Overview of Australia’s South Asia Regional aid program

How we are helping

2014/15 Regional Outcome
$24.5 million

2015/16 Regional Budget Estimate
$19.8 million

2015/16 Total Australian ODA Estimate
$32.8 million

The Australian Government will provide an estimated $32.8 million in total ODA through out South Asia in 2015-16. This will include an estimated $19.8 million in aid funding managed by DFAT.

South Asia is among the least integrated regions in the world, restricting the region’s potential growth. Australia has a growing trading and economic partnership with South Asia. In 2014, Australia’s two-way goods and services trade with South Asia was worth around A$20 billion. Improved regional connectivity across South Asia would promote economic growth and regional stability, and a more integrated region would increase access to South Asia markets, opening opportunities, including for the provision of Australian goods and services.

South Asia has the highest concentration of poor people in the world with more than 500 million people still living in extreme poverty. Many more people, particularly women and those working in the informal sector, live just above the poverty line and remain vulnerable to economic and environmental shocks.

While individual economies in South Asia are growing, intra-regional trade in South Asia accounted for just 5 per cent of total trade in 2014 (versus 45 per cent across developing Asia as a whole). The relatively poor quality of trade-related infrastructure (e.g. ports, roads and storage facilities), as well as of energy production and distribution networks, are key constraints to growth. Non-tariff barriers – such as over-administration at borders – add to the high cost of cross border trading (50 per cent higher than ASEAN).

Across South Asia there is limited cooperation on shared regional resources, such as water. In the last twenty years, over 50% of South Asians (more than 800 million) have been affected by at least one natural disaster. Climate variability, competing and increasing demands from agriculture, industry (including energy production) and population growth will all impact on water availability. Greater levels of cooperation will be needed to manage these shared resources to ensure their long term sustainability and capacity to support economic growth and to maintain regional stability.

The South Asia Regional program seeks to underpin Australia’s economic engagement in the region by addressing these key region-wide barriers to sustainable economic growth. Improved regional connectivity is likely to be of great value to women, many of whom are engaged in informal trade, through higher incomes as producers and as consumers from lower priced and better quality traded goods. Gender equality will be a focus in all our investments under the regional program.

The South Asia Regional program focuses on two inter-related objectives as outlined in the Aid Investment Plan:

Objective 1:  Increased water, food and energy security in South Asia to facilitate economic growth and improve the livelihoods of the poor and vulnerable (particularly women and girls)

The Sustainable Development Investment Portfolio (SDIP) seeks to respond to major regional development challenges in South Asia - improving transboundary water resource management, increasing access to energy and energy connectivity, and increasing agricultural productivity and farm incomes. SDIP targets these three inter-related sectors where Australia is uniquely placed to contribute its expertise and technologies.

South Asia Regional Development Program: increased water, food and energy security

Objective 2: Increased regional connectivity through trade facilitation and infrastructure connectivity

The objective will be addressed through the World Bank-implemented Infrastructure for Growth (IFG) and the South Asia Regional Trade Facilitation Programs (SARTFP). IFG aims to meet infrastructure gaps in the region by addressing the major challenge of connectivity and integration, both within countries and the region. SARTFP seeks to improve border trade and connectivity in the eastern sub‑region (which includes the North Eastern states of India, Bangladesh, Bhutan and Nepal) with a particular emphasis on enabling women’s participation in trade and economic activity.

South Asia Regional Development Program: regional connectivity

Our results

Results from 2014-15:

Sustainable development

  • Contributed to the development of Pakistan’s National Water Plan; built the capacity of and fostered collaboration between national and state level agencies on river management.
  • Trained 6,500 farmers (30 per cent of them women) in sustainable farming techniques.
  • Established a flood outlook system for the Ganges-Brahmaputra basin, providing valuable flood forecast warnings for Nepal and Bihar state in India (and in future, Bhutan).
  • Worked with regional governments to establish effective regulatory regimes and structure finance to attract investment in medium scale hydro developments.
  • Improved local water use quality and efficiency in three districts of Nepal by implementing community level water management and planning frameworks.

Regional connectivity

  • Undertook research into constraints to private sector growth, particularly in relation to women-owned and led Micro Small and Medium Enterprises.
  • Helped foster the enabling environment for infrastructure development through public-private partnerships and by facilitating infrastructure development in the transport and energy sector, including support to the ‘Eastern Dedicated Freight Corridor’ connecting Punjab to West Bengal.
  • Under the Asian Development Bank partnership facility, strengthened the South Asia Subregional Economic Cooperation countries’ capacities for trade facilitation through regional workshops on customs and logistics issues and trade processes/ reforms.

Our changing program

The South Asia Regional program will continue its consolidation agenda, with a transition to a more targeted program around two key objectives. We will also continue to meet commitments to the Indian Ocean Rim Association and the Australia-India Strategic Research Fund.

We will maximise our impact by focusing on the north eastern sub-region of South Asia. Focusing both our investments (regional economic connectivity and sustainable development) in the same geographic region deepens our engagement and the opportunity for inter-linkages and greater impact.