ENHANCED INTEGRATED FRAMEWORK

TRUST FUND MANAGER

Financial and fiduciary dimensions of the Enhanced

Integrated Framework

Asia Regional Workshop, Kathmandu, Nepal, June 2010

Table of ContentsI. EIF NORMATIVE AND STRATEGIC FRAMEWORK 1. Objectives 2. Strategies 3. Principles 4. Target countries

II. TFM WITHIN THE EIF PROCESS 1. Mandate and Functions 2. Operational Principles 3. Functional Structure 4. Regional Settings

III. TFM OPERATIONAL PROCESSES AND TOOLS 1. Overview of Tier 1 and Tier 2 Projects 2. Project Appraisal and Capacity Assessment Exercises 3. Project process

IV. TFM MAIN RESULTS 1. Legal arrangements 2. Financial outlook 3. Donor Contributions 4. Status of Tier 1 projects 5. Pipeline

IEIF

NORMATIVE AND STRATEGIC

FRAMEWORK

EIF Normative Framework

Strategic Objectives

To mainstream trade into LDC’sNational Development Plans such

as Poverty Reduction StrategyPapers (PRSP)

To assist in the coordinated delivery of Trade-Related TechnicalAssistance (TRTA) in response tothe needs identified by the LDCs

To develop the capacities of the LDCs to trade, including capacitybuilding and addressing supply

constraints

Strategic Principles

Country ownership of the process

Tripartite partnership: LDCs, donorsand EIF Agencies

Demand driven and tailor-made approach

Participatory approach, specially by Involving the private sector at all stages

Overarching goal: to enhance the capacity of the LDCs to integrate into multilateraltrading system in order to reduce poverty and benefit from increased market access.

EIF Strategic ContextThe EIF is both a trade development strategy and a trade development program in

support to the overall welfare increase of the LDCs

Trade development strategy(Facts and Assumptions)

There is strong relationship between trade and economic growth

There is not automatic link betweentrade, economic growth and poverty

reduction

The combination of trade reforms andpoverty reduction strategies tends to

increase poor countries welfare

Sound institutional and policymechanisms both at international and

national levels can make possiblethat poor countries expand their share of

income generated by trade

Trade development program(operational strategies)

Mainstreaming trade into national policies and poverty reduction

strategies

Fostering national ownership of trade policy reforms

Strengthening national capacitiesfor trade policy formulation and

implementation

LEAST DEVELOPED COUNTRIES

The Least Developed Countries (LDCs) are the focus of the EIF. LDCs are countries, which exhibit the lowest indicators of socio-economic development. A country is classified as LDC

if it meets three criteria and does not have a population larger than 75 million: • A low income criterion based on GNI per capita

• A human assets criterion based on the HDI• An economic vulnerability criterion involving a composite index based on

indicators of natural shocks, trade shocks, expose to shocks, economic smallness and economic remoteness

Africa

(33 countries) Asia

(10 Countries) Oceania

(5 Countries) Americas (1 Country)

Angola Benin Burkina Faso Burundi Central African

Republic Chad Comoros Democratic

Republic of the Congo

Djibouti Equatorial

Guinea

Eritrea Ethiopia Gambia Guinea Guinea-

Bissau Lesotho Liberia Madagascar Malawi Mali Mauritania Mozambique Niger

Rwanda Sao Tome

and Principe

Senegal Sierra

Leone Somalia Sudan Tanzania Togo Uganda Zambia

Afghanistan Bangladesh Bhutan Burma Cambodia East Timor Lao People’s

Democratic Republic

Maldives Nepal Yemen

Kiribati Samoa Solomon

Islands Tuvalu Vanuatu

Haiti

II

TFM WITHIN THE EIF PROCESS

TFM Mandate and Functions

Mandate

The TFM was given a broad mandatecomprising full Fiduciary Responsibility.

The TFM exercises its full fiduciary responsibility on behalf the

donors and the EIF Board as required by the Accountability Framework.

The TFM will follow UNOPS financial policies, rules and procedures in

compliance with the objectives and modalities of the EIF.

Functions

Trustee functions

Preparation of budgets and forecasting

Program financial management

Fiduciary appraisal of project proposalsand assessment of the grant

recipient’s capacities

Recommendations on capacitybuilding and training

Monitoring and Supervision (addressing program financial management and

fiduciary matters)

Reporting

TFM Operational Principles

EffectivenessTFM alignment with the EIF overarching goal, objectives,

strategies and principles

AccountabilityTFM obligation to demonstrate that work has been conducted in accordance with agreed rules and standards and to report fairly and accurately on

performance results vis– a –vis mandated roles/or plans

SustainabilityTFM ability to assist in

making NIU accountable and sustainable in

the long term

EfficiencyTFM efficient management and

performance as a result of obtaining maximal outputs with

minimal inputs

TransparencyTFM operations and reports are

clear honest and open to the concerned stakeholders

EIF - TFM OrganigrammeEIF Board

Executive SecretariatExecutive Director GVA

UNOPSSWOC Director GVA

Executive OfficeExecutive Officer

Portfolio Assistant

Finance OfficerGeneva

Implementation Advisor Geneva

Legal AdvisorGeneva

Portfolio ManagerAdmi. Assistant

NAIROBI

Portfolio ManagerAdmi. Assistant

DAKAR

Portfolio ManagerAdmi. Assistant

BANGKOK

Portfolio ManagerAdmi. Assistant

JOHANNESBURGOffice still to be opened

DAKAR (11)Benin, Democratic Republic of Congo

Guinea, Liberia, Mali, Senegal, Sierra Leone, Togo, Chad, Niger and

Mauritania

JOHANNESBURG (6)Angola, Mozambique,

Zambia, Equatorial Guinea, Sao Tome and Principe,and

Madagascar

BANGKOK (15)Afghanistan,

Bangladesh, Bhutan Cambodia, Lao,

Maldives, Myanmar, Nepal, Kiribati, Samoa, Solomon Islands, Timor Leste, Tuvalu, Vanuatu

and Yemen

NAIROBI (11)Djibouti, Ethiopia,

Central African Republic, Lesotho, Tanzania, Uganda, Burundi, Rwanda,

Sudan, Malawi and Comoros

GENEVA(Haiti and

Burkina Faso)

Countries to be initially assisted by Geneva, Dakar and Nairobi offices

III

TFM OPERATIONAL PROCESSES AND

TOOLS

OVERVIEW OF TIER 1 AND TIER 2 PROJECTS

TIER 1 PROJECTSTypes of Projects• Building the human resource capacity of EIF NIAs• Providing operational support to NIAs• Preparing and/or update of the DTIS• Facilitating and supporting trade mainstreaming actions

Budget and TimingAn estimated amount of US$77 million is available for Tier 1 from the EIF-TFM. The funding ceiling per country is set at US$2,000,000. Such a budget can be used for a period of five years for the following actions:• Pre-DTIS support up to US$50,000• DTIS up to US$400,000• DTIS update up to US$200,000• Support to NIAs up to US$1,500,000

LDC’s Eligibility• All LDCs participating in the EIF initiative are eligible

Approval Process• Formulation of project proposals• Appraisal and approval of proposals• Awarding

Execution Modalities• Option 1: LDC Government execution (strongly

encouraged)• Option 2: Execution by one of the six EIF agencies or

another entityMonitoring & EvaluationThe day-to-day monitoring of activities will be ensure by The NIU/FP

Review and EvaluationThe EIF Board and the EIF Steering Committee may request that a Mid-Term review or an evaluation of specific Tier 1 projects be undertaken

TIER 2 PROJECTS• Type of Projects• Assistance to implement WTO or trade policy commitments• Project preparatory activities• Trade mainstream activities to integrate DTS into PRSPs• Capacity building activities• Formulation and implementation of sectoral and national export

development strategies• Small projects to enhance the supply-side response of the country• Specific actions to enhancing SMMEs competitiveness • Assistance for WTO accession• Strengthening of trade support services• Preparation of sector-wide approaches (SWAP) for priority sectors

Budget and TimingAn estimated amount of US£320 million is available for Tier 2. Out of this, approximately half, i.e. US$160 million, will be borne by the EIF-TFM.

LDC’s EligibilityAll LDCs participating in the EIF initiative and having validated the DTIS are eligible

Approval Process• Formulation of project proposals• Appraisal and approval of proposals• Awarding

Execution ModalitiesOption 1: LDC Government executionOption 2: Non-LDC Government execution. Three main possibilities can be considered: (i) UN Agency; (ii) Other development agency; (iii) NGO, private sector, consulting firm, a research or academic institution

Monitoring & EvaluationThe day-to-day monitoring of activities will be ensured by the NIU/FP in coordination with the Executing Entity

Review and Evaluation: Review and evaluation modalities will vary depending on the LDC and the specific project’s content

Fiduciary Assessment by TFM

Project fiduciary appraisal (Desk Review)

Strategy Approach

National fiduciary responsibility

framework

Administrative fiduciary process

Workplan

Logical Framework

Budgeting

Monitoring & Evaluation

Reporting

Capacity assessment of principal grant

recipient

Implementation Capacity

Financial Assessment Capacity

and IT

Procurement

M & Supervision

Other capacities (legal capacities, anti-corruption

policies, social and environmental

policies)

Trade Capacity Assessment by

ES(Appraisal Criteria)

EIF Context

Project characteristics

Implementation arrangements

Economic Analysis

Technical assessment

Trade capacity assessment

NSC & NIU(Focal Point)

Formulation of Project Proposal

and identification of Implementing

Entity(Selection of a

government entity as the preferred

option)

Recommendations Memorandum(Incorporating both ES trade assessment and TFM fiduciary assessment)

TIER 1 Project Appraisal and Assessment Exercises

PHASE I: before a Capacity Assessment Mission takes place

PHASE II: after a Capacity Assessment Mission takes place

PHASE III: after project approval by the EIF Board

ES submits LDC project proposal to TFM for

assessment

TFM makes a desk

review and produces a

report

TFM sends desk review report to ES including

mission TORS

ES/TFM coordinates

with the Focal Point mission arrangements

TFM undertakes

mission

Basic Information

• Status of in-country EIF

process

• DTIS + Action Matrix

• Project Proposal

• Desk Review

• Statistical Fact-sheet

TFM submits Capacity

Assessment report to ES

EIF Board approves/ rejects

ES/ TFM recommendations

ES/TFM prepare Recommendation

Memorandum to EIF interim Board

ES on behalf of

EIF Board request s TFM to allocate funds

TFM implements

Board decision

TFM signs agreement with Principal Grant Recipient

TFM disburses funds after signature of agreement

TFM may undertake a Start up Facilitation

Mission to assist in the establishment of NIUs

TFM undertakes financial and

fiduciary supervision activities

TFM reports to EIF Board through the

ES

IfYes

IV

TFM MAIN RESULTS

TFM Legal ArrangementsUNOPS with Type of Agreement Description Current Status

1. Contributors (Donors)

ContributionAgreements and

Standard Provisions

Legal agreement done on behalf of the Board, (which does not have legal identity) the agreement maintains the integrity of the Trust Fund as a multi-lateral financing facility

Standard provisions approved Contribution Arrangements signed with 22 countries and the European Union

2. WTO Exchange of Letters Legal agreement with WTO as administrative host of the ES to enable the provision of technical services by the EIF Executive Secretariat

Exchange of letters on 25 November 2008. Funds transferred in January 2009 for 2009 Budget and in January 2010 for 2010.

3. UNCTAD Partnership Agreements with core

agency

Legal agreement with core Agencies for the implementation of the EIF Tier 1 and Tier 2 projects

Following the approval of the EIF Board and the UN Controller, the UNCTAD/ITC agreement was signed on 8 July 20094. ITC

5. UNIDO Partnership Agreement with new

UN Agency

Legal agreement with new UN Agency as implementing partner based on ITC/UNCTAD agreement

Following EIF Board approval, UNIDO and UNOPS signed the agreement on 24 June 2009

6. UNDP Partnership Agreements with core

agency

Legal agreement with core Agencies for the implementation of the EIF Tier 1 and Tier 2 projects

Proposed Partnership Agreement under consideration by the EIF Board

7. The World Bank

Externally Funded Outputs (EFOs)

Legal agreement following the World Bank’s EFO agreement scheme

Three EFOs approved by the Board (DRC, Togo and Afghanistan) and funds transferred

EIF Sub-Trust Fund Legal agreement establishing an EIF Sub-Trust Fund within the World Bank for EIF Tier 1 and Tier 2 projects

UNOPS and WB are working on this modality before submitting for Board approval

8. LDCs(Governments)

Memorandum of Understanding (MoU)/Grant

Agreements (for Pre-DTIS projects only)

Legal agreement with governments and parastatals for the implementation of Tier 1 and Tier 2 projects

MoU and Grant Agreements template finalized,in English and French and circulated to LDCs Following Board approval, 15 MoUs/Grant Agreements signed and 3 in progress

TFM Financial Outlook as of 31 March 2010

1. Contributions Description Amount (US$)

1.1. IF UNDP Holding Account Transfer of funds placed by UNDP under holding accounts plus interest 7,870,345.65

1.2. IF UNDP Commingled Fund Transfer of the first tranche of IF balance of commingled funds plus interests

23,501,360.30

1.3. Donors Contributions Contributions received and deposited into the UNOPS/EIF Trust Fund 61,509,589.28

1.4. Interest earned Interest earned until December 2009 1,103,243.93

Total Contributions

2. Allocated Funds2.1. LDC Funding NIU’s support plus DTIS update 11,619,399.00

11,819,399Pre-DTIS 200,000.00

2.2. Agency Funding DTIS for Togo, DRC and Afghanistan through EFO with the World Bank

1,200,000.00 1,200,000

2.3. Executive Secretariat (ES) plus EIF Board expenditure

Budget for year 1 - 2009 1,925,129.00

6,305,571.87

Budget for year 2 - 2010 3,484,410.00

ES International Consultants 367,370.00

Global Workshop and EIF Board 283,018.87

M&E and Database 245,644.00

2.4. Trust Fund Manager (TFM) Budget for Year 1 – 2008/2009 2,212,946.004,358,459

Budget for year 2 - 2010 2,145,513.00

2.5 Management Fee for financial transactions 750,000.00 1,068,589.90

Administrative Fee for implementing activities 318,589.90

Total Allocated Funds 25,716,218.81

3. Funding Available 68,268,320.35

Status of donor contributions and commitments (as of June 15th, 2010)

DONORS RECEIVED SIGNED COMMITMENTS Total

Balance IF 2008 2009 2010 2010 2011 2012 2013

Bal UNDP IF

23.5

-

-

-

-

-

-

-

23.5

Belgium

-

0.6

0.7

-

0.7

0.7

-

-

2.7

Canada

-

-

3.7

-

3.6

3.6

3.6

3.6

18.1

Denmark

-

6.0

-

-

5.4

1.8

1.8

1.8

16.9 European Union

-

4.1

-

-

1.1

-

-

-

5.2

Estonia

-

0.0

0.0

-

-

-

-

-

0.1

Finland

-

2.9

-

-

-

-

-

-

2.9

France

-

-

2.9

-

1.3

1.3

-

-

5.6

Germany

-

1.9

2.3

-

1.7

-

-

-

5.9

Hungary

-

0.4

-

-

-

-

-

-

0.4

Iceland

-

-

0.1

-

0.1

-

-

-

0.2

Ireland

-

3.2

-

-

-

-

-

-

3.2

Japan

-

0.2

0.5

-

-

-

-

-

0.6

Luxenbourg

-

2.1

-

2.8

-

-

-

-

4.9

Netherlands

-

-

-

-

-

-

-

-

-

Norway

-

4.1

5.5

-

-

-

-

-

9.5

Rep of Korea

-

1.0

-

-

-

-

-

-

1.0

Saudi Arabia

-

-

-

0.8

-

0.8

0.8

0.8

3.0

Spain

-

-

4.2

-

-

-

-

-

4.2

Sweden

-

-

6.9

-

3.5

3.5

-

-

13.8

Switzerland

-

-

0.2

-

-

-

-

-

0.2

Turkey

-

-

-

-

1.0

-

-

-

1.0

United States

-

-

-

-

0.2

-

-

-

0.2

United Kingd.

-

12.3

-

-

20.1

8.6

8.6

8.6

58.1 Interest Income

-

0.5

0.6

-

-

-

-

-

1.1

GRAND TOTAL      

94.0      

88.5

182.5

Approved TIER 1 Projects As of 31 March 2010

Approval Date Country Project Type

Main ImplementingEntity

Approved Budget (US$)

Disbursed as of 31 March 2010 (US$)

1 8 Oct 08 Togo DTIS The World Bank 400,000 200,0002 8 Oct 08 DRC DTIS The World Bank 400,000 200,000*3 8 Oct 08 Afghanistan DTIS The World Bank 400,000 200,0004 1 Jul 09 Yemen NIU+DTIS Update Ministry of Industry and Trade 1,031,000 212,6505 1 Jul 09 Sierra Leone NIU+DTIS Update Ministry of Trade and Industry 908,859 299,9736 23 Sep 09 Malawi NIU+DTIS Update Ministry of Industry and Trade 999,250 199,8007 23 Sep 09 Rwanda NIU+DTIS Update Ministry of Trade and Industry 934,400 176,4008 28 Sep 09 Uganda NIU+DTIS Update Ministry of Fin. Plan. & Ec. Dev. 1,000,000 200,0009 29 Sep 09 Cambodia NIU+DTIS Update Ministry of Commerce 909,900 Under process*

10 22 Oct 09 Liberia NIU+DTIS Update Ministry of Commerce and Indust. 999,900 149,950*11 15 Dec 09 Gambia NIU+DTIS Update Ministry of Trade, Indust. & Empl. 1,000,000 150,00012 15 Jan 10 Bhutan Pre-DTIS Ministry of Economic Affairs 50,000 40,00013 15 Jan 10 DRC Pre-DTIS Ministry of National Ec. & Comm. 50,000 Under process*14 15 Jan 10 Timor Leste Pre-DTIS Ministry of Economic Develop. and

Ministry of Tourism, Comm. Indus.50,000 Under process

15 15 Jan 10 Togo Pre-DTIS Ministry of Comm.&Priv.Sec.Prom 50,000 Under process16 26 Jan 10 Lao PDR NIU+DTIS Update Ministry of Industry and Comm. 899,999 Under process*17 26 Jan 10 Lesotho NIU+DTIS Update Ministry of Trade and Industry, Coop

and Marketing974,000 Under process

18 8 Feb 10 Zambia NIU Ministry of Comm. Ind. & Tourism 899,400 Under process19 12 Feb 10 Burundi NIU+DTIS Update Ministry of Comm. Ind. & Tourism 1,000,000 Under process*20 15 Mar 10 Nepal NIU Ministry of Comm. and Supplies 905,200 Under Process*

TOTAL 13,861,908

Tier 1 Projects in the pipeline

TFMRegion

Country Type of Project Planned Main ImplementingEntity

Estimated approval

date

Estimate Budget(US$)

Bang

kok

Afghanistan Pre-DTIS Ministry of Commerce & Industry Q3 2010 50,000

Bangladesh Pre-DTIS Ministry of Commerce Q3 2 010 50,000Solomon Island NIU Ministry of Foreign Affairs and External

TradeQ3 2010 565,250

Maldives NIU+DTIS Update Ministry of Economic Development Q4 2010 1,194,600

Daka

r

Benin NIU + DTIS update Ministère du Commerce Q4 2010 1,255,913Democratic Republic of Congo

NIU Ministère du Commerce, Petites et Moyennes Entreprise

Q3 2010 1,500,000

Mali NIU + DTIS update Ministère de l’Economie, du commerce et de l’Industrie

Q3 2010 1,000,453

Chad NIU Ministère du Commerce et de l’Industrie Q4 2010 1,000,000Guinea Bissau NIU + DTIS update Ministère du commerce Q32 2010 1,050,000

Nai

robi

Comoros NIU + DTIS update UNDP Q3 2010 1,100,000Djibouti NIU + DTIS update Ministère du commerce et de l’industrie Q3 2010 1,486,900

Ethiopia NIU + DTIS update The Ministry of Trade and Industry Q3 2010 838,602

Sudan NIU Ministry of Foreign Trade Q4 2010 1,000,000

Gene

va

Mozambique NIU Ministry of Industry and Trade Q4 2010 1,375,936

Burkina Faso NIU Ministère du Commerce, de la promotion de l’Entreprise et de l’Artisanat

Q3 2010 900,000

TTOTAL 14,367,654

THANK YOU!