making the most of africa’s commodities - idc...making the most of africa’s commodities – a...
TRANSCRIPT
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Making the Most of Africa’s Commodities:
Industrializing for Growth, Jobs and Economic Transformation
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Key messages
African countries are growing but have been unable to fulfil their industrial potential.
Massive industrialisation based on commodities is an imperative that is possible and beneficial.
Evidence of value addition and linkage development exists in Africa but the experience is mixed
Success requires firms to have a good understanding of the critical factors that influence linkage development.
Effective industrial policies and development plans are critical for Africa to address constraints and industrialize
Trade agreements and intra-Africa trade and regional integration must be used to foster Africa’s industrialization.
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Economic growth strengthened as political tensions eased across the continent………
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However, export diversification remains weak in most African countries…………
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And the commodity price boom has increased commodity-dependence in Africa
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High revenue lost from not adding value - Value-added content of selected developing countries’ cocoa exports, 2011…
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Value added content of selected developing countries timber export, 2011
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Commodity-based industrialization and moving up the value chain has dynamic benefits
• Employment effect
• Income effect
• Price benefits and price stability
• Diversification of local technological and industrial capabilities
• Lateral migration into other sectors
• Efficiency gains of cluster development and positive spill-over effects in terms of knowledge and information
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Benefits of moving up the coffee value chain - Example
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What influences linkage development?
P
O
L
I
C
Y
• Structural factors – these are difficult to
influence through government
intervention
• Country Specific factors – this is where a
government has leverage
For example:
Ownership, Infrastructure,
Skills and capabilities,
Linkage strategies etc
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Asian/Latin America experiences Salient features of successful linkage development:
• Ambitious policies for the resource sector
• Domestic markets to move up the value chain
• Marketing links
• Domestic firm capabilities / partnerships
• Industrial policies, export restrictions, fiscal incentives
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Making the most of linkages in soft (food) and industrial commodities – Constraints
and opportunities
Survey Findings from 9 country case studies
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Analytical framework
Depth and breadth of
local linkages
Technical features of the
value chain
Industry structure
Lead firms strategies CSFs
Location and infrastructure
Industrial policy
Trade restrictions,
standards, other constraints
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VALUE-ADDED CONTENT OF COCOA EXPORTS, GHANA, NIGERIA AND CAMEROON 2011 ($ THOUSAND)
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Cocoa in three countries - different trajectories
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Coffee, Tea and Agro-processed value chains – a summary comparison…..
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Factors affecting linkage development – Egypt’s textile industry
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Value added content of Ethiopia’s leather/hide export
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Linkage development in the mineral sector – three country comparison…….
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A regional hub – linkages from South Africa’s mining sector to the rest of the economy
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Variation of factors affecting linkage development by sector and country – summary conclusions of a nine country case study
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Critical success factors vary by sector and value chains – a summary….
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Factors driving linkage development
• Focus on country-specific factors to foster linkage development.
• Nationality of lead firms and end markets matters
• Build Firm Capabilities – management & worker
• Supplier development programmes are key
• Infrastructure – hard and soft - crucial
• Government capabilities – skill & institutions
• Attack the misalignments
• Appropriate, evidence-based, prioritized, monitored, incentivised policies
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Making the most of Africa’s commodities – a nine point policy framework
• Adopt a coherent policy framework • Create institutional industrial policy mechanism • Develop local content policy • Raise lead firm procurement, sourcing and processing • Run supply-chain development programmes among major
commodity firms • Boost local skills and technologies • Negotiate regional trade agreements and foster intra-African
trade • Address infrastructure bottlenecks • Coordinate ministries to improve implementation