TECHNICAL ASSISTANCE COMPLETION REPORT 1 Division: CWRD AFRM

Transcription

1 TECHNICAL ASSISTANCE COMPLETION REPORT 1 Division: CWRD AFRM TA Number, Country, and Name TA 4699-AFG : Building the Capacity of the Ministry of Commerce for Trade and Transit Facilitation Amount Approved: $ 400,000 Revised Amount: $ 400,000 Executing Agency: Source of Funding: Amount Utilized: Amount Undisbursed: Ministry of Commerce TASF $ 301,645 $ 98,354 TA Approval TA Signing Fielding of First Consultants: TA Completion Date Original: Revised Completion 24-Nov Dec Feb Nov-07 Account Closing Date Original: 31-Dec-07 Actual Closing Description: 30-Nov Jan-09 ADB has actively supported Afghanistan s regional cooperation agenda, especially under the framework of Central and South Asia Trade and Transport Forum (CSATTF). The TA was designed to support the implementation of recommendations from various CSATTF Ministerial Conferences, and to build upon the preliminary findings of TA 4536-AFG, Cross-Border Trade and Transport Facilitation. The TA was expected to enhance the capacity of the Ministry of Commerce (MoC) in trade and transit facilitation, with emphasis on negotiating and implementing actual transit agreements. The TA also was to strengthen the MoC s strategic planning and policy coordination capability for its border operations. It was intended that the TA would closely collaborate with and complement ongoing assistance provided by other development partners, in particular the World Bank s Emergency Customs Modernization and Trade Facilitation Project, implemented by the United Nations Conference on Trade and Development (UNCTAD) and the United Nations Office for Project Services (UNOPS). Expected Impact, Outcome and Outputs: Impact Improved enabling environment for Afghanistan s international trade and transit. Outcome Enhanced capacity of the MoD to negotiate, implement, and monitor trade and transit agreements, with transit management based on a solid partnership with the Customs Department, Ministry of Finance (MoF). Outputs The TA s Design and Monitoring Framework outlined six specific TA outputs: (i) Capacity Building to reinforce the capacity/competency of MoC staff national staff in trade and transit through appropriate seminars and training events, (ii) Transit Facilitation through revision and ratification of existing transit agreements and negotiation of new agreements, (iii) Cross Border Facilitation with emphasis on simplifying and streamlining transit border crossing formalities and procedures and assisting in efforts to improve crossborder transit facilities operation and maintenance and to reduce the high rate of truck trans-shipments; (iv) Strengthened Private Sector Participation in Transit Trade; (v) Enhanced Inter-Ministerial Cooperation, including inter-ministerial cooperation mechanisms and clarification of cross border management responsibilities; and (vi) Promotion of Regional cooperation through continued active Afghan participation in CSATTF meetings. 1 In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

2 Delivery of Inputs and Conduct of Activities Adequacy of Formulation: The TA was well-formulated given that it was based on recommendations emerging from ADB s earlier TA 4536-AFG, Cross-Border Trade and Transport Facilitation. The TA had clear if overly ambitious objectives and the international consultant TORs were well-structured and comprehensive, albeit similarly quite broad and ambitious. Performance of Consultants: The TA planned for 9 person-months of an international trade and transit logistics specialist provided on an intermittent basis, as well as up to 36 person-months of domestic consultant support. The consultants worked under the supervision of AFRM Country Economist (Michaela Prokop) and Regional Cooperation Coordinator (Raza Jawad). During his intermittent assignment, the International consultant undertook five missions to Afghanistan: March-May 2006, September-November 2006, January-March 2007, April-June 2007, and December The overall performance of the consultants, as per the COSO Performance Evaluation for Individual Consultant reports was rated as satisfactory. Evaluation of Outputs and Achievement of Outcome Achievements under the TA (as per planned outputs, and based on consultant inputs) were as follows: Output 1 Capacity building ( Reinforced capacity of MoC staff in trade and transit competencies ) Within the framework of the Government s Priority Reform and Restructuring (PRR) public administration reform program, the General Directorate of Transit & Trade Facilitation (GDTTF) was established in the Ministry of Commerce in January 2007, with the subsequent creation of a Division of Transit Agreements and a Division of Border Posts and Freight Logistics. The international consultant, with the support of the national consultants, provided on-the-job training for Directorate staff. The TA team also provided formal training through the preparation of training materials and workshops on (i) the role and importance of border posts in trade and transit facilitation, and (ii) rationale and content of transit agreements. In addition, two seminars (May and December 2007) were conducted for heads of border ports on the role of the Ministry of Commerce in facilitating cross-border trade. Output 2 Transit facilitation/negotiation of transit agreements Draft of the Afghan Pakistan Transit Agreement (APTA) The APTA is intended to replace the 1965 Afghan Transit Trade Agreement, still in force. A first draft, translated into Dari, was produced in November 2006, accompanied by Explanatory Notes that compared the APTA and the ATTA and explained the reasons for negotiating a new agreement taking into account the economic and transport changes that have occurred since 1965 with regard to the transit of goods to/from Afghanistan through Pakistan. Between January and March 2007 an inter-ministerial committee, under the chairmanship of the MoC, reviewed the draft, resulting in a revised version that also was translated into Dari. Between April and June 2007, the TA drafted five protocols that are an integrated part of the agreement and addressed specific issues in support of the agreement itself (Protocol One: International Carriage by Road of Goods in Transit; Protocol Two: Temporary Importation of Vehicles; Protocol Three: Customs Control; Protocol Four: Transit and Inland Customs Clearance Regime; Protocol Five: Control of Precursors and Chemical Substances used in the Illicit Manufacture of Narcotic Drugs or Psychotropic Substances). [Between March and June 2008, a new inter-ministerial committee undertook a final review of the APTA and its five Protocols. In early July 2008 the draft agreement was endorsed by the Minister of Commerce and Industries and submitted to the Ministry of Foreign Affairs and the Ministry of Finance in advance of a planned July 2008 meeting of the Joint Economic Commission (JEC) between the Governments of Afghanistan and Pakistan. The JEC meeting subsequently was postponed in the wake of the suicide bombing of the Indian Embassy on 6 July 2008.]

3 Transit Agreement with Tajikistan The TA assisted in the preparation of a draft Protocol on Cross Border Traffic between the Islamic Republic of Afghanistan and the Republic of Tajikistan. The Protocol was signed by the two governments in early 2008 and will facilitate traffic across the bridge over Pyanzh River, linking the border crossing town of Nizhniy Pyanj (Tajikistan) with the town of Sheer Khan Bandar in Afghanistan s northern Kunduz province. Strategy of the Ministry regarding Afghanistan as a potential regional hub The TA also assisted in the preparation of the transit and trade facilitation component of the Ministry of Commerce s contribution to the Afghanistan National Development Strategy and its goal of creating an enabling environment for sustainable and equitable economic growth in a socially responsible market economy leading to an increase in employment and reduction in poverty. Output 3 Cross Border Facilitation With respect to cross border facilitation, the TA s goal was to reduce the complexity and cost of the trade transaction process by making recommendations to simplify and streamline transit border crossing facilities customs procedures and documentation related to MoC competencies. Priority was given to the review of all documents and procedure related to the movement of goods to Afghanistan in transit through Pakistan. Recommendations made by the international TA consultant faced strong objections from MoC staff who feared that any simplification of procedures would result in a loss of loss of activity and revenue for the MoC. Nevertheless, in April 2007 the Minister of Commerce endorsed the recommendations and issued instructions that the ilm-o-khabar, a customs document issued by the Afghan Customs Department and distributed in Peshawar and Quetta by the Trade Office under the Ministry of Commerce, should no longer be distributed by the Ministry of Commerce. In its place, the ASYCUDA Transit Module, T1, has become the only document used for customs clearance in accordance with the implementation of the ASYCUDA Customs transit system. With a view to clarifying the institutional roles of concerned ministries and agencies as well as the private sector in building, managing and operating border facilities, the TA produced a report Facilitating Cross Border Trade White Paper for review by the Trade Facilitation Sub-Working Group of the Border Management Initiative (BMI). The White Paper outlined the principles of Integrated Border Management (IBM) defined as the coordination and coordination of agency activities at border land stations in order to facilitate movements of legitimate people and goods while maintaining secure borders. The Paper drew a clear delineation of responsibilities between Border Police, Customs and other agencies at the borders, including the role of the Ministry of Commerce and Industry. The Paper also provided advice regarding the layout of infrastructure facilities at the borders to exercise effective control while at the same time smoothly and in an orderly fashion handling cross border traffic (both passengers and commercial) as per international good practice. Following discussion, the Paper was finalized in October 2006 and then translated into Dari. The international TA consultant, in the context of the BMI, also provided advice to the US Army Corps of Engineers and its architects on the layout and design of the Border Control Zone (BCZ) at Sheer Kan Bandar. The lay-out and design is now considered the model for future construction of other border control zones. In order to provide a baseline for the ANDS transport target to reduce transit time through Afghanistan by 50% by the end of 2010, the TA in February and October 2007 undertook (with UNCTAD financing) surveys at Thorkham border crossing to determine and compare the time required by commercial vehicles to complete necessary cross border procedures. A similar survey was conducted at Islam Quala border crossing in December 2007 (also financed by UNCTAD but under supervision of the ADB TA consultant). Output 4 Private Sector Participation The private sector was consulted on the draft APTA through direct interviews as well as private sector participation in the inter-ministerial committee that reviewed the draft. The international TA consultant also initiated work on a possible workshop, organized jointly by ADB and the World Bank, to further discuss APTA and to consider problems faced by the Afghan and Pakistan business communities regarding trade, transport and transit between the two countries and necessary measures to facilitate trade and transit between the two countries and within the sub-region.

4 The TA also produced a draft Border Port Services Act as a framework (i) to promote transit facilities at the border and within the country; (ii) to encourage the private sector to take an active role in the financing and management of such facilities through public/private/partnerships (PPP); (iii) and to license private sector operators and to regulate their activities. As of February 2009 the Act had not yet been finalized pending further review by the Ministry of Commerce and Industry. Output 5 Inter-Ministerial Cooperation In June 2007 the TA helped produce a matrix on the respective roles of different ministries in import/export/transit operations. The TA also produced a draft Afghan Transit Transport Act to clarify the delineation of responsibilities among ministries in line with the Government s Integrated Transit Transport Policy. The draft Act, intended to replace the existing Law on International Road Transport and Transit (1978), has not yet been reviewed and finalized by an inter-ministerial committee before being submitted to the National Assembly. Output 6 Promotion of Regional Cooperation The TA supported the Government s preparation for different working groups and meetings organized by ADB under Central Asia Regional Economic Cooperation (CAREC). Overall Assessment and Rating The TA is rated as successful in that it met its three main performance targets or indicators: (i) preparation of a new Agreement to regulate transit between and through both Afghanistan and Pakistan; (ii) promotion of principles behind a functional regional transit system facilitating cross border trade, including delineation of responsibilities among different agencies at the border in line with international good practice; and (iii) definition of new border functions for the MoC. With respect to its capacity development objectives, the project was only partly successful. In addition to capacity development being a long-term proposition, building the capacity of the MoC s General Directorate of Transit and Trade Facilitation (GDTTF) posed a double challenge: (i) building an efficient and responsive Directorate capable of planning and implementing activities under its mandate; and, (ii) building the Directorate s human capital, i.e. providing staff with the required technical skills to perform their jobs, and in the overall context of the PRR restructuring process. It is to be noted that the General Directorate was established in 2007, with many staff positions filled between April-July 2007, leaving little time under the TA for training, upgrading, or mentoring. It also is to be noted that the successful completion of the TA was facilitated by an agreement between ADB and the World Bank that extended the duration of the international TA consultant s assignment by an additional nine (9) months, with funding from the World Bank s Emergency Customs Modernization and Trade Facilitation Project in Afghanistan (ECMTFP), executed by UNCTAD. Delays in the submission of the TA consultant's final report, and subsequent finalization of his claims, delayed financial closure of the TA. Major Lessons As noted above, and as per the experience of all donors providing capacity development support in Afghanistan, sustainable institutional and human capacity cannot be built or developed quickly, Hence, capacity building must be seen as a long term non physical investment in human capital and institutions and practices and as a means to an end rather than an end in itself (Partnership for Capacity Building in Africa World Bank report 1996). Thus, capacity building entails more than conducting targeted training programs (which the TA did undertake), but also implies a clear understanding of the mission to be pursued, real leadership, and improved governance. Hence, further technical assistance and capacity development will be required before the GDTFF, its staff, and its practices will be able to perform efficiently.

5 Although pleased with the results of the ADB TA, the GDTFF saw the need to consolidate the TA s results through further technical assistance, with the World Bank agreeing to contract the international TA consultant for a further 5 months of follow-on support. The World Bank is now planning a new customs and trade focused project for approval by mid Recommendations and Follow-Up Actions Trade, transit, and customs are somewhat specialized areas, with AFRM and CWRD having no such expertise. As such, it was somewhat difficult to provide effective supervision and guidance to the TA consultants. The TA also was inadequately integrated into ADB s regional/sub-regional program, which was further complicated by Afghanistan s overlapping membership in different regional bodies. Following on the APTA, similar comprehensive transit agreements need to be drafted for trade and transit between Afghanistan and Uzbekistan (to complete the 2004 Cooperation Agreement in the Field of Transit and Transport ) and Afghanistan and Tajikistan (to complete the 2005 Agreement on Transport, Transit, Cargo and Passengers). Further work also is required to better involve the private sector in financing and operating transit facilities at the border or within Afghanistan (warehouses, inland container depots, free zones. Prepared by: M. Raza Jawad, Regional Cooperation Coordinator, AFRM 27 April 2009