. Excerpts:

What is your assessment about the effectiveness of EIF’s support to the Least Developed Countries including Nepal? 

Let me start with what we do at EIF. We’ve primary responsibility of helping the LDCs to build their productive capacity and to address their supply side constraints. There is realization that market access opportunities alone haven’t been enough for the LDCs to break into export market and there is a need of addressing supply side capacity as well. When we talk about the productive capacity, it’s a part of supply side. Started in 2009, we’re currently actively supporting 36 LDCs. If you count all the LDCs in which we’ve some kind of relation with, these are 46 in number. What we normally do is first try to build the capacity of government through National Institutional Arrangement Strengthening support, and that support helps government to develop capacity to manage aid for trade. This is known as ‘Tier 1’ support. We provide very limited resources (support), which are considered as catalytic resources. Then we provide ‘Tier 2’ support, which is for building productive capacity and addressing supply side constrains. With the help of these projects several countries have built their supply capacity as well as created the kind of productive capacity that is required for them to break into the export markets.

In the context of Nepal, it is the only country that has received three projects in ginger, medicinal herbs and pashmina. All these projects have been involved in the productive capacity development. Regarding the ginger, the problem is that initial site that is identified as the place for construction of necessary fundamentals and installing necessary machinery and equipment was found unsuitable and government is working on new site. Regarding Pashmina Enhancement project, International Trade Center is the agency for implementing the project. Together with Nepal Pashmina Industry Association they are implementing the program. Likewise, MAPS (medicinal herbs and aromatic plants) project has been recently launched and GIZ, as the main implementing agency.

Do you think these projects would be able to create synergy between export trade and poverty alleviation, what result are you expecting through the implementation of the projects that you have mentioned?

Right now if you ask about the result of project there is nothing concrete to show. They’ve just started. We are quite confident that these projects will generate significant results. For instance, enhancement of the quality of ginger, which was exported in unwashed form in the past had several disadvantages including weight, quality and price it could fetch. Now the installation of equipments will be help in washing and drying and supplying more hygienic ginger products to the markets, which will fetch better price and farmer do not have to suffer losses. Likewise the other products included in the National Trade Integration Strategy (NTIS) are high export potential products. Not only this, these products are equally are important for creating social impact, export expansion of these products will lead to poverty alleviation. 

While talking about the Implementation of Tier 1 and Tier 2 projects, the Ministry of Commerce and Supplies is complaining that they are failing to obtain expected results due to lack of inter ministerial coordination, what is your take on this?

There is an in-built mechanism for inter ministerial coordination, which is called ‘National Steering Committee’, chaired by the chief secretary that comprises representatives from all of the ministries and the private sector as well. They are having regular meeting, and this body plays coordinating role.

Enhancing export should be the first priority of Nepal given the context of huge trade deficit. There is no possibility of curbing imports in current situation because bulk of Nepal’s import item are essential items with low elasticity. The only way to narrow down the trade deficit is to be able to enhance export, whether to India, China or to third countries. That should be the only criteria to judge the trade related projects. In order to do that the Ministry of Commerce and Supplies (MoCS) has to impress upon other stakeholders including other ministries of their need to focus on the particular issue. National Steering Committee has been playing the role of coordination, but there seems to be problem at the operational level. 

Inter-ministerial coordination is not a problem that is endemic to Nepal; this is the problem found in most of the LDCs. The efforts that have been made so far have not been sufficient in the context of Nepal.

Countries like Cambodia, Lao PDR and certain countries in West Africa are doing fantastic job with EIF’s support. Lao PDR is taken as an example of energy trade. Nepal also has included energy trade under NTIS, but not much progress has been achieved so far in the energy sector, which can transform the economy of the country. What is your view on this?

The difference between Lao PDR and Nepal, which you pointed out is valid. In Lao PDR there is the highest level of ownership within the government and the focal point is the Trade Minister herself, who is considered as great example of a leader driving the trade agenda in the country and because of her clout within the government; she is able to influence all other ministries. Once there is a political ownership at the top and given the political make up of the country all the government agencies have unified strategy they adopted. In the case of Nepal, we come back to the same problem of inter ministerial coordination because the Ministry of Commerce as such has not been given that kind of profile that it deserves, no matter how severe the problem of trade deficit is. And MoCS is also unable to influence decision making process of ministry of energy, ministry of agriculture among others. That’s where the problem is. Actually what I feel is that this process managed such that for the ownership of highest political level – at the Prime Minister or Deputy Prime Minister level.

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