How is Aid for Trade different from the aid the Australian Government already gives?
Aid for Trade is not different to overseas aid funding – it’s a part of the investment. The Australian Government is looking to commit 20 per cent of overseas aid to Aid for Trade initiatives by 2020, which on the current aid trajectory is just .04 percent of all government spending. Just a small amount of money can catalyse big returns for many of Australia’s closest neighbours.
Where is World Vision working to assist with Aid for Trade practices?
World Vision is currently supporting our project model aligned with Aid for Trade, local value chain development, with over 100 projects across the world in southern and eastern Africa, south east Asia, the Pacific, Middle East and eastern Europe. In some cases, we also work in more catalytic ways with the market system, working with existing private sector actors to shape the way the market works so it becomes more inclusive of poorer smallholder farmers. World Vision is also a member of Grow Asia, an initiative of the World Economic Forum and ASEAN, which seeks to facilitate collaboration between stakeholders to enable inclusive and sustainable agricultural development in South East Asia.
What is World Vision Australia’s policy position on Aid for Trade?
World Vision recognises that trade is an important way to increase the size of available markets and expand the livelihood opportunities of poorer communities. World Vision Australia has experience in helping smallholder farmers gain access to larger international markets where it is clearly beneficial, such as cocoa and coffee producers. Local value chain development begins by helping farmers analyse the market, to enable producers gain confidence in making the best decisions for their own circumstances.
Trade should not only mean international trade; in many cases the greatest opportunities for smallholder farmers will come from improving their access to their own domestic markets, helping their own countries’ economy and thus strengthening theirs and the region’s economic position.(1)
The Australian Government’s Aid for Trade program should focus on developing private sector capacity, especially smallholder farmers, poor producers and the many small businesses involved in these market systems. In increasing Australia’s Aid for Trade funding, the Australian Government should:
- Emphasise the third pillar of its aid for trade strategy: improving the productive capacity of the local private sector
- Focus aid investments on programs which improve the ability of smallholder producers and small- and medium-sized enterprise to benefit from improved market conditions (whether local or international)
It is crucial that Aid for Trade initiatives explicitly link their actions to measurable outcomes for those living in poverty. Aid for Trade programs have sometimes been criticised internationally for merely assuming benefits will flow on to those living in poverty without designing specific benefits to those living in poverty in the program structure.
As Australia ramps up its Aid for Trade investments, the Government needs to be thinking about the challenges encountered by other donors. Government donors are rightly accountable for ensuring their activities achieve not just macro-level growth but development outcomes for those living in poverty. By focusing on building the capacity of poorer producers and small- and medium-sized enterprises in developing countries, Australian Aid for Trade programs can overcome some of the challenges faced by Aid for Trade initiatives internationally.
1. See, for example, ‘Leaping and Learning: linking smallholders to markets’, Steve Wiggins and Sharada Keats, Overseas Development Institute (OD1), 2013