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What are the steps and sequence of the EIF?
The EIF process consists of a
number of phases:
-
awareness-building of the
importance of trade for development in the least-developed
country (LDC);
-
preparation of a Diagnostic
Trade Integration Study (DTIS) or DTIS-update to identify
constraints to overall competitiveness and supply chains
and sectors of greatest export potential; and an Action
Matrix — a list of trade priorities — for better
integration into the global trading system;
-
preparation of a multi-year work
plan for the EIF implementation and integration of the
priority DTIS recommendations (Action Matrix) into the
national development strategy; and
-
implementation of the Action
Matrix in partnership with the development partners.
Funding
Funding of the actions identified
in the EIF's DTIS is provided through the following
channels:
-
the enhanced EIF's own Trust
Fund (EIFTF). This consists of two financing arrangements:
Tier 1 and Tier 2. Tier 1 is intended to support greater
in-country capacity and ownership of the EIF process. It
funds activities to strengthen local capacity to manage
the EIF process, finances updates/preparation of the DTIS
and supports trade mainstreaming activities. Tier 2
provides funding for priority activities as identified in
the DTIS, its updates and its Action Matrix.
-
bilateral, regional or
multilateral development partners active in the LDC. In
this respect, the enhanced IF is a way of leveraging
additional Aid-for-Trade resources. Indeed, most funding
for the actions included in the DTIS — for example,
infrastructure projects — needs to come from the LDCs'
development partners over and above the EIFTF. The funding
needed to address the trade priorities listed in the
Action Matrix of the DTIS and which cannot be met by the
EIFTF can be accessed by submitting these demands to the
development partner community of each country. An
effective way of doing this is to integrate the trade
priorities into the country's Poverty Reduction Strategy
Paper or any other national development strategy. In this
way, the country sends a strong signal to its development
partners on the importance of growth through trade.
-
the national budget, especially
in countries where assistance by development partners is
largely delivered by budget support and where the
country's financial state allows for the government's
investment in trade development.
The private sector — domestic or
foreign — could also be a source of funding.
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