FACILITATING FACILITATING PRODUCTIVE PRODUCTIVE ACTIVITY AND ACTIVITY AND

COMPETITIVENESS: COMPETITIVENESS: Passive and Active Passive and Active

Policies: How to Grow Policies: How to Grow and Alleviate Poverty: and Alleviate Poverty:

Building Building Productive/Export Productive/Export

PlatformPlatformJ. LUIS GUASCHJ. LUIS GUASCH

World BankWorld Bank

Mozambique, February Mozambique, February 20112011

It can be doneIt can be done Yet it requires leadership, commitment Yet it requires leadership, commitment

and bringing in a number of and bringing in a number of stakeholdersstakeholders

Trough a combination of passive and Trough a combination of passive and active policies and programs: active policies and programs: minimum platformminimum platform

Plenty of examples from LAC and Plenty of examples from LAC and othersothers

Increasing Productivity, Increasing Productivity, Productive Actvity and Productive Actvity and Mainstreaming SMEsMainstreaming SMEs Program of policies and instruments needs to Program of policies and instruments needs to

be supported by an educated an intelligent be supported by an educated an intelligent industrial policy, combination of active and industrial policy, combination of active and passive policiespassive policies incentive driven use of public funding gradual and incentive driven use of public funding gradual and

evolving, results orientedevolving, results oriented critical focus on knowledge transfer and qualitycritical focus on knowledge transfer and quality on attracting critical new firms (investment)-ie on attracting critical new firms (investment)-ie

commercialization and processingcommercialization and processing well targeted geographically (provinces) and well targeted geographically (provinces) and

sectoriallysectorially needs certain level of institutionality and capacityneeds certain level of institutionality and capacity focus on both domestic and export marketsfocus on both domestic and export markets phased out, sunset clauses and evaluation of phased out, sunset clauses and evaluation of

results results coherent and coordinated across relevant sectorscoherent and coordinated across relevant sectors

Passive and Active Policies

Passive policies are those focused on removing obstacles to economic activity, on reducing transaction costs, red-tape, improving processes and procedures etc

Active policies are those focused on assisting producers improve productivity/productive activity, on jump starting economic activity and so on-most address forms of market failures

Both are needed, while the passive ones are quite important (particulalrly in Mozambique on processes, procedures, taxes, licences, trade facilitation, land etc), without the active ones the reaction/impact time would be quite long

PlatformPlatform Leadership and problem solving capacityLeadership and problem solving capacity Vision and ObjectivesVision and Objectives Programs/InstrumentsPrograms/Instruments InstitutionsInstitutions EvaluationEvaluation

Taking stock of what you have: building on endowments and Taking stock of what you have: building on endowments and successsuccess

A combination of passive and active policiesA combination of passive and active policies Building through a minimum platform shape to country Building through a minimum platform shape to country

conditions and endownmentsconditions and endownments Sectorial and province focus: building on success-from Sectorial and province focus: building on success-from

byproducts to diversification; differentiated approach for large byproducts to diversification; differentiated approach for large and for small firmsand for small firms

Close collaboration and involvement of private sectorClose collaboration and involvement of private sector Joint public-private undertakingJoint public-private undertaking

ObjectivesObjectives

Overall: Increase productivity, Overall: Increase productivity, production activity, moving up the production activity, moving up the value added chain and the level and value added chain and the level and content/diversity of exports. All content/diversity of exports. All while integrating micro and SMEs while integrating micro and SMEs into the production and value and into the production and value and export chainexport chain

Components of the Components of the StrategyStrategy

Trade Policy and Access to MarketsTrade Policy and Access to Markets Tariff RegimeTariff Regime Free Trade TreatiesFree Trade Treaties

Exportable/Production SupplyExportable/Production Supply Productive/export mappingProductive/export mapping Quality and StandardsQuality and Standards Human CapitalHuman Capital Innovation and Knowledge Transfer, CITEs, TTOsInnovation and Knowledge Transfer, CITEs, TTOs Clusters and value chainsClusters and value chains Discovery and new productsDiscovery and new products

Logistic and Trade Facilitation CostsLogistic and Trade Facilitation Costs Harware: Infrastructure Corridors and Export ZonesHarware: Infrastructure Corridors and Export Zones Software: Associated Services and Trade ProceduresSoftware: Associated Services and Trade Procedures

Social/Productive Inclusion of SMEs: Knowledge TransferSocial/Productive Inclusion of SMEs: Knowledge Transfer ArticulationArticulation HubsHubs ConsortiaConsortia CITEsCITEs Suppliers programs; rverse factoringSuppliers programs; rverse factoring Government ProcurementGovernment Procurement Easy ExportEasy Export

Financial Instruments for Trade and FDI, IncentivesFinancial Instruments for Trade and FDI, Incentives Institutions: Delivery Unit, Export Facilitation, Quality Agency, Knowledge Institutions: Delivery Unit, Export Facilitation, Quality Agency, Knowledge

Transfer Articulation Innovation Agency-Regional focusTransfer Articulation Innovation Agency-Regional focus Overall Investment ClimateOverall Investment Climate

Embedded in a new modern and educated Industrial

Policy Explicit criteria for selection, focalization, use

of resources

Strong emphasis in mainstreaming SMEs into the productive, value and export chain

Strong emphasis also on commercialization and processing

Also on securing new medium large firms in strategic and key areas and sectors

Moving up the value added chain

Adequate job creation emphasis Critical emphasis on knowledge transfer

Access to MarketsAccess to Markets Bilateral and multilateral FTAsBilateral and multilateral FTAs Exchange rates-volatilityExchange rates-volatility Market intelligenceMarket intelligence

Identification of marketsIdentification of markets Identification of product characteristics and standardsIdentification of product characteristics and standards Identification of distributors/buyersIdentification of distributors/buyers Identification of intermediaries/users: (maybe diaspora)Identification of intermediaries/users: (maybe diaspora) Run by technical Ministry (aided by private sector) and Run by technical Ministry (aided by private sector) and

not by State or Foreign Relations Ministrynot by State or Foreign Relations Ministry

Communications and InternetCommunications and Internet Export Promotion AgencyExport Promotion Agency

Productive and Productive and Exportable OfferExportable Offer Quality: services and adoptionQuality: services and adoption

Productivity: knowledge and technology transferProductivity: knowledge and technology transfer InnovationInnovation Value Chain-Clusters-Silos and Cold chainValue Chain-Clusters-Silos and Cold chain Information ICTInformation ICT CITEs can play major roleCITEs can play major role DiscoveryDiscovery Productive/ Export mappingProductive/ Export mapping Evaluate possibilities for efficient import Evaluate possibilities for efficient import

substitutionsubstitution FDI strategically chosesFDI strategically choses Human capitalHuman capital

Infrastructure and Services Infrastructure and Services Logistic PlatformLogistic Platform

HardwareHardware Productive and Export (and Tourism) corridors:Productive and Export (and Tourism) corridors: Port and AccessesPort and Accesses Regional exit points: hubs ports and airportsRegional exit points: hubs ports and airports Logistic terminals-networkLogistic terminals-network SilosSilos AccessAccess Export/Special economic zonesExport/Special economic zones Cross BorderCross Border Rural Electrification for Productive purposes-moving up value chainRural Electrification for Productive purposes-moving up value chain

SoftwareSoftware Network of Service sites, hubsNetwork of Service sites, hubs Single windowsSingle windows Dedicated lines: PerishablesDedicated lines: Perishables Privileged lanes: Track recordPrivileged lanes: Track record Customs and InspectionsCustoms and Inspections WarehousingWarehousing Hubs-MarketsHubs-Markets Cold ChainCold Chain Multimodality LawMultimodality Law Transport services: TruckingTransport services: Trucking Certifications on quality and phytosanitary complianceCertifications on quality and phytosanitary compliance Digitalization of Certificates of Origin Digitalization of Certificates of Origin

Employment Impact of a Decrease of 12% points in logistic\infrastructure costs across

industries with different Capital/Labor Intensities

Sector Demand Increases

Employment Increases

Agro-Industry 9% 10%

Wood and Furniture

10% 12%

Textiles 6% 8%

Leather and Shoes

12% 10%

Mining 7% 2%

Global PRW Capacity in 2008

Source: IARW

Geographic Zones from Peru: Economic Geographic Zones from Peru: Economic Potential, Productive Efficiency, Access Potential, Productive Efficiency, Access

Costs, PovertyCosts, Poverty

Knowledge Transfer and Innovation Program

To support using existing knowledge, discovery efforts and diversification

Minimum package-need to be not too ambitious

Build on strenghts and capacities Focalized support, geographical (provices) and

sectoral Educated criteria to select sectors support Matching grants proven effective Separate objectives: i) knowledge transfer-high

priority; ii) creation/adaptation of knowledge; iii) comercialization and processing

Strategic FDI: Paralel Approach for small and

larger firms Critical to attract generously, new firms

strategically in terms of location and products with particular focus on commercialization and processing (particularly related to agriculture)

For success a parallel approach is needed: to improve and articulate micro and SMEs and second to support and attrac medium larger firms higher up in the value chain

Centers for Knowledge Transfer

In particular CITEs (i) facilitate the transfer of knowledge and existing technologies (off-the-shelf) to enterprises; (ii) address missing links in sectoral value chains and quality issues; (iii) identify bottlenecks and opportunities for further innovation of products and processes at the sectoral level; (iv) facilitate the commercialization of products; (v) provide value added services not reasonably available; and (vii) provide specialized training; (viii) access to electrification.

CITEsCITEs Centers of technology and knowledge transfer, mostly oriented to Centers of technology and knowledge transfer, mostly oriented to

serve SMEsserve SMEs In situIn situ Offer technical services, knowledge and technology transfer, quality Offer technical services, knowledge and technology transfer, quality

and conformity to standards, testing, assist in articulation and and conformity to standards, testing, assist in articulation and export , and trainingexport , and training

Highly focused on products and location:agro industry, acquiferous, Highly focused on products and location:agro industry, acquiferous, metal-mechanic, textiles, software, electronic instruments, jewelry, metal-mechanic, textiles, software, electronic instruments, jewelry, tourism, paper and pulp, leather and shoes, furniture and wood, art tourism, paper and pulp, leather and shoes, furniture and wood, art craft, fruits, packaging, software, logisticcraft, fruits, packaging, software, logistic

Private run/managed, but public-private undertakingPrivate run/managed, but public-private undertaking Capital equipment grant, operating costs through user feesCapital equipment grant, operating costs through user fees Includes new product CITEsIncludes new product CITEs Results sample: new products (20%), new exporters (25%), Results sample: new products (20%), new exporters (25%),

productivity increases (80%)productivity increases (80%)

Spain (pioneer), Peru, Mexico, Colombia, Uruguay, Dominican Spain (pioneer), Peru, Mexico, Colombia, Uruguay, Dominican Republic, Brazil, Croatia, Slovenia, Honduras, etc Republic, Brazil, Croatia, Slovenia, Honduras, etc

Strategic Alliances:between

To support adaptation and new knowledge generation

Industry or/ and Research Centers/Universities Large/medium firms and SMEs Consortias Technology Transfer Offices (TTO) Can be supported by matching funds type

program Results and productive focus and job creation

oriented IPR issues need to be resolved at the start Public-Private undertaking Selective: building on “success”

Special Economic/Export Zones

Can be quite effective if properly designed Addresses infrastructure and bureaucracy

issues Multipurpose-Going beyong manufacturing

(includes services and agro-industry) A mix of export and domestic market

focused activities Limiting reliability on unsustainable fiscal

incentives

Mainstreaming SMEsMainstreaming SMEs Easy ExportEasy Export ArticulatorsArticulators HubsHubs Suppliers programs and reverse factoringSuppliers programs and reverse factoring Quality, quality and qualityQuality, quality and quality Knowledge TransferKnowledge Transfer Storage and PackagingStorage and Packaging CITEsCITEs Special Economic ZonesSpecial Economic Zones Government Procurement incentivesGovernment Procurement incentives SilosSilos Rural Electrification for productive purposesRural Electrification for productive purposes Internet access/ CentersInternet access/ Centers In situ assistanceIn situ assistance Working with communities and local governmentsWorking with communities and local governments

Hubs and Storage Sites/Silos

Critical element of rural development success in poor East Asia countries

Specially fit for disperse productive activity and costly access to markets, and to reduce losses

Intermediate stage-quasi wholesale market: strategic location: designed for facilitate distribution and access to markets and reduce losses

It also addresses issues of scale packaging and cold chain

Starts implemented by public sector phased out to private sector

Articulators I Articulators I For a country where production is highly fragmented as in

Mozambique, articulation initiatives are critical to secure scale benefits and knowledge transfer, all likely inducing much needed significant productivity gains and products fit for domestic and export markets and increased entrepeneurship and also have a strong demonstration effect

Usually specialized individual agents, can be trained, NGOs Usually specialized individual agents, can be trained, NGOs etcetc

Functions: identifying communities of small producers and Functions: identifying communities of small producers and facilitating associativity securing scale; transfer information facilitating associativity securing scale; transfer information and quality; identifying intermediaries. and quality; identifying intermediaries. They can assist on finance, accounting, leadership, technical (production know-how, fertilizers, seeds, and soil treatment); marketing (access to local markets, exports, linking with buyers, traders or specialized wholesale and distribution firms (resorts, restaurants supermarkets); secure scale effects consolidating land, through various forms of associativity and even facilitate the financing working with microfinance institutions, and NGOs

Articulator II: high valueArticulator II: high value Who are they? They are usually medium/large, Who are they? They are usually medium/large,

formal firms: The usual suspects plus others formal firms: The usual suspects plus others through diggingthrough digging

Larger firms up on the value chain or Larger firms up on the value chain or distriutors and exporters a (often looking for distriutors and exporters a (often looking for scaling up), buyers, firms higher up in the scaling up), buyers, firms higher up in the value chain (pulp, juices, canning etc), foreign value chain (pulp, juices, canning etc), foreign firms, chains, firms in related businessfirms, chains, firms in related business

Functions: transfer know-how, quality issues, Functions: transfer know-how, quality issues, lock in contracts ex-ante (that can be used for lock in contracts ex-ante (that can be used for securing finance)securing finance)

Quality, reliability and scale are the critical Quality, reliability and scale are the critical factors for Articulators II to get involved factors for Articulators II to get involved

For agro-sector: Typical For agro-sector: Typical Assistance to FarmersAssistance to Farmers

Specific focus on commercialization and Specific focus on commercialization and processingprocessing

Soil preparation, seed selection and Soil preparation, seed selection and treatment, harmonization and planting treatment, harmonization and planting density, timing of production, use of density, timing of production, use of fertilizers, fito-sanitary control and testingfertilizers, fito-sanitary control and testing

When applicable, procedures for When applicable, procedures for phytosanitary permits, organic certification phytosanitary permits, organic certification and the certification itselfand the certification itself

When applicable FSC certification for forestry When applicable FSC certification for forestry producers producers

Range of productsRange of products All sort of fruits, vegetables and horticultureAll sort of fruits, vegetables and horticulture Animal related, meat, cheeses, lactics, fiberAnimal related, meat, cheeses, lactics, fiber Fish farming, trout, tilapia, shrimp and Fish farming, trout, tilapia, shrimp and

other indigenous speciesother indigenous species Peanuts and other nuts, berries, medicinal Peanuts and other nuts, berries, medicinal

plants, potatoes, wood and related products,plants, potatoes, wood and related products, GrainsGrains Art crafts, jewelry, watches, tourism, Art crafts, jewelry, watches, tourism,

textiles, paper and pulp, leather, furniture, textiles, paper and pulp, leather, furniture, and related productsand related products

Results: An example of Results: An example of mainstreaming micro and mainstreaming micro and

SMEs into productive SMEs into productive activity and exports activity and exports

Within 24 months, in the Peru program Within 24 months, in the Peru program 67,000 small producers were articulated, 67,000 small producers were articulated, increasing sales by US$ 65 million, increasing sales by US$ 65 million, exporting over 50% of their products exporting over 50% of their products (tripling their earnings)(tripling their earnings)

Profile: Small and micro firms including Profile: Small and micro firms including farmers (about 1 hectare holdings), farmers (about 1 hectare holdings), animal husbandry (meat, cheeses, animal husbandry (meat, cheeses, fibers), art crafts , textiles, fish, wood, fibers), art crafts , textiles, fish, wood, tourism, minerstourism, miners

Through about 100 articulatorsThrough about 100 articulators

Other Programs for Mainstreaming SMEs

Suppliers programs and reverse factoring

Government procurement, favoring consortia with SMEs , or SMEs

Easy ExportEasy Export Export by postExport by post From any part of the countryFrom any part of the country Avoids all intermediation, custom agents Avoids all intermediation, custom agents

and logistic costsand logistic costs Filing one page trough internetFiling one page trough internet Limits in value to 5,000 US$Limits in value to 5,000 US$ Limits in size 30 to 50 KilosLimits in size 30 to 50 Kilos But unlimited sendsBut unlimited sends Insurance availableInsurance available Extraordinary impact on micro and SMEsExtraordinary impact on micro and SMEs

RESULTS EASY EXPORTRESULTS EASY EXPORTNúmber of Firms that used Númber of Firms that used

the service within 2.5 years of the service within 2.5 years of implementationimplementation

2,000 new exporting firms (mostly micro/small firms)

40% from provinces

60% from the greater capital area

20 new countries

25 new export products

Over US$2.5 million exported annually

Products ExportedProducts Exported

Contenido del Envío ParticipaciónParticipación

Acumulada

Bisuteria 30.21% 30.21%Productos Naturales 16.66% 16.66%Ropa 14.90% 14.90%Joyeria 10.29% 10.29%Insectos Disecados 3.04% 3.04%Instrumentos Musicales 2.32% 2.32%Ceramicos 1.93% 1.93%Pisco 1.20% 1.20%Textiles (Alfombras, arpillería, otros) 1.16% 1.16%Libros 1.16% 1.16%Jugueteria 1.10% 1.10%Tallas en Piedra 0.94% 0.94%Postales 0.73% 0.73%Calzado 0.51% 0.51%Cabello 0.41% 0.41%Artesania 0.32% 0.32%Litografías 0.29% 0.29%Carteras 0.28% 0.28%Medicina 0.19% 0.19%Otros 12.37% 12.37%

Total 100.00% 100.00%

DiscoveryDiscovery

QuinoaQuinoa Sauco, aguaymanto, coca, asparagus, Sauco, aguaymanto, coca, asparagus,

quinoa, tropical products, acquiferous, quinoa, tropical products, acquiferous, white moss, sacha-inti, medicinal plantswhite moss, sacha-inti, medicinal plants

Value added productsValue added products BrandBrand Denomination of OriginDenomination of Origin Specialized CITE for new productsSpecialized CITE for new products

Financial instruments for Financial instruments for ExportingExporting

Export insuranceExport insurance Pre and Post export financingPre and Post export financing Credit to buyers abroadCredit to buyers abroad ROSCOS or group guaranteesROSCOS or group guarantees

InstitutionalityInstitutionality Strong leadership at highest level and political Strong leadership at highest level and political

commitmentcommitment Led by a lean Delivery Unit with problem solving Led by a lean Delivery Unit with problem solving

capacitycapacity Execution by strong Unit at MPD and supported Execution by strong Unit at MPD and supported

by Knowledge Transfer and Articulation, Export by Knowledge Transfer and Articulation, Export Promotion, Quality, and Infrastructure agencies Promotion, Quality, and Infrastructure agencies (to be setup) (to be setup)

With a Board composed by mix private sector and With a Board composed by mix private sector and public agentspublic agents

Capacity and appropriate resourcesCapacity and appropriate resources Coordination capacityCoordination capacity On the background are strategy for education On the background are strategy for education

and trainingand training

Functions of Delivery Unit (DU)

A key role of the DU is accelerating 'lagging' programs. It has led the reform program from the center by: Monitoring Targets, which set measurable goals Monitoring Plans, which are used to manage delivery and

set out the key milestones and trajectories Monthly reporting on key themes Stocktakes, which the Prime Minister holds every 2/3 months Priority reviews, to check the reality of delivery at the

frontline Problem-solving/Corrective action, where necessary Delivery reports, summarizing the government's progress on

delivery every six months. The process of 'unblocking' selected delivery outputs

entails an quick turnatound ( a week), with a team comprised of both internal and external members, and the production of a confidential report to the Prime Minister.

Location of Delivery Unit The unit should be kept simple and relatively lean with a

backbone of skilled analysts. Direct access to the political leadership, in order to be able to initiate authoritative and binding problem-solving meetings of senior policy makers and senior civil servants, is important.

For example:In the UK, the PMDU was first established in the Prime Minister's Office, but has gradually relocated toward the Treasury (and is now jointly controlled) and focuses on 30 Public Service Agreements;

In Indonesia, the Delivery Unit - the Presidential Working Unit for Supervision and Management of Development (UKP4) - is located in the Vice President's Office and focuses on delivery of the 11 major priorities of government;

In Malaysia, the Delivery Unit is located in the Prime Minister's Office, reflecting the implementation and service delivery leadership role of the PM, focusing on the KRAs.

The equivalent unit in Chile is located in the President's Office.

ANNEX: Mozambique Context

On Trade and Access to Markets

Relatively well positioned.

Tariffs. This Mozambique’s MFN applied (import-weighted) tariff averages (including the ad-valorem equivalent or AVE for specific tariffs) have declined from 17.4% from 1995-99, to just 9 % in 2005, below the regional and low-income comparators’. The average applied tariff, namely the tariff taking into account Mozambique’s membership in the Southern African Development Community (SADC), is slightly lower than its MFN tariff and is destined to fall further given that SADC is envisioned to become a customs union by 2010 and a common market by 2015. In addition, as a member of WTO, Mozambique has now bound 100% of its tariff lines.

Market Access. With SADC, EBA, GSTP, AGOA and EPA

Mozambican firms can have access to markets in 14 Southern Africa countries, the United States and the 27 countries of the European Union. Overall it represents access to 1 billion people and a GDP of US$24 trillion

But do not forget hungry China!!!

Need to develop (expand) productive/exportable offer:

goods and services

Sectoral (and geographical) focus Agribusiness: fruits, nuts, poultry, fisheries etc Wood related products Tourism Light manufacturing and spillovers from mega

projects Textiles and apparels Artcraft

Exploiting Linkages across sectors (ie agrobusiness, artcraft and tourism)

The National Quality System

National Accreditation Body Accreditations

Calibration certificate required for laboratory accreditation

Accreditation body standards

Definition of units (may be required in standards) National Metrology Institute

Calibration certificate Certification

Inspection certificate Testing report

Standards required for certification

Certification body

standards

Consumers and the general public

Enhanced product quality and compatibility Enhanced safety, health Decreased environmental impact

Enterprises

Inspection body

standards Testing

laboratory standards

Calibration laboratory standards

Calibration certificate

Certification bodies Inspection bodies Testing laboratories Calibration laboratories

National Standards Body/Bodies

Benefits

standards and definitions conformity assessment processes standards and definitions conformity assessment processes

Closing information gap…

At a minimum, Mozambican producers/exporters would need to close the following information gaps to make their products attractive to foreign importers:

characteristics of products demanded by trade partners-current and potential

how products are kept to fresh or fresh-frozen; how calibration needs are secured; good information on the packaging; good information on logistics and deliveries; good service in terms of logistics and export processing; regular predictable supplies; regular interactions with buyers; how certification of quality and compliance with standards

are secured.

Need to address… In situ services: mobile units Measurements Inspection Certification Acredditation Reciprocity protocols Issuance of norms, product IDs Phyto sanitary support Advocacy a culture of quality

On Developing the Quality System

i) advocacy efforts showing the importance of quality and developing a culture of quality; ii) revamping INNOQ, with enough resources to gradually be able to perform its mandate; iii) establish partnerships with South Africa labs and quality agencies to develop and transfer capacity and know-how; iv) establish a system of mobile labs so that service can be provided in situ; v) systemically issue normative about product standards in trade country partners; vi) special emphasis in phyto sanitary agreements; vii) harmonize standards at international levels; viii) secure accreditation with international bodies; ix) product IDs

Articulating Efforts in Mozambique

Some of the main articulators are NGOs, Producers Associations, private sector firms, some Governments agencies and so on, such as, TECNOSERVE, SIGUAMA, AICAJU, IKORU. CLUSA, AIA. Those efforts in a variety of forms, extent and success are presents in the following product sector cashews macadamia, peanuts, fruits and horticulture (mangos, carrots, onions, papaya, tomatoes, beans, maize, soy beans), poultry, animal feed, coco, wood products, eco-tourism. The beneficiaries tend to be small family firms half to four hectars, articulation size of about 20. However few have transferred quality standards or fair trade and organic certification, although is in the support strategy. For example TERCNOSERVE, operating in the Beira corridor, has articulated 1,800 producers into: 94 association, selling about US$1 million, with an average earnings increase of 30% in 18 months.

Others are AIA in the nuts sector and UGC, Abilio Anutunes, and Belos Horizontes in the poultry sector

Possibles CITEs in Mozambique

Nuts Poultry Fruits Horticulture Fisheries Textiles Tourism Artcraft Discovery: Transformation

Trade Facilitation I The environment for trade facilitation while

improving remains highly contentious and a concern stated by most traders in Mozambique. There are a number of issues that increases costs (either direct or indirect through time consumed and losses-opportunity and real through spoilage of merchandise). While each of the contentious elements might not make or break a deal-relatively individual low cost, the combination or sum of them all do amount to a considerable amount with real impacts on competitiveness

Trade Facilitation Issues II

Cross borders issues: Extent of Pre-shipment inspections, use and cost of scanners, certificate of origin, custom inspections, permission to export from MIA, certification of EPZ

Finance issues: VAT refund, letter of credit procedures, restrictions on access and payments of foreign exchange, multiple and cascading taxes

Documentation There is not a single SADC document for imports and exports; Required declarations cannot be submitted electronically.. . Payments: Payment compensation are not able to be made from non-paid approved reimbursements, Payments are not able to be made electronically

Supporting Services: Withholding tax, 10% on transport firms not registered in Mozambique; availability and effective services on quality and standards certification including phyto-sanitary for perishables; transport and air service domestic and international; storage and depot capacity; customs services and fines procedures; availability and access to the cold chain-freezers, refrigerated storage and refrigerated transport is most scarce in Mozambique; reliable transport service; lack of multimodal operators; packaging services and provision and a: lack of understanding and of packaging services for exports and labeling

All those issues needs addressing. Each one them has a relatively small impact-with some exceptions-but the sum of them all add considerable adverse impact on logistic costs, and can hamper the marketing of Mozambique as an export friendly country

Logis tic Perform ance Index, 2007

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Infrastructure Focus

Corridors framework and selected feeder roads

Key priority Maputo-SA corridor: Port and border crossing

Nancala corridor: Port and West expansion, railroad but…

Beira corridor: Port and West expansion Jurisdiction issues, associated services in

ports (cold chain and storage), equipment, consolidation and so on

Air Connectivity Improve international air access and the domestic services by: For both tourism and agrobusiness (perishables goods) it is

essential to have an effective coverage of air service both domestic and international, now lacking. For that it will be necessary to:

(i) Continuing to implement 5th freedom rights for neighboring countries (allowing for instance British Airways, KLM and Air France to fly from other African cities to destination(s) in Mozambique) in line with SADC protocol agreements;

(ii) Entering into code share agreements with large airlines on key

routes to Europe. (iii) Approaching LAM with a proposal to break off its domestic

service and either reinvest and recapitalize or privatize management;

(iv) Bring other players into the domestic market to increase supply and competition.

Minimum PlatformThe completion and set up of the Minimum Platform should help

MSMEs to overcome technical barriers to trade and develop business in both domestic and foreign markets. The ideal platform should include:

1) minimum Quality, Standards, Testing, and Metrology (QSTM) infrastructure;

2) ICT-based proactive trade information system (PTIS)

3) development of the market of products and market development services for SMEs;

4) rationalization of trade support structures and integration of their activities with those of investment promotion services. A quick assessment of the gaps between the Mozambique current trade facilitation infrastructure and the MITEP pillars reveals the following:

Short Term Short Term: Critical focus on the following: Produce a National Export Strategy Restructure IPEX Restructure INNOQ Create Unit of Articulation and Knowledge Transfer Set up about three CITEs: Agro-Industry (select), Poultry, Tourism Implement MITEP Facilitate the availability of Export Financial Instruments:

Insurance and pre and post export financing Expedite and eliminate controls on all transit cargo, except for

tampering at exit Aggressive e-trade initiative allowing the electronic filing of trade

documents and electronic payment, information, procedures… Single document for SADC Simplify Tax system and structure

Short Term-Institutionality

Appoint leader Create Delivery Unit Action based National Production and Export

Strategy Restructure IPEX Restructure INNOQ Set up Minimum Platform Revisit support of quality and certification

agro related products Establish Knowledge Transfer and

Articulation Unit

On INNOQ Overall as mentioned the quality system, while

key for the success of any export initiative is perhaps one of the weakest link in the export platform in Mozambique. As a result INNOQ requires substantial revamping, refocusing and upgrading in all elements, issuance of norms and standards, provision of metrology, testing and certification and on securing effective accreditation. It needs to secure partnerships with a major South Africa labs to transfer knowledge and capacity, create a mobile fleet of labs and service, so, as to effectively serve the major areas of the country; partner with major firms operating in Mozambique to leverage their own quality services (spare capacity) and so on

On IPEX It should play a major role as the advocate and agent of change in

trade facilitation bottlenecks, in reporting and disseminating best practices, in working with customs to improve client oriented service

Develop expertise and an action plan in trade promotion, identifying potential target markets, players and distributors and define priority markets, conduct market studies, devise market entry strategy. Also implement strategy for marketing of Mozambique theme, brand and country image; for facilitating managerial entrepeneurship and export culture; and in the support export efforts and providing associated export services.

IPEX ought to have coverage in the key areas of the country-such as the three key corridors. On its management structure and focus best practices lessons (Lederman 2007) show that it should be lead and managed in a public-private manner but with a considerable presence of private sector in the Board. It does require corresponding public sector financing. And on the focus the emphasis in terms of both, sectors and type of firms (potential exporters) and on productive activities

On Agro products

Jurisdiction and Coordination on Quality and Standards in Agriculture related Products.

Given the current and potential importance of the agribusiness sector, it is essential that the jurisdiction and capacity of the associated services be revisited. They are currently bottlenecks in the fisheries and fruits sectors among others

Knowledge Transfer Unit Articulation, Transfer of Knowledge and

Value Chain Support and De-regulation Agency

Finally, there is a need to create or assign jurisdiction to existing institution, of a unit in charge of two critical functions: articulation and knowledge transfer efforts and so to launch and administer those programs. While IPEX could be an option, the danger is that it might be distracting from it core functions. It would be preferred to create a new unit or to assign it to a unit in the Planning Ministry.