Value Chains A Strategy for Re-Industrialization

Transcription

1 Value Chains A Strategy for Re-Industrialization July 2016 Rainbow Hotel Bulawayo, Zimbabwe Monnane M. Monnane, PhD. SADC Secretariat

2 Structure of the Presentation Background (RISDP and SADC Industrialization Strategy and Roadmap) What is a Value Chain? Experiences (Japan, China, Africa and SADC). Challenges Public Private Coordination of Value Chains Conclusions

3 Background Focus on value chains is appropriate because it is in line with: Revised Regional Indicative Strategic Development Plan (RISDP), which places industrialization at the centre stage of the SADC regional integration agenda. RISDP perceives Industrialization as a future engine for growth and development in SADC and a key instrument to deepen integration. SADC Industrialization Strategy and Roadmap , approved by the SADC Summit of Heads of State and Government in April 2015 in Harare, Zimbabwe. This is a long term major economic and technological transformation scheme that identifies three priorities for accelerated industrialization. o Agriculture-led growth including agricultural value chains; o Natural resource-led growth including minerals beneficiation and processing, also linking into value chains, both regional and global; and o Enhanced participation in domestic, regional and global value chains.

4 Value Chains: What are they? In simple terms, a value chain identifies the full range of activities that firms undertake to bring a product or a service from its conception to its end use by final consumers (Figure 1.). At each step in the chain, value is added in some form or other.

5 Figure 1: Mining Value Chain

6 Regional and Global Value Chains: What are they? Driven by offshoring and mounting interconnectedness, the activities that make up the value chains of many products and services have become increasingly fragmented across the globe and between firms. Various tasks along the production chain can be carried out in distant locations, depending on the respective comparative advantages of different countries. The interconnected production process across various countries is often referred to as a global value chain or an international production network (See Boeing Example next slide).

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8 Experiences Elsewhere: Japan, East and Southeast Asia Japanese investors started putting up component production bases in East and Southeast Asia to access locational advantages (labour). The final assembly took place in a third country from where the finished products were exported either back to the home country (Japan) or to the global markets under the Japanese brand. Due to cost advantages associated with fragmentation of production, Japanese final products were then able to compete with the products from other developed countries. Overtime, multinationals from other developed countries, aiming at improving their cost competitiveness, flocked the region and soon spread to other regions as well. What emerged from this phenomenon were global value chains (GVCs) with production of a product spread across countries, regions and continents gathering cost advantages to become globally competitive.

9 Experiences Elsewhere: China Cross-border production networks were developed in East Asia with China as the anchor of the production networks. These networks have taken advantage of low wages (Vietnam, Cambodia and Indonesia) and large labor forces (China) with technology driven from lead countries like Taiwan, China and the Republic of Korea and logistics and services from Singapore and elsewhere. The has resulted in the development of among others, the tyre industry (previously dominated by Bridgestone (Japan), Goodyear (United States) and Michelin (France); LED industry and the fastener industry.

10 Africa Potential Benefits of Value Chains: % of Perceptions on the greatest opportunities arising from participation in Global Value Chains (ADB, 2013) Job Creation from new activities Increased Integration in Integrated Trade Attracting foreign Direct Investment Emergence of Domestic Higher Value Added Activities Skill and Technology Spillover through integration with external suppliers and purchases 14 Possibility to leap Increased regional frog into specific trade acitivities without having to develop vertically integrated docmestically 2

11 The SADC Region Study on profiling mineral beneficiation - Potential regional value chains: Regional Energy Mineral Value Chain (coal, oil, gas - Power generation as well as for manufacturing polymers). Regional Ferrous Minerals Value Chain (iron ore, zinc, chromium, nickel, etc - Steel production which can be used in manufacturing processes and in infrastructure development. Regional Base-metals Mineral Value Chains (Copper and aluminium can be used to produce products that can be used in manufacturing processes and infrastructure development. Regional Fertilizer Mineral Value Chain: (nitrogen from coal and gas, phosphate and potassium - fertiliser production). Regional cement value chain (Limestone resources could be used to develop various cement plants in the region) Regional Value chains on minerals where SADC has producer power (Diamonds, Platinum Group Metals and Cobalt).

12 The SADC Region (continued) Feasibility Study on Regional Manufacturing of Medicines and Health Commodities Potential Value Chains Anti-retrovirals (ARV) value chain (To produce the required amount of ARVs for this massive expansion of this treatment). Anti-TB drugs value chain (To produce medicines to treat Malaria). Artemisinin Value Chain (To produce medicines to treat Malaria). Condom value chain (To develop the condoms value chain, the rubber plantations in the Democratic Republic of Congo need to be revamped). Bed Net value chain: A to Z Mills (in Tanzania) can provide insecticide-treated netting in rolls to other knitting factories elsewhere in SADC, where the final bed nets could be made. Feasibility Study on Agro processing is at conception stage.

13 Other Value Chains During the development of the Action Plan, the following value chains were identified by country: Value Chain Agro-Processing Cluster Soya Sugar Meat products (poultry and beef) Cassava Dairy products Other food and drinks Fish and fish products Countries South Africa, Zimbabwe, Zambia, DRC Malawi, Mozambique, South Africa, Swaziland, DRC, Tanzania, Zambia, Zimbabwe, Mauritius, Botswana Botswana, South Africa, Zambia, Zimbabwe, Namibia, Swaziland Angola, DRC, Mozambique, Tanzania, South Africa Madagascar, South Africa, Namibia, Tanzania, Malawi, Botswana, Zimbabwe, Swaziland Angola, DRC, Lesotho (maize), Mauritius (sea food), Zambia (oil seeds and livestock products), Malawi (oil seeds), South Africa, Zimbabwe, Swaziland, Madagascar Angola, Mauritius, Mozambique, Namibia, Seychelles, South Africa, Zambia, Madagascar

14 Other Value Chains (cont d) Fish and fish products Horticulture (Fruits, Vegetables and Flowers) Wildlife (game meat and hide processing) Forestry Timber and non-timber forest products (medicinal, cosmetics, essential oils and other herbal products) Angola, Mauritius, Mozambique, Namibia, Seychelles, South Africa, Zambia, Madagascar Swaziland, Lesotho, Zambia, South Africa, Madagascar, Zimbabwe, DRC Botswana, Namibia, South Africa, Zambia, Zimbabwe DRC, South Africa, Angola, Madagascar, Swaziland, Mozambique, Zimbabwe, Zambia, Namibia, Tanzania

15 Other Value Chains (cont d) Minerals and Beneficiation Cluster Energy Mineral (including polymers) Ferrous Minerals (Iron/Steel) Base-metals Mineral (Copper, Aluminium, Nickel, Cobalt) Fertilizer Diamonds Platinum Cement Soda Ash Mining machinery Angola (oil), Botswana (coal), DRC (oil), South Africa (coal), Angola (oil), Mozambique (gas), Tanzania (gas), Madagascar, Zimbabwe, Swaziland (coal), Malawi Angola, DRC, South Africa, Tanzania, Mozambique, Zambia, Zimbabwe, Swaziland DRC, Zambia, South Africa, Namibia, Mozambique, Tanzania, Madagascar South Africa, Zimbabwe, Zambia, DRC, Malawi, Mozambique, Angola, Tanzania Botswana, Namibia, South Africa, Zimbabwe, DRC, Lesotho, Angola South Africa, Zimbabwe South Africa, Zimbabwe, Zambia, DRC, Mozambique Botswana, Zambia, South Africa South Africa, Zambia

16 Other Value Chains (cont d) Manufacturing: Consumer Goods Cluster Leather, Leather Goods and Footwear Clothing and Textiles Capital Goods: Machinery and Equipment Automobiles Botswana, Lesotho, Namibia, Zambia, South Africa, Zimbabwe, Mozambique, Madagascar, Malawi, DRC, Tanzania Botswana, Lesotho, Madagascar, Mauritius, Namibia, South Africa, Swaziland, Zimbabwe, Malawi South Africa, Lesotho, Mozambique, Zimbabwe, Namibia Services Cluster Tourism Financial services ICT Botswana, Mauritius, Seychelles, South Africa, DRC, Tanzania, Zambia, Zimbabwe, Madagascar Botswana, Mauritius, Seychelles, South Africa All Member States

17 Challenges One cannot talk about value chains without talking about challenges regarding participation in value chains. The SADC Industrialization Strategy and Roadmap identifies the infrastructure deficit, the scarcity of skills, especially those essential to progression up the technology ladder, and financing as the key binding constraints to industrialization and by extension, value chain participation.

18 Public Private Coordination of Value Chains Successful development of, and participation in value chains is dependent on close private-public sector collaboration. Government s central role is the creation of an enabling policy and regulatory environment for accelerated industrialization, value chains development and participation with a particular focus on tackling the binding constraints of infrastructure, skills development and financing. Private sector must implement the Industrial Development Strategy (develop national value chains and integrate into the regional and global value chains).

19 Conclusions The rise of the global value chains (GVCs) is reshaping the whole structure of worldwide trade flows. It is no longer true that all, or even the bulk of the value of a country s exports can be assumed to be domestically produced. Even less realistic, of course, would be to assume further that most of the different forms of incomes generated by such production activities are captured by domestic agents. Removing Binding Constraints (Infrastructure, Quality and Maintenance, Skills Development and Financing) is key to developing and ascending the value chains.

20 . THANK YOU Contact: Monnane M. Monnane Cell: