Sunday, June 16, 2024

Aid for trade should be without condition for effectiveness

CPD, ICTSD discussion told
Economists and businesspeople on Thursday demanded that the international lenders and development partners should provide unconditional assistance under ‘aid for trade’ initiative as such aid tagged with different conditions had made almost no impact on improvement in the Bangladesh’s trade capacity. At a dialogue on ‘aid for trade: second generation issues for Bangladesh’, they said lenders took back a large portion of the aid by giving consultation service with their citizens.
The Centre for Policy Dialogue in association with the International Centre for Trade and Sustainable Development organised the programme at the BRAC Centre Inn in Dhaka.
The CPD, in its research, found that AfT had had no impact on the macro economy in improving trade capacity and enhancing export competitiveness of the country because of erratic flow of aid for trade disbursement.
The CPD also said that the contribution of AfT to economic infrastructure development and productive capacity building had been declining since 2006.
‘The AfT should be condition free. Otherwise, the least developed countries like Bangladesh would not be benefited as conditional aid increases transaction cost and aid recipient countries have a few options in choosing appropriate projects,’ said CPD distinguished fellow Debapriya Bhattacharya.
The conditional aid has less flexibility while experts from the donor countries take back a big portion of the assistance, he said.
Debapriya said the government should engage private sector entrepreneurs in adopting projects for improving trade capacity and enhancing export competitiveness.
Bangladesh Foreign Trade Institute chief executive officer Md Mozibur Rahman said that projects under AfT should be demand-driven and integrated with overall economic perspective of aid recipient countries.
‘A large chunk of AfT fund goes to the consultants from the donor countries. The practice should be stopped,’ he said.
CPD executive director Mustafizur Rahman said contribution of AfT to the economic infrastructure and building productive capacity sectors had been declining since 2006 while aid flow to the trade policies and regulations sector saw a huge growth of 686-per cent which is a major concern.
AfT in Bangladesh experienced a negative 20-per cent growth in economic infrastructure sector against 78 per cent global growth during 2002-2005 and 2006-2011. AfT flow in building productive capacity sector also saw a negative 45-per cent growth against 56-per cent global growth in the period.
Bangladesh Knitwear Manufacturers and Exporters Association former president Fazlul Haque said private sector entrepreneurs and exporters could not see any significant benefit of the initiative.
‘Trade is a totally private sector driven activity. But the sector people are being neglected in formulating and implementing projects related to trade capacity building and export,’ he said.
CPD research director Fahmida Khatun presented a keynote paper on effectiveness and impact of aid for trade initiative in Bangladesh.
She also said that the disbursement of AfT declined to $391.74 million in the 2006-2011period than that of $549.28 million in the 2002-2005 period.
On the other hand, total disbursement as a percentage of total commitment of AfT declined in recent period, and the gap between the commitment and the disbursement continues to widen, she said.
Former permanent representative of Bangladesh to World Trade Organisation and UN Agencies in Geneva, Switzerland Toufiq Ali, former commerce secretary Sohel Ahmed Chowdhury, Dhaka Chamber of Commerce and Industry president Sabur Khan, BFTI director Mostafa Abid Khan, World Bank’s South Asia Region lead economist Sanjay Kathuria, Apex Adelchi Footwear Ltd managing director Syed Nasim Manzur, Multimode Group deputy chief executive officer Tabith Awal, BFTI senior fellow Abu Yusuf spoke, among others, at the programme.

-With New Age input

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