I read with interest the recent article (March 30) in The EastAfrican, “Does aid for trade help the poor in developing countries?” Its general conclusion was that there is little evidence of the impact of trade programmes on poverty, particularly those associated with Aid for Trade (AfT).

I am concerned that some people could read the article and come away with the idea that trade isn’t important. It is. Although it is difficult to establish a clear, direct linkage between trade, economic growth and poverty reduction, the general consensus is that trade openness and economic growth are highly correlated and that trade can have a positive effect on poverty reduction.

Let’s put the issue in context: The economies of East Africa are relatively small. The entire economic output of East Africa is roughly equivalent to that of Qatar and the economic powerhouse in the region, Kenya, has an economic output roughly equivalent to that of Fairfax County, Virginia in the United States. They are small economies and rely on international trade markets for their exports and to source competitive imports.

If the economies in the region are small, how are they going to grow without significant increases in trade (both exports and imports)? If the economies were to not trade, where would the impetus for economic growth come from? Would poor people be better off? Of course not.

Poverty traps are multidimensional and inter-generational. But I would argue that trade is a necessary but not sufficient condition for reducing poverty. Structural transformation has to take place to create conditions that allow the poor to benefit from liberalisation and openness of trade.

I would argue that Aid for Trade will benefit the poor only if structural transformation of economies takes place. There are serious obstacles placed before developing countries that limit trade opportunities (e.g., agricultural subsidies in the US and the European Union) that should be eliminated or reduced. However, structural transformation needs to take place in East Africa to enable the development of a strong supply response capability. From this perspective, many developing countries have failed to promote structural transformation, build productive capacity, create productive employment and develop the necessary infrastructure to facilitate trade at the national level.

What does this mean? It means being truly competitive in a transparent and accountable manner, that protectionism is not allowed, non-tariff barriers are eliminated and that pro-poor strategies and programmes are put in place to provide direct benefits to the poor. It also means that an enabling framework is provided by governments to facilitate the development of a viable and competitive private sector. This would include measures to promote trade facilitation and supply side measures to enhance competitiveness.

Protection persists because it is a convenient and non-transparent way for governments to direct economic benefits to particular groups. The infant industry syndrome is frequently introduced as a necessity for countries to develop. The problem is that once this protection is put in place, it rarely goes away and creates disincentives for business.

Although trade liberalisation raises the average standard of living in the medium term, groups favoured by protection will see their incomes decline and the resulting restructuring of the economy may create economic dislocations in the short-term. In other words, powerful folks who control economic activity don’t want to lose their control even if this maintains or increases huge discrepancies between the haves and have-nots.

I must comment on the South Sudan Customs Authority reference in the article. TradeMark East Africa is the organisation that is providing assistance to develop the Customs Authority in South Sudan. It is hardly a “massive leap of faith” to assume that by improving Customs operations and efficiency, the poor will benefit.

South Sudan currently gets 98 per cent of its revenue from oil. That creates an extreme and dangerous case of overdependence on one source of revenue, as was witnessed last year.

The government of South Sudan desperately needs to diversify its sources of revenue and, as in virtually every developing country, Customs usually is a major source of revenue. Once the government of South Sudan increases and diversifies its revenue base, it can provide goods and, more importantly, services to the people of South Sudan, particularly health and education. They have virtually no services at present, except those provided by NGOs.

To further elaborate, the government of Burundi, with strong support from TradeMark East Africa, established the revenue authority in Burundi — Office Burundais des Recettes (OBR). As a result, there has been a 100 per cent increase in revenue collection over the past two years and this has significantly benefited the people of Burundi, including 40,000 now having improved access to health care every month as a result. I fail to see a “massive leap of faith” that improving the revenue authority will benefit the poor but rather a direct link between the two.

Scott Allen is the deputy chief executive officer, regional programmes at TradeMark East Africa