report to the consultative committee of the itc …€¦ · consultative committee of the itc trust...
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TRADE IMPACTFOR GOOD
TRADE IMPACTFOR GOOD
REPORT TO THE CONSULTATIVE COMMITTEE OF THE ITC TRUST FUND (1 JANUARY – 31 DECEMBER 2014)
ITC mission:ITC enables small business export success in developing and transition countries by providing, with partners, sustainable and inclusive trade development solutions to the private sector, trade support institutions and policymakers.
The designations employed and the presentation of material in this publication do not imply the expression of any opinionwhatsoever on the part of the International Trade Centre concerning the legal status of any country, territory, city or area orof its authorities, or concerning the delimitation of its frontiers or boundaries.
This document has not been formally edited by the International Trade Centre.
October 2014Original: English
© International Trade Centre 2014
REPORT TO THE CONSULTATIVE COMMITTEE OF THE ITC TRUST FUND (1 January – 31 December 2014)
iii
CONTENTS
1. Introduction ................................................................................................................. 5
2. Source of ITC Funds ................................................................................................... 5
2.1 Voluntary contributions received for TRTA projects as at 31 December 2014 ......... 6
2.2 Share of donor contributions for 2014 ...................................................................... 7
3. Use and status of ITF funds ....................................................................................... 8
3.1 ITC expenditure against budget (US$ million) .......................................................... 8
3.2 ITC’s Expenditure pattern 2008-2014 (US$ million) ................................................. 8
3.3 W1 and W2 status of funds available as at 31 December 2014 (US$ ’000) ............. 9
3.4 W1 and W2 expenditure by technical cooperation activities (US$ ’000 gross) ......... 9
4. Window I: unearmarked and soft-earmarked budget and delivery in 2014 .......... 10
4.1 Criteria for the allocation of Window I funds ........................................................... 10
4.2 Unearmarked and soft-earmarked budgets and expenditure in 2014 .................... 10
4.3 2014 Window I Operational Plan budget by Focus Area ........................................ 11
5. Programme Support account expenditure as at 31 December 2014 ..................... 12
6. Regular Budget ......................................................................................................... 12
7. ITC project delivery and performance ..................................................................... 13
7.1 Expenditure performance against budget in 2014 .................................................. 13
7.2 Extrabudgetary project expenditure by region ........................................................ 14
7.3 ITC’s performance against corporate objectives .................................................... 16
8. Project Quality Assurance ....................................................................................... 18
9. Human Resources .................................................................................................... 18
10. Programme Support Services .................................................................................. 19
Annex 1 List of projects per Focus Area and Programme ................................. 21
Annex 2 Programme Support Services: 2014 Annual Report ............................ 24
Annex 3 Understanding ITC’s financial resources .............................................. 24
5
1. Introduction
ITC is pleased to submit to the CCITF the following report of its activities covering the period 1 January to 31 December 2014.
This report provides information, principally in the form of self-explanatory tables which give an overview of the organization’s activities. It focuses on the analysis of ITC’s extrabudgetary resources providing a detailed description of the source of funds, their status and use. It also provides an update on programme support and regular budget resources and performance against development results targets for the year.
2. Source of ITC Funds
ITC’s work is enabled by two sources of funding: the regular budget (RB) and extrabudgetary funding (XB), which includes programme support costs (PSC). The RB is approved on a biennial basis by the United Nations General Assembly and the World Trade Organization (WTO) General Council.
Extrabudgetary funds are activated through the ITC Trust Fund (ITF). This includes two categories of funds known as windows. Window I consists of unearmarked and soft-earmarked contributions from donors, while Window II is composed of bilateral contributions for specific projects and programmes, as well as income earned through the sales of products and services. PSC is earned via a charge to all extrabudgetary expenditures.
1
Earmarked funding is used for bilaterally funded projects whose technical cooperation goals and outcomes fall within the scope of a specific Window 2 agreement and specific reporting requirements. Window I allows for more flexibility in the allocation of funds and more standardised reporting, which facilitates more systematic capturing of results. Soft-earmarking funds allows donors to reflect their priorities in particular areas of focus for ITC but are not subject to the same level of detail in oversight and reporting as Window 2.
1 For a more detailed presentation of ITC’s funding modalities please refer to Annex 3 Understanding ITC’s Financial
Resources.
6
2.1 Voluntary contributions received for TRTA projects as at 31 December 2014
The table below provides a detailed account of contributions received for both windows as at 31 December 2014. The table does not take into account contributions received under inter-organizational arrangements and revolving funds. (Values are US$’000)
2013(US$‘000) 2014(US$‘000)
Contributors W1 W2 Total W1 W2 Total
Associate experts - Finland - 419 419 - 391 391
Associate experts - France - 189 189 - 178 178
Associate experts - Germany - 72 72 - 189 189
Associate experts - Mo Ibrahim Foundation - - - - 114 114
Associate experts - Republic of Korea - - - - 641 641
Australia - 1,970 1,970 - 115 115
Canada 1,035 1,477 2,512 850 1,122 1,972
Caribbean Export Development Agency - - - - 24 24
Centre for the Development of Enterprise - - - - 59 59
China - 150 150 100 400 500
Confederation on Indian Industry 20 20
Denmark 2,335 - 2,335 2,340 - 2,340
European Union - 6,444 6,444 - 9,561 9,561
Finland 3,259 - 3,259 3,294 - 3,294
France - - - 146 - 146
Germany (GIZ) - 27 27 - 225 225
Germany 2,608 - 2,608 2,541 - 2,541
Hivos - 158 158 - 156 156
ILO - 229 229 - - -
India - - - 50 - 50
Inter-American Development Bank - - - - 60 60
Ireland 1,192 - 1,192 1,144 - 1,144
Islamic Development Bank - - - - 20 20
Japan - 80 80 - 56 56
Kuwait - 249 249 - 249 249
CORPEI de Ecuador - - - - 98 98
Namibia - - - - 144 144
Netherlands - 2,868 2,868 - 1,542 1,542
Norway 2,515 - 2,515 2,680 - 2,680
OPSR/TEPA – Saint Lucia - 84 84 - - -
Organisation Int. de la Francophonie - 25 25 - 8 8
Qatar Development Bank - - - - 27 27
Palestine Trade Center - - - - - -
South Africa - 116 116 - 105 105
Stichting IDH Sustainable Trade Initiative - - - - 37 37
Sweden 4,498 - 4,498 4,441 - 4,441
Switzerland - 6,055 6,055 56 2,990 3,046
Switzerland/EIF - 141 141 - 608 608
Trade Promotion Organisations (TPO) - 40 40 - - -
Trademark East Africa 10 10
UNDP - - - - 200 200
UNIDO - 398 398 - - -
United Kingdom - - - 10 3,530 3,540
USAID - 230 230 - - -
World Bank - - - - 588 588
WTO - 320 320 - 315 315
Grand Total 17,442 21,742 39,184 17,682 23,752 41,434 1) Excludes contributions received under inter-organizational arrangements and revolving funds.
7
2.2 Share of donor contributions for 2014
Figure 1: 2014 Donor Contributions to the ITF (Window I), as at 31 December 2014
Figure 2: 2014 Donor Contributions to the ITF (Window II), as at 31 December 2014
8
3. Use and status of ITF funds
3.1 ITC expenditure against budget (US$ million)
ITC’s overall 2014 budget amounted to $95.5 million. At 31 December 2014, ITC delivered 99% of this budget. Expenditures for RB were 4% under the forecasted budget.
ITC’s 2014 Operational Plan established a XB budget (including PSC) of $51.7 million. At 31 December 2014 delivered technical assistance worth $52.7 million, 2% more than its initial budget and 25% more than in 2013.
3.2 ITC’s Expenditure pattern 2008-2014 (US$ million)
ITC reached its highest ever expenditure in 2014, 14% higher than 2013 expenditure.
2014 budget Expenditure Expenditure
/ Budget
RB 39.0 37.4 96%
W1 26.8 24.5 91%
W2 24.9 28.1 113%
XB 51.7 52.7 102%
Total 90.7 90.1 99%
9
3.3 W1 and W2 status of funds available as at 31 December 2014 (US$ ’000)
W1 W2 Total
Balance as at 1 January 2014 10,757 24,299 35,056
Add: Contributions received 17,682 23,752 41,434
Funds from inter-organization * 0 2,009 2,009
Income from services rendered 0 565 565
Interest income 55 164 219
Sub-total Income 17,737 26,490 44,227
Less: Expenditures 21,693 25,563 47,255
Programme Support Costs (PSC) 2,820 2,586 5,406
Expenditure + PSC 24,513 28,149 52,661
Refund to donors 0 85 85
Transfers to/(from) other funds 0 (3) (3)
Transfer to Operating reserve 37 97 134
Other adjustments 8 15 23
Sub-total Expenditure 24,558 28,343 52,901
Balance available as at 31 December 2014 3,936 22,446 26,382
Add Operating reserves 5,495
Total available balance as of 31 December 2014 31,877
* EIF, UNDP
3.4 W1 and W2 expenditure by technical cooperation activities (US$ ’000 gross)
Categories W1 W2 Total %
Technical assistance personnel cost 19,976 19,733 39,710 75%
Travel 339 950 1,289 2%
Contractual services: subcontracting / grants 1,536 1,629 3,165 6%
Operating expenses 361 611 971 2%
Acquisitions 347 1,208 1,554 3%
Other including group training 1,954 4,017 5,971 11%
Total 24,513 28,147 52,661 100%
10
4. Window I: unearmarked and soft-earmarked budget and delivery in 2014
4.1 Criteria for the allocation of Window I funds
Window I funding decisions are taken by the Senior Management Committee (SMC) and are intrinsic to the annual planning process. Decisions are taken during the preparation of the annual Operational Plan. The Operational Plan for 2014 was approved by SMC in December 2013 and shared with the CCITF in January 2014.
Analysis presented in this section focuses on Window I budget decisions as reflected in the Operational Plan. Budgets are adjusted in the course of the year to reflect changes in the operating environment as new projects commence and mature projects end. The factors taken into account in carrying out revisions include:
- Client needs;
- Performance in the execution of the work programme;
- Actual and forecasted data on donor contributions;
- Donor earmarking preferences; and,
- Synergies with Window II and PSC-funded components of the overall work programme.
4.2 Unearmarked and soft-earmarked budgets and expenditure in 2014
Window I consists of unearmarked and soft-earmarked contributions from donors while Window II consists of bilateral contributions for specific projects or programmes as well as income earned through sales of products and services.
US$ 26.5 million (gross) of Window I funds were budgeted for projects and programmes through the operational planning process for 2014. At 31 December 2014, total expenditure reached $24.6 million (gross), or 93% of the Window I budget.
2014 Window I delivery - soft-earmarked and unearmarked funds (US$m)
Unearmarked, 15.0, 61%
Soft earmarked, 9.6, 39%
Unearmarked
Soft earmarked
11
4.3 2014 Window I Operational Plan budget by Focus Area
ITC Focus Areas W1 Initial
Budget $’000
Expenditure $’000
% Spend2
1. Trade and market intelligence for SME competitiveness 3,304 2,960 90%
2. Supporting regional economic integration and South-South links
2,219 2,166 98%
3. Connecting to value chains: SME competitiveness, diversification and links to export markets
1,161 1,367 118%
4. Strengthening trade and investment support institutions 2,670 2,679 100%
5. Promoting and mainstreaming inclusive and green trade 5,379 5,516 103%
6. Building a conducive business environment 2,876 3,313 115%
7. Project development3 2,422
8. Corporate efficiency (e-learning, CRM, ITC regional office for Latin America and Caribbean (in Mexico), modernisation of IT systems and services, modernisation of HR policies and services, evaluation and impact assessment (including independent evaluation of ITC), results-based management)
6,785 6,512 97%
Total W1 Operational Plan Budget 26,816 24,513 92%
Window I delivery and soft-earmarking by Focus Area in 2014
(US$m, gross)
2 % spend above 100% is due to in-year budget adjustments and use project development and innovation funds.
3 Expenditure attributed to relevant focus areas
0.0
1.0
2.0
3.0
4.0
5.0
6.0
1. Trade andmarket
intelligence forSME
competitiveness
2. Supportingregional economic
integration andSouth-South links
3. Connecting tovalue chains:
SMEcompetitiveness,
diversification andlinks to export
markets
4. Strengtheningtrade and
investmentsupport
institutions
5. Promoting andmainstreaminginclusive andgreen trade
6. Building aconducivebusiness
environment
US$m
Soft-earmarked
Unearmarked
12
5. Programme Support account expenditure as at 31 December 2014
Description Budget Expenditure % spent against
budget
Staff and other personnel costs 4,090 3,630 89%
Contractual services 53 42 80%
Operating expenses 20 10 48%
Fellowships, grants, other 502 406 81%
Total 4,665 4,088 88%
6. Regular Budget
Regular budget expenditure between the biennia (US$ ’000)
Categories Biennium 2008/2009
Biennium 2010/2011
Biennium 2012/2013
2014 (12 months)
Staff and other personnel costs 49,462 57,792 61,398 31,267
Travel 601 703 755 345
Contractual services 2,465 2,876 2,711 644
Operating expenses 5,474 6,303 6,341 3,338
Acquisitions 1,888 1,615 2,065 457
Other 2,134 2,814 3,021 1,308
Total 62,024 72,103 76,291 37,359
Appropriations for a biennium 62,186 72,996 79,890 80,218 % spend against biennium budget 100% 99% 96% 48%
Categories Biennium
Budget 2014-2015
Expenditure (as at 31
December 2014)
% Spend
Staff and other personnel costs 63,953 31,267 49%
Travel 714 345 48%
Contractual services 2,502 644 26%
Operating expenses 5,915 3,338 56%
Acquisitions 2,243 457 20%
Other 2,865 1,308 46%
Grand Total 78,191 37,359 48%
Expenditure under contractual services and acquisitions are lower than budgeted due to the revised scheduling to 2015 of the procurement equipment and services. In addition publications are produced over the biennium and the cost related to translation and printing is usually heavier in the second year of the biennium, after the English language versions have been created.
Notes on Regular budget
Operating expenses
General operating expenses include the cost of rental and maintenance of ITC Headquarters
premises, rental of internal reproduction equipment, communications, including charges for telephone,
mobile technology, insurance etc.
13
Acquisitions
This covers the acquisition of furniture and equipment and the continued maintenance and support of
business critical information systems, the upgrade of EDP equipment, and the replacement of
software and EDP equipment to support administration systems at the corporate level.
Other
This covers audit services and investigative services provided by the Office of Internal Oversight
Services (OIOS), ITC’s share of joint medical services, ITC’s share of joint services provided by the
United Nations Office at Geneva (UNOG) mainly in the areas of payroll, treasury, finance and budget
through the use of the Integrated Management Information System (IMIS), Services provided by the
International Computing Centre (ICC) and the United Nations Office at Geneva (UNOG) concerning e-
mail and hosting of servers, including ICC for services relating to e-mail gateway, e-mail anti-spam
and anti-virus, and UNOG for services such as hosting ITC’s disaster site, internet connectivity and
firewall; Security services.
7. ITC project delivery and performance
7.1 Expenditure performance against budget in 2014
ITC set a budget of US$51.7 million (gross) in the 2014 Operational Plan for extra-budgetary resources. At the end of December expenditure totaled US$52.7 million gross.
Summary of XB budget and expenditure by Focus Area as at 31 December 2014 ($m gross)
Focus Areas 2014
Operational Plan Budget
Expenditure as at 31
December 2014
% spent against budget
1. Trade and market intelligence for SME competitiveness
7.6 7.5 99%
2. Supporting regional economic integration and South-South links
4.4 5.8 132%
3. Connecting to value chains: SME competitiveness, diversification and links to export markets
11.8 12.1 102%
4. Strengthening trade and investment support institutions
3.3 3.5 106%
5. Promoting and mainstreaming inclusive and green trade
10.0 9.3 93%
6. Building a conducive business environment 5.5 7.9 144%
7. Project Development4 2.4
8. Corporate efficiency5 6.8 6.3 93%
Grand Total 51.7 52.7 102%
4 Project development expenditure is accounted for under the relevant Focus Area. Of the initial $2.4 million budgeted for
project development, $1.4 million was allocated to specific activities and just over $1 million was spent by the end of 2014. 5 Covers XB funding related to e-learning, CRM, ITC regional office for Latin America and Caribbean (in Mexico), modernisation
of IT systems and services, modernisation of HR policies and services, evaluation and impact assessment (including independent evaluation of ITC), and results-based management.
14
XB Expenditure by Focus Area as at 31 December 2014 ($’m gross)
7.2 Extrabudgetary project expenditure by region
Summary of 2014 extrabudgetary project expenditure by region (US$m gross)6
Window I Window II Total
Sub-Saharan Africa 6.1 12.6 18.8
Arab States 0.4 2.8 3.2
Asia-Pacific 0.6 6.6 7.2
Eastern Europe and Central Asia 0.1 2.0 2.1
Latin America and the Caribbean 1.3 0.9 2.2
Global Public Goods 10.5 3.1 13.6
Corporate efficiency 5.6 0.1 5.7
Total 24.5 28.1 52.7
6 A thorough listing of projects per region and focus area with details on budget, expenditure and donor is provided in Annex 2.
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
1. Trade andmarket
intelligence forSME
competitiveness
2. Supportingregional
economicintegration andSouth-South
links
3. Connecting tovalue chains:
SMEcompetitiveness,
diversificationand links to
export markets
4. Strengtheningtrade and
investmentsupport
institutions
5. Promoting andmainstreaminginclusive andgreen trade
6. Building aconducivebusiness
environment
7. Corporate
US$m W2 W1
15
Regional share of total 2014 XB expenditure
56%
10%
21%
6%
7%
Sub-Saharan Africa
Arab States
Asia-Pacific
Eastern Europe andCentral Asia
Latin America and theCaribbean
Focus on priority countries:
16
7.3 ITC’s performance against corporate objectives
ITC’s targets for outcomes and outputs are submitted as part of the long fascicle for the biennium 2014-2015. Those targets are then evenly distributed to each year of the biennium. ITC’s results performance in against the 2014 targets has been strong. Outcomes exceeded targets for all but one outcome indicator. The number of outputs (advisory services, workshops and publications) has also been higher than the targets for all output categories except publications. As a result of this strong performance, ITC has increased the targets for 2015. This should lead to ITC exceeding its targets for the biennium for all indicators.
Outcome results
ITC’s online databases of trade and company data (Trade Map, Market Access Map, Investment Map, and Standards Map) continue to be an important source of trade and market intelligence as evidenced by a 10% higher number of users, 154,863 in 2014. ITC achieved much higher than anticipated results in the area of strengthening the integration of the business sector into the global economy due to the significant success of its business guide for developing countries to understand the WTO Trade Facilitation Agreement, published in 5 languages. ITC’s guide spelling out how Pakistani companies in the country’s key export sectors can boost sales
and employment by taking advantage of the EU’s ‘Generalized System of Preferences-Plus’ (GSP+)
scheme, published in 2014, was a key contributor to higher than expected results.
Significant achievements were made in enhancing trade support institutions and policies for the
benefit of exporting enterprises including during the largest TPO Network conference ever,
organized by ITC in Dubai in November. Over 400 participants from 68 countries – representing
TPOs, business associations, and governments – discussed the challenges to trade promotion work
in a fast-evolving economic landscape involving new opportunities and competitive threats as well as
heightened expectations from business communities.
ITC exceeded its targets to strengthen the export capacity of enterprises to respond to market
opportunities through a wide range of projects. The Centre was very successful in making SME’s
export ready and in linking SME’s with potential buyer to facilitate business transactions. ITC will
strengthen its efforts in enabling SME’s to formulate sound international business strategies to ensure
it will meet its targets for the biennium. 2014 was the first year in which ITC reported on a gender
disaggregated indicator in its strategic framework. The organization helped 362 women-owned
enterprises to improve their competency in export-related operations and link them to new markets or
market contacts.
Output results
ITC delivered a higher number of outputs than planned for 2014. The higher number of participants in
group training is particularly outstanding. The use of technology, for example with the SME Academy,
ITC’s online e-learning tool, launched in 2014, helped delivery of ITC services be more cost effective,
and reach a wider audience.
The Centre did not achieve its target number of publications for 2014. The Centre will pay close
attention in 2015 to the implementation of the Publications Plan for the remainder of the biennium and
is preparing a publication strategy to be finalized in 2015 with the aim of increasing the contribution of
the ITC’s publications to meeting its strategic goals.
17
Performance against corporate outcome targets
2014
Targets
2014
Actual
Actual/
Operational
Plan target
A. Strengthened integration of the business sector into the global economy through trade intelligence and
enhanced support to policymakers
A.1
Increased number of male and female users of trade-related intelligence,
including cases in which a gender perspective in trade is integrated into
national development strategies, as a result of ITC support to enable decision
makers to prepare and/or design
76,500 154,863 202%
A.2
Increased number of male and female clients expressing awareness of trading
system-related activities through the support of ITC to enable decision makers
to understand business needs and create an environment conducive to
business.
1,000 4,023 402%
A.3
Increased number of cases in which country negotiating positions have been
enriched through analytical input and business sector participation, with the
support of ITC, to enable decision makers to integrate business dimensions
into trade negotiations
63 220 349%
B. Enhanced trade support institutions and policies for the benefit of exporting enterprises
B.1
Number of institutions reporting improvements in their managerial performance
and/or services to small and medium-sized enterprises as a result of ITC
assistance.7
60 416 693%
B.2 Number of institutions reporting improvements as a result of their membership
in networks supported by ITC. 43 53 123%
B.3 Number of institutions reporting improvements in their country’s trade
promotion and export development policies as a result of ITC assistance. 43 48 112%
C. Strengthened export capacity of enterprises to respond to market opportunities
C.1
Increased number of enterprises enabled to formulate sound international
business strategies through ITC training on export management issues,
delivered directly or indirectly
650 517 80%
C.2 Increased number of enterprises enabled to become export-ready through ITC
training activities focusing on export readiness, delivered directly or indirectly. 950 1,001 105%
C.3 Increased number of enterprises having met potential buyers and, as a result,
having transacted business through ITC support. 800 957 120%
C.4
Increased share of women-owned enterprises that report improved
competency in export-related operations and that are exposed to new markets
or market contacts as a result of ITC assistance.
350 362 103%
Performance against corporate output targets
Operational Plan
2014 Targets
2014 Actual Actual/
Operational Plan
target
Advisory services 800 921 115%
Group training 350 492 141%
Number of participants 10,500 23,713 226%
Publications 34 29 85%
Other substantive activities 150 210 140%
7 Performance against this indicator may include duplicates. These duplicates are removed at the end of the biennium.
18
8. Project Quality Assurance
ITC has continued its commitment to improving the quality of projects throughout the project life cycle, from the design phase. In 2014 the quality assurance process for the design phase was further streamlined and templates and development markers were improved to facilitate more effective project design, review and approval. ITC introduced a rating system for project design to track the initial quality of submissions. Projects documents of unsatisfactory quality are sent back to the project development team with advice on further improvements. All projects eventually meet the stringent ITC quality standards. There have been notable improvements in the initial quality of projects in 2014 with the exception of slightly weaker performance in quarter four, where pressure to finalize project documents and funding agreements before the end of the year can take its toll.
The chart below illustrates project design ratings per quarter in 2014 where 1 is the highest quality rating and 4 represents lowest quality, for initial submissions. Ratings are given by the Project Appraisal Committee (PAC), made up of Section Chiefs, before projects are submitted to the Senior Management Committee for approval. Directors have been made accountable to track the quality of the project proposals of the Division and the ratings for the division and project quality ratings are discussed during the annual performance review of Project Managers, Section Chiefs and Directors.
2014 Project document ratings by quarter
Project quality assurance to implementation
Our analysis shows that the vast majority of project plan successfully evolve into fully funded
operational projects.
Project Plans and Small
Project Plans reviewed by
PAC in 2014
No. of approved project
documents No. of operational projects Implementation ratio (%)
Project Plans 19 18 95%
Small Project Plans 19 15 79%
Total for ITC 38 33 87%
9. Human Resources
As a knowledge-based organization, ITC’s people are at the heart of its success. ITC keeps track of
its performance against a series of goals that form part of its people strategy.
ITC hired more people in 2014 and used the recruiting process to improve diversity by awarding more
contracts to female candidates. The organization was also to give more growth opportunities to
internal staff members.
0
5
10
15
20
25
Q1 Q2 Q3 Q4
Number of projects
Rating 1
Rating 2
Rating 3
Rating 4
19
The Centre also improved its performance management practices. 94% of staff completed the
performance appraisal cycle in 2014 (compared to 58% in 2013) and discussed performance with
their managers.
Goal: To source, attract and recruit world-class talent to ITC
Indicators 2013 2014
% Improvement
Number of fixed-term recruitments completed 32 44 37%
% Competitions won by internal candidates 19% 34% 79%
% of competitions won by female candidates 14% 42% 300%
Time to recruit (no. of days) 187 121 35%
RB / PSC vacancy rate 10% 5.6% 4.4%
10. Programme Support Services
Increase in productivity
The increase in ITC’s delivery of technical assistance activities has been supported by increased productivity in the provision of central support services. Significantly more services have been provided while the resource level has remained constant.
% increase compared to 2012 % increase compared to 2013
Legal services +72% +34%
Procurement +28% +16%
Travel services +62% +52%
Substantial savings
Significant savings have been realized by ITC through modifying travel policies:
Voluntary downgrade from business to economy class air travel: CHF 123,000
Cost avoidance through implementing travel policy and corporate fares: CHF 664,000
Efficiency gains
The introduction of new or upgraded systems has contributed to more efficient support services.
Electronic leave processing (eLeave) (Completed)
Replacing paper based leave application and tracking system
Efficient, transparent process
Complete integration with other HR-related systems
Automated approval/rejections with notifications. Electronic workflow for MOUs (Work in progress)
Better quality for content and better efficiency and transparency in the processing of the legal instruments
Enhanced reporting on substantive, administrative, legal and financial aspects and monitoring for auditing and quality control and follow ups
Optimization of the process between Project manager, Section chief, Financial Management, Legal Team, Technical Directors and DPS Director for the preparation and issuance of legal instruments.
20
Enhanced project manager's satisfaction as well as DPS staff New Projects Portal (Work in progress)
Single system for the full project cycle from design to implementation and closure
Integrated with other ITC systems like IMIS/Umoja, email system, Customer Relationship Management (CRM) system.
Better planning, implementation and monitoring of ITC projects.
21
Annex 1 List of projects per Focus Area and Programme
(US$ 000’ gross)
Focus Area / Programme / Project Donor
Su
b-S
ah
ara
n
Afric
a
Asia
-Pac
ific
Ara
b S
tate
s
Easte
rn E
uro
pe
an
d C
en
tral A
sia
La
tin A
meric
a
an
d th
e
Carib
be
an
Glo
ba
l
Co
rpo
rate
OP budget $'000
Expenditure $'000 % Spend
1. Trade and market intelligence for SME competitiveness
Competitive Intelligence Programme
Competitive Intelligence ITF Window I
174 166 95%
Development of a national trade portal in Bangladesh ITF Window I 39 29 74%
Innovation Fund: Next Generation trade intelligence portal ITF Window I
85 87 103%
Market Insider ITF Window I
126 123 98%
Trade information services revolving fund Revolving Fund
50 6 12%
Upgrading of Trade Information services for exporters in Saint Lucia St. Lucia
50 45 90%
Non-Tariff Measures in Goods and Services Programme
Non-tariff measures (NTMs) – phase II United Kingdom 1,550 1,201 77%
Transparency in Trade Programme
2014 Flagship Report ITF Window I 94 79 84%
Euro-Med Trade and Investment Facilitation Mechanism - An online tool and problem solving network European Union
0 750
Global Public Good: Market Access Map European Union, Russian Federation
790 712 90%
ITC @ 50 Publication ITF Window I 100 122 122%
Malawi: Improved Trade Statistics and Information System European Union 0 240
Revolving fund for market analysis and research Revolving Fund 400 229 57%
Trade for Sustainable Development Programme
ITF Window I, Switzerland, European Union, HIVOS, IDH Sustainable Trade Initiative
1,927 1,747 91%
2. Supporting regional economic integration and South-South links
Boosting Intra-African Trade Programme
Project Development: Boosting Intra-African Trade - A Pan-African Programme ITF Window I
0 48
Trade promotion and value addition for African cotton European Union 600 918 153%
Coordination of African Regional Cotton Sector Strategies Implementation European Union
880 649 74%
Programme for Building African Capacity for Trade (PACT) II ITF Window I
573 651 114%
Kenya: Promoting Intra-regional trade in Eastern Africa ITF Window I 509 407 80%
Tanzania: Promoting Intra-regional trade in Eastern Africa ITF Window I 696 622 89%
Zambia: Promoting Intra-regional trade in Eastern Africa ITF Window I 521 482 93%
Promoting South-South Links Programme
Project development: Supporting intra and interregional trade by linking Central American SMEs to Multilatinas Value Chains ITF Window I
0 57
Enhancing Export Capacities of Asian LDCs for Intra-regional Trade China
210 158 75%
Expansion du commerce intra et inter-regional entre les Etats Members de la CEMAC, de l'UEMOA et les Trois Francophones Mekong OIF
65 21 32%
Supporting Indian Trade and Investment for Africa (SITA) United Kingdom, ITF Window I
0 1,234
Regional Integration and Economic Partnership Agreements (EPAs) Programme ITF Window I
0 316
3. Connecting to value chains: SME competitiveness, diversification and links to export markets
e-Solutions Programme: linking businesses to markets
Development of SMEs exports through Virtual Market Places
ITF Window I, World Bank
0 138
Value Added to Trade Programme
Project Development: Programme d’appui au développement des exportations malgaches ITF Window I
0 62
Project development: Myanmar Country Programme: Accelerating inclusive and sustainable export-led growth ITF Window I
0 31
Project Development: Strengthening Omani SMEs Export Competitiveness in Priority Sub-Sectors ITF Window I
0 13
Project development: Georgia - Enhancing SME competiveness through capacity building and assistance to the herbs sector to facilitate integration into the EU market ITF Window I
0 19
Project Development: Ukraine: Enhancing SME competitiveness in the fresh fruits and vegetables sector of the Kherson region ITF Window I
0 20
Project development: Caribbean Region – Development of value added products and intra-regional trade to enhance livelihoods from coconuts ITF Window I
0 65
ECS Revolving Fund Revolving Fund 50 40 80%
22
Focus Area / Programme / Project Donor
Su
b-S
ah
ara
n
Afric
a
Asia
-Pac
ific
Ara
b S
tate
s
Easte
rn E
uro
pe
an
d C
en
tral A
sia
La
tin A
meric
a
an
d th
e
Carib
be
an
Glo
ba
l
Co
rpo
rate
OP budget $'000
Expenditure $'000 % Spend
Fiji: Improvement of Key Services to develop livestock European Union 1,125 1,276 113%
Fiji: Strengthening of capacities and services in the agri-food sector European Union
1,037 757 73%
Gambia: Sector Competitiveness and Export Diversification EIF 480 413 86%
Sri Lanka: Improving the Safety and Quality of Fruits and Vegetables
ITF Window I, STDF
323 133 41%
Inception Phase of ITC's 3E Programme ITF Window I 141 74 53%
Kuwait: Improving the international competitiveness of food and beverage producers Kuwait
300 133 44%
Kyrgyzstan: Strengthening export competitiveness of SMEs in the textile and clothing sector and enhancing trade support institutional capacity Switzerland
615 880 143%
Lesotho - Horticulture productivity and trade development EIF 1,551 639 41%
Supply chain management training and professional certification (MLS-SCM)
ITF Window I, Switzerland, Revolving Fund
878 660 75%
Morocco: Export Development for Employment Creation Canada 1,200 1,397 116%
Nepal Pashmina Enhancement and Trade Support EIF 700 240 34%
NTF III Management and Technical Leadership Netherlands 1,755 946 54%
NTF III Bangladesh - IT & ITES Export Competitiveness Netherlands 0 688
NTF III Kenya - Enhancing Export Competitiveness of the Avocado sector in Kenya Netherlands
0 83
NTF III Kenya – Enhancing Export Competitiveness of the IT & ITES Sector in Kenya Netherlands
0 124
NTF III Myanmar – Inclusive Tourism Focusing on Kayah State Netherlands
0 90
NTF III Uganda - Enhancing Export Competitiveness of the Coffee sector in Uganda Netherlands
0 17
NTF III Uganda – Enhancing Export Competitiveness of the IT & ITES in Uganda Netherlands
0 228
Tunisia: Improving the competitiveness of the T&C Value Chain Switzerland
0 14
Chad: Strengthening the trade capacity of the gum arabic sector EIF
0 23
Rwanda: Boosting the International Competitiveness of SME Clusters- BICS
ITF Window I, One UN
0 161
SME's Promotion and Development - Nampula (Mozambique) One UN
0 9
Standards and trade development facility, Nigeria - SPS capacity building for sesame seeds and sheanut butter exports STDF
0 6
Strategic Partnerships for enhancing Export Quality in Developing countries ITF Window I
187 109 59%
Comoros: Strengthening the sanitary and phytosanitary system STDF
0 26
Tajikistan: Strengthening export competitiveness of SMEs in the textile and clothing sector and enhancing trade support institutional capacities Switzerland
365 514 141%
Tanzania: Integration of Horticulture Supply/Value Chains into Tourism
One UN, Switzerland
459 472 103%
WIPO/ITC: Brand Strategy Activation ITF Window I 100 84 84%
Zimbabwe: Trade and private sector development programme European Union
0 949
4. Strengthening trade and investment support institutions 3,263 3,470 106%
Assess Improve Measure (AIM) for Results 3,076 3,024 98%
Project development: Strengthening commercial mediation services for exporting SMEs in Africa ITF Window I
0 32
AIM for results: Improving TSIs Performance and Measurement-Phase I
ITF Window I, Revolving Fund
487 644 132%
ITC Trade Finance Online Flagship Course ITF Window I 0 37
Peru: Enabling TSIs in Peru's northern corridor to respond to the needs of exporters Switzerland
240 146 61%
South Africa: Building Capacity in Export Management and Export Market Analysis South Africa
113 110 97%
State of Palestine: Strengthening capacities in trade promotion for export development UNDP
200 241 120%
Support for LDCs under EIF ITF Window I 141 140 99%
TPO Networking - Sharing and adoption of winning practices ITF Window I 64 62 97%
World trade promotion organisations conference and awards ITF Window I 335 295 88%
Building Coalitions of Services Industries 187 446 238%
Ecuador: Desarrollo del comercio de servicios Ecuador 0 42
LDC SERVICES EXPORTS: Business Success Stories and Challenges Australia
0 23
Trade in services: Trade intelligence, partnership development and technical assistance ITF Window I
187 199 106%
Zambia: Improving Access to Finance Services for SMEs One UN 0 182
5. Promoting and mainstreaming inclusive and green trade 9,978 9,196 92%
Empowering Poor Communities to Trade Programme 3,170 4,025 127%
23
Focus Area / Programme / Project Donor
Su
b-S
ah
ara
n
Afric
a
Asia
-Pac
ific
Ara
b S
tate
s
Easte
rn E
uro
pe
an
d C
en
tral A
sia
La
tin A
meric
a
an
d th
e
Carib
be
an
Glo
ba
l
Co
rpo
rate
OP budget $'000
Expenditure $'000 % Spend
Poor Communities and Trade Programme / Ethical Fashion Initiative
ITF Window I, Japan, Switzerland
2,717 3,507 129%
Cambodia: Export diversification and expansion program (CEDEP) I: High value silk EIF
400 323 81%
Lao PDR: Enhancing sustainable tourism, clean production and export capacity Switzerland
53 195 369%
Empowering Women to Trade Programme
ACCESS! Namibia - Export Development Services for Businesswomen Namibia
0 76
Trade facilitation for women informal cross-border traders and MSMEs in the East African Community - phase II United Kingdom
169 274 162%
W&T II: Programme Management United Kingdom, Australia
1,444 1,197 83%
W&T II: Ethiopia and Mongolia: Supporting Women Business Enterprises in the Textiles and Garments Sector ITF Window I
300 157 52%
W&T II: Economic Empowerment of Women in the Pacific Region Australia
970 366 38%
W&T II: Palestine: Enhancing Women SMEs Development ITF Window I, United Kingdom
179 172 96%
W&T II: Ghana: Improving competitiveness of women in the yam value chain United Kingdom
140 43 31%
W&T II: Improving economic benefits for women in the coffee sector
ITF Window I, United Kingdom
340 171 50%
W&T II: Nicaragua: Enhancing the capacities of women business enterprises to participate in international trade ITF Window I
129 24 19%
W&T II: People First: Working towards gender balance across ITC ITF Window I
0 47
W&T II: The Global Platform for Action on Sourcing from Women Vendors
ITF Window I, United Kingdom
1,097 1,080 98%
W&T II: Zambia: Empowering Women in the Cotton Sector ITF Window I, United Kingdom
266 51 19%
Supporting Youth Entrepreneurship and Trade Programme
Innovation Fund: ITC Youth and Trade Initiative ITF Window I 0 34
Project Development: Integration of Tanzania’s Youth into global value chains of bee-products ITF Window I
0 57
Trade and Environment Programme
Trade and Environment programme - Phase 2 ITF Window I 1,650 1,432 87%
6. Building a conducive business environment
National and Sector Export Strategies
Burkina Faso: Elaboration d'une strategie sectorielle d'exportation et de developpement de la filiere amendes de karite EIF
0 150
Export Strategy Design and Management Programme ITF Window I 1,500 1,590 106%
Supporting trade negotiations
Business and trade policy ITF Window I 261 371 142%
LDCs: Fostering business support to the WTO Accession project ITF Window I
506 562 111%
Tajikistan: Implementation of WTO provisions and business awareness of WTO Accession (Component Two) Switzerland
493 205 41%
Tajikistan: WTO Negotiations of Accession - Policy Advice and Capacity Building (Component One) Switzerland
219 309 141%
Trade Facilitation Programme
Côte d'Ivoire: Institutional strengthening of economic policy and facilitation of regional and global integration. European Union
1,300 3,262 251%
Improving the Business Enviroment for exporting SMEs through Trade Facilitation: Supporting country compliance with the TF agreement obligations
ITF Window I, Switzerland
0 282
Pakistan: Assistance to the design and implementation of trade policy and regulatory reform to improve export possibilities European Union
245 251 103%
7. Corporate
Business Development
Needs assessment and project design: Piloting the methodology and boosting the project pipeline ITF Window I
422 337 80%
Corporate efficiency
E-learning, CRM, ITC regional office for Latin America and Caribbean (in Mexico), modernisation of IT systems and services, modernisation of HR policies and services, evaluation and impact assessment (including independent evaluation of ITC), results-based management ITF Window I
6,785 6,308 93%
24
Annex 2 Programme Support Services: 2014 Annual Report
Annex 3 Understanding ITC’s financial resources
1. Introduction
This annex outlines the source, nature and governance of the financial resources available to the International Trade Centre (ITC). The work of ITC is enabled by the regular budget (RB) and extrabudgetary funding (XB), which includes programme support costs (PSC). The RB is approved on a biennial basis by the United Nations General Assembly and the World Trade Organization (WTO) General Council.
Extrabudgetary funds are activated through the ITC Trust Fund (ITF). This includes two categories of funds known as windows. Window I consists of un-earmarked and soft-earmarked contributions from donors, while Window II is composed of bilateral contributions for specific projects and programmes, as well as income earned through revolving funds. PSC is earned via a charge to extrabudgetary expenditures and the budget is approved on a yearly basis.
Funding
ITC receives funds from different sources and holds them in accounts known as pockets. The rules applied to the accounting, management and use of these funds vary depending on their source, nature and agreements concluded. As agreed in the administrative arrangements for the regular ITC budget, the RB is assessed, approved and paid in Swiss francs (SwF) while its accounts are kept in United States dollars (US$). Payments are received monthly and at present represent approximately 40% of annual I T C financial resources (see table 1).
Table 1 Funding types
Type Currency Source Payment frequency % of resources
Regular budget SwF United Nations, WTO Monthly 40
Extrabudgetary funds US$ Donors Varies 60
The remaining 60% of ITC resources, referred to as extrabudgetary funds (XB), are provided principally by donor countries in support of technical assistance in trade. A smaller component is comprised of income earned by ITC from support costs and from selling its services and products. These funds are accounted for separately in US$ and are subject to different conditions depending on their nature and the agreements governing their use when the funds were accepted by the
organization.8
Results-based management of ITC financial resources
ITC is progressively improving its outcome measurement and aggregation of results, risk management, automating reporting and harmonizing indicators. To achieve these goals ITC works with the support of the Office of Internal Oversight Services (OIOS) and the United Nations Board of Auditors (BoA) in designing and implementing risk management procedures.
Results-based management (RBM) is a core recommendation in the ITC evaluation report of 2006 and an essential requirement of the United Nations and many donor governments. Recommendation 15, the relevant clause in the evaluation report, reads as follows:
‘ITC’s initial preparations for, and experience with RBM should be carried forward as a priority, and should include as the next step the development of an appropriate performance
8 For the purposes of this report all figures are listed in US dollars (US$) unless otherwise indicated.
25
management framework at the corporate level based on logical framework analysis, with a
structured set of indicators for monitoring and assessing results’9
ITC has made significant efforts to embed RBM in the organization by creating clear and transparent connections between corporate objectives and the intervention logic at the project level.
Audience familiarity with ITC financial information
ITC programmes and budgets are reviewed by member state representatives at the Joint Advisory Group (JAG), the WTO Committee of Budget, Finance and Administration (CBFA) and the United Nations General Assembly (GA):
The JAG brings together representatives of its member countries to review ITC activities and to consider its future plans. The member state representatives on the JAG are sometimes the same delegates attending United Nations Conference on Trade and Development (UNCTAD) meetings. In some cases the same individuals attend meetings of the WTO, but in other cases it is not the same individuals as some member states have sufficient staff to allocate separate representatives to WTO and UNCTAD.
The ITC budget is reviewed by CBFA. The WTO General Council approves the budget.
The ITC budget is reviewed by the Advisory Committee on Administrative and Budgetary Questions (ACABQ) and by the Fifth Committee of the GA. The GA approves the budget.
While some delegates who review the ITC programme and budget in the WTO General Council may also attend the JAG, the GA delegates who review the ITC programme and budget in New York are not likely to be the same delegates that participate in the JAG in Geneva.
2. Regular Budget
The regular budget (RB) is funded equally by the United Nations and WTO and is intended to cover the organization’s running costs, including salaries and common staff costs, over a two-year period.
These resources are spent on the development and implementation of core ITC competencies, or business lines, as well as programme implementation at all levels. As ITC is a purely technical cooperation agency, probity and good management have dictated the allocation of a share of RB resources to the oversight, administration and backstopping of technical cooperation activities largely funded by extrabudgetary contributions.
The RB requires approval by the GA and the WTO General Council; this dual approval mechanism has resulted in some challenges and inefficiencies in the past. The budgetary process has been improved by streamlining the number of budget documents produced as well as through simplifying the budgetary approval process.
RB resources available for the biennium 2014–2015 amount to approximately US$ 80.2 million.
Figure 1 ITC regular budget funding structure and delivery
9 DMI Associates, Evaluation of the International Trade Centre UNCTAD/WTO, Synthesis Report, April 2006.
26
3. Extrabudgetary Resources
Extrabudgetary funds (XB) are activated through the ITF. The funds and activities financed from XB are administered by ITC in accordance with applicable United Nations regulations and ITC procedures. The amount of XB funds depends on agreements reached with donors on an ongoing basis, with project budgets often covering several years.
The ITF consists of two categories of funds: Window I consists of un-earmarked and soft-earmarked contributions from donors, while Window II consists of bilateral contributions for specific projects or programmes as well as income earned through revolving funds.
Window I – Unearmarked and soft-earmarked funding
The purpose of Window I funds is to support expenditures contributing to preparing the future of ITC and to finance initiatives critical to ITC corporate interests and performance. This includes activities that do not fit the Window II portfolio of traditional trade-related technical assistance (TRTA) activities. Window I funds can be broken down into the following main categories:
CATEGORY A: Unearmarked funds - Corporate innovation, research and development
This category is used to finance initiatives focused on raising the overall efficiency of ITC in delivering TRTA and ensuring that ITC remains at the cutting edge of TRTA. It is subdivided into:
A 1: Global public goods
Global public goods are products and services ITC has identified as tools to reduce information asymmetries which limit the scope of developing countries to take advantage of export opportunities.
A 2: Innovation for corporate efficiency
Investments in innovation for corporate efficiency may include:
Improving information and communication systems and services;
Innovation in the efficiency of processes to reduce transaction costs; and
Continual learning.
A 3: Innovation for the development or maintenance of products and services
Research and development (R&D) are essential to remain relevant to beneficiary country clients.
CATEGORY B: Soft-earmarked funds for innovative services and projects
Decisions pertaining to category B of Window I are pre-constrained by donor indications of preference in particular targets and areas of focus. This category is therefore primarily used to support initiatives that include an innovation element in the ITC approach to TRTA. A non-exhaustive list of examples includes:
Administrative, infrastructure and overheads
Staff posts (not attributed to projects)
Intergovernmental meetings
Project design and development
Oversight and backstopping of XB programmes
(not charged to projects)
Examples of ITC delivery
Regular budget funding
Budget
United Nations and WTO
Sources of funding
27
Mainstreaming a new policy angle within TRTA (examples are gender, climate, and poor
communities);
Developing a pilot project helping to achieve a demonstrative and duplicable effect (this could
develop the product of an R&D initiative into full implementation);
Developing a new partnership;
Ensuring private sector participation in developing countries’ accession to the WTO; and
Leveraging donor funds.
28
Window II – Earmarked funding
Earmarked XB funding is used for bilaterally or multilaterally funded projects whose technical cooperation goals and outcomes fall within the scope of the ITC Strategic Framework. Some examples of earmarked funding follow.
Bilaterals
A major portion of XB is generated in the form of bilateral agreements, where funding is received from a donor for the completion of specific project proposals. These funds frequently support customized country and regional projects. In such instances, funds may only be used for the defined project(s) and unique financial and results reporting are prepared on behalf of each donor for both contributions and expenditures. These funds may not be redeployed without a donor’s specific consent.
European Commission
The EC is the largest single donor to ITC. The financial and administrative modalities of ITC-EC technical cooperation partnerships are governed by the Financial and Administrative Framework Agreement signed between the EU and the United Nations.
Enhanced Integrated Framework
ITC continues to foster its cooperation with the least developed countries (LDCs) through its active participation in the EIF, a multi-stakeholder initiative and the most relevant Aid for Trade framework for LDCs. In close collaboration with EIF partners, ITC supports LDCs participating in the programme in areas related to the internationalization of SMEs.
United Nations Development Programme
ITC works in close partnership with UNDP to implement projects in country.
Associate experts
This pocket comprises funding by donors for associate expert staff working for ITC. While associate experts work on a variety of tasks and functions, this fund, composed of the monies to pay their salaries, cannot be deployed for any other purpose.
Revolving funds
Revolving funds are established to carry out specific activities in attaining certain objectives resulting in repayment to the fund. Revolving fund activities are financially self-supporting and of a recurring nature. The income they generate is credited back to the funds and is used for the activities of the funds. There are nine revolving funds within ITC that receive money through the sale of products and services. The use of resources within each fund is governed by the fund’s terms of reference.
Programme support costs
The charge collected on trust funds or extrabudgetary expenditures is called Programme Support Costs (PSC) and is expressed as a percentage of direct costs (expenditure). The recovery and uses of PSC resources are of central importance to the financing and organization of efficient and effective programme support services.
In its decision 80/44 of 27 June 1980, the UNDP Governing Council approved a PSC rate of 13% of annual project expenditures. In its report on the PSC arrangements embodied in UNDP Governing Council decision 80/44, the ACABQ recommended that the UNDP formula be approved by the GA for use by the United Nations Secretariat. This recommendation was accepted in resolution 35/217 of 17 December 1980, remains in force and is applicable to the ITC.
The standard rate is set at 13% for extrabudgetary expenditures with the following exceptions:
UNDP 10%
Associate experts 12%
EC and EIF 7%
29
The purpose of the 13% PSC charge is to recover incremental indirect costs, defined as additional expenses incurred supporting activities financed from XB contributions. This charge is intended to ensure that the additional cost of supporting activities financed from XB contributions is not borne by assessed funds or other core resources that are central to the budget review and approval process in the United Nations Secretariat.
Incremental costs can be divided into two basic categories, direct costs and indirect costs:
Direct costs (which should be included in the main budget lines) are those costs that can be readily and directly attributed to, and recovered either wholly or in part from, an operation, programme or project financed from XB contributions. Their definition requires that a direct link between the cost and project can be identified. These costs include but are not limited to: (i) substantive and operational staffing, facilities, equipment and activities,10 and (ii) programme services including planning, resource mobilization, monitoring, evaluation and management. They may also include direct costs pertaining to the administration of human, financial, physical and information and communications technology (ICT) resources (e.g. service costs). All direct costs should be financed by the relevant operation, programme or project.
Indirect costs are those that cannot be traced unequivocally to specific services providing administrative and other support functions to a range of operations, programmes and projects. These costs include but are not limited to:
- The central administration of human, financial, physical and ICT resources;
- Staffing, facilities, equipment, activities and legal liabilities related to (i) above;
- The implementation of United Nations-wide initiatives related to (i) above (e.g. Umoja11
and IPSAS implementation, which are explained below); and
- Oversight (the OIOS and the BoA).
They may also include indirect or overarching costs pertaining to central programme services (e.g. monitoring, evaluation and management). Indirect costs are appropriately, and cost-effectively, recovered through the support costs charge expressed as a percentage of direct costs (i.e. by PSC).
Use of PSC revenue
PSC resources may be used to finance indirect costs under the following categories:
Central/programme/departmental administration. For example, staff in the human, financial, physical and ICT resources management areas that support operations, programmes and projects financed from XB contributions; and rent, maintenance, operating expenses, furniture and equipment relating to these staff.
Other internally and externally provided services, e.g. IT, legal, security and oversight (the OIOS and the BoA); UN-wide initiatives (e.g. Umoja and IPSAS) and centrally managed charges.
Programme/departmental programme services such as central planning, resource mobilization, donor relations, monitoring, evaluation, and reporting and programme development.
10
Including, for example, conference facilities, language and documents processing services. 11
It must be noted, for example, that the General Assembly, in its resolution 63/262 of 24 December 2008, endorsed a cost-sharing formula for the Umoja project which requires that 23 per cent of project costs are borne by Special Accounts for Programme Support Costs.
30
Summary of ITC regular and extrabudgetary funding
Figure 2 ITC regular and extrabudgetary funding structure as of 2013
Operating reserves
As a legislative requirement, ITC maintains two operating reserves to cover financial liabilities arising from operations funded from XB resources.
1. The PSC Operating Reserve is made up of 20% of the estimated annual programme support income to protect against unforeseen shortfalls in delivery, inflation and currency adjustments, or to liquidate legal obligations in the cases of abrupt terminations of activities financed from XB.
2. The Trust Fund Operating Reserve was established to cover delays in the payment of pledged contributions and to meet any shortfalls of income in the trust funds. It is used to meet the final expenditures of trust fund technical cooperation activities, including liquidating liabilities and to cover unexpected project-related requirements for which funds are not available. ITC has increased this reserve so that, over the years, it reaches the statutory level of 15% of the annual estimated expenditure.
Regular budget funding
Provision of collective benefits for
all beneficiary countries, e.g.:
- Staff posts (not attributed to
projects)
- Intergovernmental meetings
- Project design and
development
- Oversight and backstopping of
XB programmes (to ensure
probity and good management /
not charged to projects)
- Admin, infrastructure and
overheads (shared with PSC)
RB should not subsidize XB
activities (and vice versa)
Extrabudgetary funding
Direct project costs
All directly attributable
costs, e.g.:
- Project staff
- Consultants
- Travel, etc.
Sundry costs [Project BL]
other direct costs e.g.:
- Printing
- Telecoms
Must not subsidize RB
Programme support
costs
Indirect incremental
costs directly related to
project delivery, e.g.:
- Administration costs
- Rent
- Maintenance
- Etc.
Some of these costs
(e.g. insurance, audit
costs) are shared with
the RB, but are directly
related to the project
31
During the 12-month period of the biennium 2012–2013 ended 31 December 2012, the level of the operating reserve was increased from US$ 4,261,000 as at 31 December 2011, to US$ 4,775,000 as at 31 December 2012 equivalent to a level of approximately 13% of estimated annual expenditures.
The Trust Fund Operating Reserve is also used as a cash-flow tool. When pledges have been received from a donor but the funds are not actually in hand, an advance from the operating reserve may be extended to the project to allow work to commence or continue. Once donor funds are received the operating reserve is reimbursed and the funds are again available to meet a future need of the same nature.
The resources in both operating reserves may not be redeployed to serve any other purposes.
4. Results-Based Budgeting At ITC
RBM architecture
Results-based management (RBM) is generally understood as a management strategy by which an organization ensures that all its processes, products and services contribute to the achievement of desired results. The report of the ACABQ on the proposed programme budget for the biennium 2012–2013 took note of ITC efforts in implementing RBM principles and encouraged ITC to continue working towards full implementation of both RBM and results-based budgeting (RBB) [A/66/7/Add.5]. The GA endorsed the conclusions and recommendations contained in the ACABQ report at the 66
th
session of the Fifth Committee [A/C.5/66/L.19].
A cornerstone of ITC efforts to achieve full RBM implementation has been the introduction and embedding of RBM methodology into the project portfolio. The Project Appraisal Committee, which undertakes a peer review of all new projects and programmes across the organization, significantly supports this process. RBM is embedded in ITC’s full portfolio of projects and development results against the corporate goals are published on the organization’s website.
More efficient management of ITC financial resources
ITC aims to comply with the direction from the ACABQ that there should be no cross-subsidy between RB and XB resources. ITC XB activities are not to be subsidized by RB funds.
As outlined above, XB resources are used to complement regular budget financing to achieve ITC goals on behalf of beneficiary countries. XB funding is also used for bilaterally or multilaterally funded projects whose technical cooperation goals and outcomes fall within the scope of the ITC Strategic Framework as adopted by the JAG and the GA.
While the finite nature of ITC resources requires a sequential and focused response to country needs, over time all countries will benefit from ITC programmes through one delivery channel or another. While not every country can benefit within a financial period, eventually all beneficiary countries will benefit either from ITC activities in the country or through global goods, multi-country focus and organizational development.
Implementation of International Public Sector Accounting Standards
At the same time ITC is building its project delivery capability through modernizing its financial reporting through the implementation of International Public Sector Accounting Standards (IPSAS) as of January 2014. Combined with the work on RBM principles, ITC is in an improved position to have better financial and management reporting in support of its management decisions.
The United Nations common system is also moving towards the adoption of IPSAS, which provides for an accrual rather than cash accounting approach. ITC has adopted IPSAS in 2014 and automated financial systems will be implemented to support their implementation. An Enterprise Resource Planning (ERP) system is foreseen for this purpose. A full set of accounting policies and procedures has been finalized and discussions are continuing on the impact of ITC Swiss franc budgets and US$ functional currency on the United Nations ERP.
While ITC is using the United Nations’ automated Integrated Management System (IMIS), it will continue to invest in Umoja, the ERP system which is planned for 2015 implementation and which will replace the current IMIS system, which dates back to the early 1990s.
32
During the interim period ITC will continue generating financial reports through the use of a combination of systems and tools including IMIS, ITC- specific portal database systems, desktop tools (such as Excel) and manual processes.
Cost transparency project
The cost transparency project has enabled better understanding of the main administrative processes and products as well as their underlying resource and costs. This project has been extended in 2014 to better understand the cost structure down to activity level. This improved understanding will deliver increased transparency and will allow ITC to better cost future projects.
5. Governance
ITC regularly reports to the Consultative Committee of the ITC Trust Fund (CCITF), providing a report which contains financial information and outcome-based performance. The CCITF report focuses on the analysis of ITC XB resources, providing a detailed description of the source of funds, their status and use. It also provides an update on programme support and RB resources.
The institutions and bodies exercising governance functions over the ITC – the United Nations Secretariat, the WTO Secretariat, G A member states, the WTO General Council – require formal budget and financial statements in respect to ITC finances. ITC financial statements covering both RB and XB resources are signed by the United Nations Controller and audited by the BoA. The programme and budget submissions describe the complete programme of work, including activities funded by RB as well as XB contributions, even though the result of the budgetary process is restricted to the approval of RB funding. Guidance, advice and control are exercised through these bodies on the entire ITC programme of work.
In addition, ITC governing bodies receive the results of the External Audit of ITC financial statements. These reporting mechanisms enable the governing bodies to make decisions about the level of contribution they wish to make to the RB . In addition, the reporting mechanisms provide reassurance that all monies received by ITC (regardless of source) and all financial transactions conducted by the ITC correspond to the rules and regulations established for their management.
As part of the regular budget process, the JAG reviews the Strategic Framework for ITC programmes. The UNCTAD Trade and Development Board and the WTO consider the report of the JAG annually. The Committee for Programme and Coordination of the GA in New York formally considers the ITC Strategic Framework.
While the detailed review of the regular budget and the examination of external audit reports are handled through the WTO and United Nations mechanisms, ITC updates the JAG annually on its entire programme activity (funded by either source of funds).
The JAG requires financial information focusing on the results and use of XB contributions. In addition, the JAG needs to understand the overall ITC financial situation (including the R B) to provide guidance on the definition and implementation of ITC technical assistance programmes.
Street address: ITC 54-56, rue de Montbrillant 1202 Geneva, Switzerland
Postal address: ITC Palais des Nations 1211 Geneva 10, Switzerland
Telephone: +41-22 730 0111
Fax: +41-22 733 4439
E-mail: [email protected]
Internet: http://www.intracen.org
The International Trade Centre (ITC) is the joint agency of the World Trade Organization and the United Nations.
FSC is an independent, non-governmental, not for profit organization established to promote the responsible management of the world´s forests.Printed by ITC Reprographic Service on FSC paper, which is environmentally-friendly paper (without chlorine) using vegetable-based inks. The printed matter is recyclable.
