EVALUATION OF THE USAID/CENTRAL ASIA REPUBLICS (CAR)
TRADE FACILITATION AND INVESTMENT ACTIVITY
|Click on any image below to enlarge|
building in Astana,
capital of Kazakhstan
Border Crossing for Kyrgyzstan/Uzbekistan
(3.47 MB - QuickTime)
The USAID Trade Facilitation and Investment (TFI) Activity is implemented by The Pragma Corporation in Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan. The purpose of the evaluation conducted by MetaMetrics under subcontract to Management Systems International, Inc. (MSI) was to assess the two year effectiveness of the Trade Facilitation and Investment Program in creating a legal and regulatory environment conducive to the growth of small and medium sized enterprises (SMEs) in Kazakhstan and Kyrgyzstan. Based on MSI/MetaMetrics Team evaluation recommendations, USAID/CAR decided on modifications for the TFI program for the coming three year period to 2006 and beyond.
According to the Trade Facilitation and Investment (TFI) scope of work, the purpose is "to improve the trade and investment environment for small and medium-sized enterprises. The TFI is under USAID/CAR's Strategic Objective 1.3, which calls for an improved environment for the growth of small- and medium-sized enterprises...." In particular, TFI will support Intermediate Result 1.3.3, which calls for increased implementation of laws and regulations.
Removal of five barriers to trade and investment in each of five local sites in Kazakhstan and Kyrgyzstan was the initial Reduction in Constraints (RIC) Program two year target. This total of 25 constraints removed was reached in the first year. Local Country personnel in two offices were trained. Relationships were built with business associations. Industry specific (tourism and pharmaceuticals) associations were targeted at the national level in Almaty. About 96 constraints to trade and investment were removed by the end of Year Two.
Program emphasis for the coming years is on the local level with attention to cross-border issues. The TFI Program initiated valuable activities for cross-border trade facilitation in the fertile Fergana Valley, an area in Kyrgystan, Tajikistan, and Uzbekistan which was severely conflict-affected in the mid 1990's. This important economic and political valley has a USAID Mission office.
TRADE FACILITATION AND INVESTMENT STRATEGY
The TFI Program effectively trained and utilized Central Asia based personnel for technical positions, including leadership, throughout the TFI Program. The expatriate personnel, both long-term and short-term are used for key positions and are effective in providing the necessary technical direction and vision to support the TFI Program mission.
Some of the lessons learned by TFI over the past two years in Kazakhstan and Kyrgyzstan can inform the emerging programs in Tajikistan and Uzbekistan. The strategy in each country will have different sets of priorities, objectives, and related activities. The MSI/MetaMetrics Evaluation Team recommended that TFI, in coordination with the USAID Mission, develop specific program objectives in Reduction in Constraints (RIC), Transit and Customs, Cross-Border Trade, MAS-Q, and WTO Accession/Compliance for each country. Objectives can also be Oblast and border community specific as necessary. At a minimum, the Evaluation Team recommended that an explicit TFI Country Program Strategy be composed for each of the four Central Asian Republics.
Enforcement of Legal and Regulatory Regime: The TFI Program was effective in improving the legal and regulatory environment for SMEs. The MSI/MetaMetrics Evaluation Team recommended that enforcement be given a higher priority which would require additional contact and liaison with the prosecutors' offices at the local, oblast, and national levels.
Regional Consultative Councils: The Ferghana Valley Council of local government officials and entrepreneurs showed promise for coordination between the citizens of three countries in reducing constraints to trade and investment. The MSI/MetaMetrics Evaluation Team recommended that TFI provide continuing support to the formation of regional councils.
TFI as a Catalyst for Change: The TFI Program was very successful in removing trade and investment constraints. It is not the nature of a bureaucracy to change quickly and it is possible that the TFI acted as a catalyst for change, allowing officials within those agencies who have supported reform to use TFI as "political cover" to justify their actions. By according responsibility to pressure from TFI, they protect their careers and internal agency relationships.
Corruption: A source of corruption may be the self-financing of government agencies. An entrepreneurial class, educated by TFI with respect to registration and inspection procedures, is not sufficient to deal with illegal payment seeking officials. A concerted effort of refusal to pay bribes is needed to eliminate such practices. Associations with an active and engaged membership can assist in instituting attitudes of nonpayment of bribes.
Kyrgyzstan joined the WTO in December of 1998 after only three years from application. Any assistance that the TFI Program could provide to the other CAR countries, including to Kazakhstan if conditions warrant, in coordinating their WTO efforts within the various ministries and agencies of government would be extremely helpful. The Evaluation Team recommended that the TFI Program continue to work with Tajikistan on WTO accession issues. TFI should also be prepared to assist Uzbekistan should additional assistance be requested.
Harmonization of Standards and Documents: The current situation of country specific standards, certificates, and documentation must be reengineered to allow for seamless processing by Customs officials in both the exporting and importing countries, i.e., to accept testing, quality, and origin certificates according to international standards. The TFI Program should continue to actively support the MAS-Q project, particularly with respect to harmonization and acceptance of standards required for imports and exports within the four country region.
Revised Kyoto Convention (RKC) Principles: The TFI Program should continue to work with Customs in both Kazakhstan and Kyrgyzstan on programs consistent with the trade facilitation principles of the RKC. In implementing these programs, care should be taken to insure the new programs actually facilitate Customs clearance, not simply add additional processes.
Cross-Border Trade: Customs and other involved authorities, as well as private sector parties in Kazakhstan and Kyrgyzstan have worked together in cross-border councils at the oblast level to address border issues. This type of bilateral cooperation should be expanded to as many other crossing points in the region as possible. The TFI should continue to make the Ferghana Valley Council a priority.