Trading competitively : trade capacity building in Sub-Saharan Africa

182 Pages·2002·0.68 MB·English

by  OECD

«
Development Centre Studies
Trading Competitively:
Trade Capacity Building
in Sub-Saharan Africa
INTERNATIONAL DEVELOPMENT
By Federico Bonaglia and
Kiichiro Fukasaku
Development Centre Studies
Trading Competitively
TRADE CAPACITY BUILDING
IN SUB-SAHARAN AFRICA
by
Federico Bonaglia and Kiichiro Fukasaku
DEVELOPMENT CENTRE OF THE ORGANISATION
FOR ECONOMIC CO-OPERATION AND DEVELOPMENT
ORGANISATION FOR ECONOMIC CO-OPERATION
AND DEVELOPMENT
Pursuant to Article 1 of the Convention signed in Paris on 14th December 1960, and
which came into force on 30th September 1961, the Organisation for Economic Co-operation
and Development (OECD) shall promote policies designed:
– to achieve the highest sustainable economic growth and employment and a rising
standard of living in Member countries, while maintaining financial stability, and thus
to contribute to the development of the world economy;
– to contribute to sound economic expansion in Member as well as non-member
countries in the process of economic development; and
– to contribute to the expansion of world trade on a multilateral, non-discriminatory
basis in accordance with international obligations.
The original Member countries of the OECD are Austria, Belgium, Canada, Denmark,
France, Germany, Greece, Iceland, Ireland, Italy, Luxembourg, the Netherlands, Norway,
Portugal, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States.
The following countries became Members subsequently through accession at the dates
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(12thDecember 1996) and the Slovak Republic (14th December 2000). The Commission of
the European Communities takes part in the work of the OECD (Article 13 of the OECD
Convention).
The Development Centre of the Organisation for Economic Co-operation and Development was
established by decision of the OECD Council on 23rd October 1962 and comprises twenty-two Member
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The purpose of the Centre is to bring together the knowledge and experience available in Member
countries of both economic development and the formulation and execution of general economic policies; to adapt
such knowledge and experience to the actual needs of countries or regions in the process of development and to
put the results at the disposal of the countries by appropriate means.
THE OPINIONS EXPRESSED AND ARGUMENTS EMPLOYED IN THIS PUBLICATION ARE THE SOLE
RESPONSIBILITY OF THE AUTHORS AND DO NOT NECESSARILY REFLECT THOSE OF THE OECD, THE
DEVELOPMENT CENTRE OR THE GOVERNMENTS OF THEIR MEMBER COUNTRIES.
*
* *
Publié en français sous le titre :
Compétitivité des échanges
RENFORCER LES CAPACITÉS EN AFRIQUE SUBSAHARIENNE
© OECD 2002
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Foreword
This publication results from the 2001/2002 Programme of Work of the OECD
Development Centre. It forms part of the output from the project entitled, The Integration
of Developing Countries into the World Trading Systemand is based on work presented in
a number of both OECD and non-OECD forums.
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Acknowledgements
The Development Centre is most grateful to the International Trade Centre (ITC) in Geneva,
the Institute for Development Studies (IDS) at the University of Nairobi and the Ethiopian
Economic and Policy Research Institute (EEPRI) in Addis Ababa for their close collaboration
and excellent contributions to this project. Special thanks are extended to Friedrich von Kirchbach
and his staff at ITC, Patrick Alila, Walter Odhiambo and Meleckidzedeck Khayesi at IDS,
Nairobi, Poul Pedersen at the Centre for Development Research, Copenhagen, Berhanu
Nega and Kibre Moges at EEPRI and Hussein Shibeshi at the Chamber of Commerce,
Addis Ababa, for their valuable assistance and kind co-operation, as well as to Veepin
Bhowon and Sen Narrainen at Imani, Port Louis, for their contributions to the case study of
Mauritius.
The authors are grateful to Ulrich Hiemenz, Andrea Goldstein and Henri-Bernard
Solignac Lecomte for helpful comments and suggestions on an earlier draft. Special thanks
are also extended to Neil Beshers for his contribution to the editing of this publication. The
opinions expressed in this study are, however, those of the authors alone, and do not reflect
those of the Organisation to which they belong.
Last but not least, research grants from the Government of Switzerland and the
Government of Italy are gratefully acknowledged.
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Table of Contents
Acknowledgements.............................................................................................................4
Preface.................................................................................................................................9
List of Abbreviations.........................................................................................................11
Executive Summary..........................................................................................................13
Introduction ...................................................................................................................21
Chapter 1 Building Trade Capacity in an African Context........................................27
Chapter 2 Africa’s Export Performance Reconsidered..............................................37
Chapter 3 Looking Inside the Export Mechanism.....................................................51
Chapter 4 The Role of Trade Support Services: Evidence from Case Studies..........67
Chapter 5 The Mauritian Experience.........................................................................89
Chapter 6 Conclusions and Policy Implications......................................................113
Appendix A Trade Reform and Supply Response under Structural Adjustment........121
Appendix B Structure of Exports................................................................................147
Appendix C Background Information on ITC, IDS and EEPRI Surveys...................163
Bibliography .................................................................................................................171
Text Tables
Table 0.1. Main Exports of Six African Countries, 1998...........................................21
Table 2.1. Shares of Six African Countries in SSA exports.......................................39
Table 2.2. Main Export Destinations of Six African Countries.................................40
Table 2.3. Principal Export Markets within SSA: Six African Countries..................41
Table 2.4. High-income OECD Countries’Imports
from 14 Selected Resource-rich Countries...............................................42
Table 3.1. Ranking of Bottlenecks to International Business Development
as Perceived by Enterprises and Business Associations
in the Five Countries.................................................................................58
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Table 3.2. Ranking of Bottlenecks to International Business Development
as Perceived by Kenyan Firms..................................................................59
Table 4.1. Summary Results on the Use of Trade-related Services
by Surveyed Firms — Kenya....................................................................73
Table 4.2. Summary Results on the Use of Trade-related Services
by Surveyed Firms — Ethiopia.................................................................75
Table 5.1. International comparison of GDP per capita.............................................90
Text Figures
Figure 1.1. Trade Capacity Building in an African Context........................................30
Figure 2.1. Africa’s Marginalisation in World Trade...................................................37
Figure 2.2. Commodity Structure of Exports: Six African Countries, 1961-2000......44
Figure 2.3. Commodity Structure of Exports: Four ASEAN Countries, 1961-2000...45
Figure 2.4. Commodity Structure of Exports: Latin America, 1961-2000..................46
Figure 3.1. Looking Inside the Export Mechanism.....................................................54
Figure 3.2. Bottlenecks to International Business Development,
as Seen by Business Associations and Enterprises...................................57
Figure 5.1. Imports of High-income OECD Countries
from Mauritius, 1970-2000.......................................................................90
Figure 5.2. Economic Policy in Mauritius: 1960-2000...............................................94
Figure 5.3. Governing the Policy-making Cycle.........................................................96
Text Boxes
Box 1.1. Global TCB Initiatives: The Integrated Framework..................................30
Box 1.2. Africa’s TCB Initiatives: The Joint Integrated Technical
Assistance Programme..............................................................................31
Box 3.1. Factors Affecting a Country’s Export Mechanism....................................53
Box 3.2. Trade Finance in Ethiopia, Mozambique and Uganda..............................61
Box 3.3. Telecommunications Infrastructure in Six African Countries...................62
Box 3.4. Obstacles to International Business Development:
An Ethiopian Experience..........................................................................63
Box 4.1. Organisations Handling Kenya’s Primary Exports....................................69
Box 4.2. Organisations Handling Ethiopia’s Primary Exports................................70
Box 4.3. Export Firm Profile: Kenya Nut Co. Ltd..................................................74
Box 4.4. Export Firm Profile: Genuine Leather Products.......................................77
Box 4.5. Public Support to Trade: What Went Wrong?...........................................80
Box 5.1. Trade Support Services in Mauritius: Public Institutions.......................100
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Box 5.2. Support to SMEs in Mauritius................................................................102
Box 5.3. Trade Support Services in Mauritius: Private-sector Organisations.......105
Appendix Tables
Appendix Table A.1. Real Exchange Rate Overvaluation............................................123
Appendix Table A.2. IMF Trade Restrictiveness Index (1997-2000)...........................130
Appendix Table A.3. Supply Response to Structural Adjustment, 1988-98.................135
Appendix Table A.4. Major Development Initiatives Involving
Six African Countries.................................................................137
Appendix Table A.5. Selected African Economies:
Main Economic Indicators, 1980-99..........................................138
Appendix Table A.6. Selected Asian and Latin American economies:
Main Economic Indicators, 1980-99..........................................141
Appendix Table B.1. Exports of Ethiopia: Top 15 Products Based
on Mirror Statistics, 1998...........................................................147
Appendix Table B.2. Exports of Kenya: Top 15 Products Based
on Mirror Statistics, 1998...........................................................148
Appendix Table B.3. Exports of Madagascar: Top 15 Products Based
on Mirror Statistics, 1998...........................................................149
Appendix Table B.4. Exports of Mozambique: Top 15 Products Based
on Mirror Statistics, 1998...........................................................150
Appendix Table B.5. Exports of Tanzania: Top 15 Products Based
on Mirror Statistics, 1998...........................................................151
Appendix Table B.6. Exports of Uganda: Top 15 Products Based
on Mirror Statistics, 1998...........................................................152
Appendix Table B.7. Eligibility under AGOA..............................................................153
Appendix Table B.8. Impact of AGOA on Apparel and Clothing Exports...................153
Appendix Table B.9. Structure of Exports by Major Product Group:
Six African Countries, 1961-2000..............................................156
Appendix Table B.10. Structure of Exports by Major Product Group:
Four Latin American Countries, 1961-2000...............................157
Appendix Table B.11. Structure of Exports by Major Product Group:
Four ASEAN Countries, 1961-2000...........................................158
Appendix Table B.12. Structure of Broad Primary Exports:
Six African countries, 1961-2000...............................................159
Appendix Table B.13. Structure of Broad Primary Exports:
Four Latin American Countries, 1961-2000...............................160
Appendix Table B.14. Structure of Broad Primary Exports:
Four ASEAN Countries, 1961-2000...........................................161
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Appendix Table C.1. ITC survey: Coverage.................................................................163
Appendix Table C.2. ITC Survey: Distribution of Responding Enterprises
by Sector of Activity...................................................................164
Appendix Table C.3. Kenyan Survey: Distribution of Sample Firms
by Industry and Size...................................................................164
Appendix Table C.4. Ethiopian Survey: Characteristics of Sampled Enterprises........166
Appendix Table C.5. Use of Information Types in Export Marketing
by Sample Firms – Kenya...........................................................167
Appendix Table C.6. Use of Contact Making Services
by Sample Firms – Kenya...........................................................167
Appendix Table C.7. Use of Pre-export Support Services
by Sample Firms – Kenya...........................................................168
Appendix Table C.8. Use of Technical Services by Sample Firms – Kenya................168
Appendix Table C.9. Use of Government Support Services
by Sample Firms – Kenya...........................................................168
Appendix Table C.10. Use of Information Types in Export Marketing
by Sample Firms – Ethiopia.......................................................169
Appendix Table C.11. Use of Contact Making Services
by Sample Firms – Ethiopia.......................................................169
Appendix Table C.12. Use of Pre-export Support Services
by Sample Firms – Ethiopia.......................................................169
Appendix Table C.13. Use of Technical Services by Sample Firms – Ethiopia.............170
Appendix Table C.14. Use of Government Support Services
by Sample Firms– Ethiopia........................................................170
Appendix Figures
Appendix Figure A.1. Implementation of SAPs in Six African Countries (1980-2001)..........126
Appendix Figure A.2. Official Development Assistance Cycles
(Kenya and Tanzania).................................................................128
Appendix Figure A.3. Simple Average MFN Tariff........................................................131
Appendix Figure A.4. Foreign Direct Investment
in Six African Countries, 1988-99..............................................136
Appendix Boxes
Appendix Box A.1. Structural Adjustment Facilities..................................................124
Appendix Box A.2. Trade Reform Programmes in Ethiopia......................................132
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Preface
The fuller integration of developing countries into the world economy is one of the top
priorities of the OECD countries. In this regard, the successful launch of a new trade round
at the fourth WTO Ministerial Conference in Doha last November was a welcome development.
Nevertheless, more work needs to be done to address the specific interests and concerns of
developing countries, especially the least-developed. In poor countries, both the government
and the private sector often lack the institutional and human resource capacities necessary
to deal with the complexity of multilateral trade negotiations and to reap the full benefits
of emerging trade opportunities. OECD countries have a major stake in helping them to
strengthen their capacities to meet these challenges in coming years.
The Development Centre is actively engaged in current discussions on trade and development
issues at the OECD and elsewhere; it has made an important contribution to them, in particular
with regard to Africa. Two volumes published in 2001, Emerging Africaand Policies to Promote
Competitiveness in Manufacturing in Sub-Saharan Africa,highlight respectively the importance
of export diversification in sustaining economic growth and the role that structural reforms can
play in improving industrial efficiency and increasing attractiveness to foreign direct investment.
More recently, a Policy Brief no. 20, The New Regionalism in Africa: More Than Meets the Eye,
points to the value of regionalism as a vehicle, through confidence building, for attracting
private investment, both domestic and foreign. Earlier this year the Development Centre and
the African Development Bank launched a new annual publication, African Economic Outlook.
This publication sets out the comparative economic prospects of 22 African countries.
Against this backdrop, this study addresses the question of how Africa’s commodity-
dependent countries can formulate and implement “business plans” for export promotion
and diversification towards non-traditional products. The study begins by asking what trade
capacity building means in the African context, with particular focus on how to improve the
competitiveness of African firms. A central feature of the study is to highlight the key role
played by trade support services in facilitating access to international markets, reducing
transaction costs and providing trading knowledge. The results of the six country case studies
confirm that despite a significant improvement in policy stances over recent years, the
inadequate provision of trade support services and lack of coherence among government
policies remain major obstacles to the expansion of overseas businesses. Transaction costs
in key areas such as trade finance, transport and communication, and information are still
high and impose a heavy burden on private sector developments.
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