In order to derive maximum benefits from trade liberalisation processes, the competitiveness of African, Caribbean and Pacific (ACP) countries’ private sector is crucial. A new paper from ECDPM and the Technical Centre for Agricultural and Rural Cooperation ACP-EU (CTA) analyses the successful experience of the Integrated Development Programme for the Caribbean Rum Sector – from its inception and design to its concrete management and implementation – as an example of how Aid for Trade driven by the private sector can best support ACP development. It is meant to inform ACP private sector players who are facing similar challenges of restructuring and competitiveness in the face of trade liberalisation, donors who want to provide adjustment support, as well as policymakers at the interface of these two groups of stakeholders.
Lessons learned include:
• First and foremost, it is essential that industry leaders themselves have a clear understanding of both the challenges arising from changing market conditions and the scope for market-led, private sector-driven policy and programme responses. External assistance can play an important role, but is no substitute for visionary leadership. Similarly, a sustained advocacy strategy is required.
• Secondly an industry association can play a crucial role in guiding the operationalisation of the industry strategic vision for the restructuring. Management of the programme by an industry association greatly facilitates relationships of trust between programme managers and programme beneficiaries. In this context the role of the public sector should be one of facilitator rather than driver, while the private sector knowledge needs to be brought into the process of programme design, management and implementation.
• Furthermore, establishing a facility to support the elaboration of ‘business plans’ appears to be an essential complementary measure to any cost sharing grant scheme targeting small and medium sized ACP enterprises. In the same vein, the facility to assist private sector enterprises to engage with EU aid procedures, including documenting and submitting claims, was also key in the success of the programme. The procedures of any programme dealing with private sector need to be light and efficient so as to allow speedy reimbursement of approved expenditures. Qualified staff running the programme management unit who respond quickly is another precondition to success.
• An important organisational step, which facilitated the management of the programme, is the mutual recognition between local accountancy systems and EDF procedures. The elaboration of an actual manual of procedures designed to promote best business practices proved essential. This was particularly relevant for the tendering process and procurement rules,
• For a cost-sharing grant scheme programme, the level of co-financing by the EC should be sufficiently high to provide incentives to the private sector to take risks and pro-actively engage in market-led production and trade adjustment process.
• Another important lesson from the Rum Programme is that enough flexibility is required at the design stage in the allocation of funds to different components so that it can be ‘demand driven’ and build on success. When designing a programme to support market-led trade and production adjustment processes, it is also essential to allow enough time for marketing and promotion activities.
• Finally, a continuous dialogue among all stakeholders helped the early identification of potential problems and as well as the rapid resolutions of difficulties.
