Kathmandu, March 14

The Enhanced Integrated Framework (EIF) — a multi-donor programme to support trade-related capacity development of least developed countries (LDCs) — is likely to lower its support in the next phase.

The programme is being implemented for institutional and productive capacity development of LDCs. EIF may face shortage of resources in the next phase of the programme as donors have pledged just $90 million for the next phase (2016-22) though it had expected to mobilise at least $274 million within this period.

To bridge the resource gap, the EIF is preparing to organise replenishment conference of donors next year, according to EIF Executive Director Ratnakar Adhikari.

EIF — initiated by the World Trade Organisation (WTO), World Bank, International Monetary Fund (IMF), United Nations Development Programme (UNDP), International Trade Centre (ITC) and United Nations Conference on Trade and Development (UNCTAD) — had mobilised around $202 million in the first phase through 23 donors in between 2009 and 2015. Norway, Finland and the European Union are the major donors of EIF.

The EIF board, which includes three representatives from aid recipient countries and the remaining from among the donors, had decided to extend the programme for the next phase last year, but the resource commitment from donors has not been very encouraging. Against this backdrop, the EIF has urged all countries obtaining support from EIF for institutional and productive capacity building to create a sustainability window by pooling resources from the government and their donors for the execution of trade-related capacity development programmes that have been initiated with EIF support.

Currently, 41 countries have been obtaining EIF’s support. EIF’s tier-I support is for institutional capacity development, which has been reduced to $0.2 million for the second phase and tier-II support that is being provided for productive capacity development has been lowered to $1.5 million for each country till 2018, according to Adhikari. The EIF will announce further support for the LDCs only after replenishment conference.

Of the 41 countries obtaining EIF support, 25 nations have been obtaining tier-II support — that is, for productive capacity development.

Nepal is also enjoying support for three products under tier-II programme, namely, ginger, pashmina, and medicinal and aromatic plants (MAPs). These products are identified as products with comparative and competitive advantages under Nepal Trade Integration Strategy (NTIS) (2010-15).

Quality enhancement of ginger is being implemented by Food and Agriculture Organisation (FAO) utilising EIF’s support worth $0.7 million. Likewise, pashmina which is being promoted by International Trade Centre through Pashmina Enhancement and Trade Support project (PETS) has been mobilising EIF’s support worth $1.86 million. Similarly, EIF has been extending $3.9 million for product development of MAPs that is being implemented by GIZ Nepal, German International Cooperation Agency. The country has also received $ 1.5 million for institutional capacity development of trade related institutions.

The Ministry of Commerce has also started executing second phase NTIS for next phase (2016-20). The second phase of NTIS has changed the list of priority products. NTIS 2016 has identified five products, namely, carpets, leather products, pashmina, footwear and all types of fabrics (textiles, yarns) under priority export items. Similarly, three categories of services — skilled and unskilled labour; information technology and business process outsourcing; and tourism — have been incorporated as priority sectors for enhancing export trade.