SMEs competitiveness and upgrading: current issues and challenges

No.1

SMEs competitiveness SMEs competitiveness and upgrading: and upgrading:

current issues and challengescurrent issues and challenges

ONUDI – Service de Renforcement des Capacités Commerciales[Service for the the Reinforcement of Commercial Capacity]

Brussels – September 2009

FEKI Rafik

No.2

ContextContext

No.3

The main challenges faced by the agricultural The main challenges faced by the agricultural and food processing industry in ACP and food processing industry in ACP

countriescountries• The agricultural and food processing industry in ACP states is

characterised by:– A predominance of SMEs and micro-businesses, generally badly structured and

poorly organised;– The absence of an environment (institutional, infrastructure, etc.) suited to the

growth of the industry;– The weakness of the supply-side capacities needed to produce competitive

merchandise;– Non-diversified agricultural and food-processing production;– Poor value-added and materials transformation rates: the majority of the

products are exported in a raw or semi-finished state; – Unskilled workforces and obsolete technology; – Difficulty accessing international markets: high transportation costs, poorly

adapted infrastructure, etc.– Problems in complying with OTC/SPS standards.

No.4

Over 90% of goods exports worldwide are industrialised goods (2007)Over 90% of goods exports worldwide are industrialised goods (2007)

Growth in International Trade and the Problem ScenarioGrowth in International Trade and the Problem Scenario caused by the Marginalisation of the SMAs caused by the Marginalisation of the SMAs

Source : UNCTAD, 2008World

Developing Economies

Developed Economies

LDCs

High-Income developing countriesMiddle-Income developing countries

Low-Income developing countries

World Exports, 1980-2007

0.00

2,000,000.00

4,000,000.00

6,000,000.00

8,000,000.00

10,000,000.00

12,000,000.00

14,000,000.00

1980 1990 2000 2003 2004 2005 2006 2007

Year

Mil

lio

ns

of

do

llar

s

No.5

Prioritiesby area

EnergyAnd Environment

Strengthening Commercial skills-

Poverty reduction via Productive activities

Mission- To improve the quality of life of the poor of the world through sustainable industrial development

Programme Components

Industrial policy, Improving the business

and institutional environment

Restructuring and upgrading SMEs Renewable energy

Developing ’female and rural entrepreneurs

Promoting local investment IDEs and partnerships

Developing clusters

Food processing-and value chains

Rural energy for productive ends

Sustainable production in poor communities

Wider take-up of technology

Innovation of Systems, TechnologyManagement and prospecting

Modernising the food-processing-industry for export-

Export Consortium for SMEs

Standards, Measurements, Tests and Quality - SMTQ

Climate change Industrial energy efficiency

Clean and sustainable production

Water management

Montreal protocol

Stockholm Convention

Analysing commercialcompetitiveness policies-

Corporate social responsibility

No.6

No.7

Development of manufacturing capacities (ONUDI)• Industrial policy and infrastructure support• Investment and technology transfer • Development of SMEs• Export clusters and consortia• Productivity and quality• Industrial upgrading and modernisation• Sector-based technological support• Cleaner production, energy efficiency

Standards and compliance auditing (ONUDI)• Developing and harmonising standards• Development of testing services, PT plans• Certification (products and business systems)• Metrology/calibration• Accreditation plans

Incorporation into the multilateral trade system• WHO rules and negotiations• Freeing up trade (customs, documentation)• Infrastructure (transportation, ports)

ONUDI TCB: The Offer

PSDIPTPSDPSDTCBTCBAGRENV

TCBTCBTCBTCBTCB

No.8

No.9

No.10

No.11

No.12

No.13

Strengthening institutional capacities at regional and national levels• Setting up a permanent PRMN management body • Developing the legal and regulatory framework of the Programme• Upgrading the capabilities of the partner structures• Developing management tools and proceduresSupport in designing and implementing funding mechanisms

• Research into improving the businesses’ financial context• Feasibility study for the establishment of two Funds: modernisation and restructuring

Establishing or strengthening regional and national technical capacities• Training 80 consultants specialising in restructuring and modernisation diagnosis

Pilot programme for Restructuring and Modernising 120 food-processing businesses

• Producing 120 modernisation diagnoses• Defining restructuring and modernisation plans• Technical assistance in implementing the action plans

Regional Programme: Modernisation of food-processing industries in Regional Programme: Modernisation of food-processing industries in WAEMU states – PRMN [Restructuring & Modernisation Programme]WAEMU states – PRMN [Restructuring & Modernisation Programme]

€15 million

No.14

• 160 businesses benefiting from the Programme;

• 150 national experts trained in diagnosis and modernisation methodology;

• The Modernisation Office is up and running;

• A national Modernisation Programme has been drawn up and a Modernisation Fund established;

• etc.

Senegal Modernisation Programme:Senegal Modernisation Programme:AchievementsAchievements

No.15

Business

performance INDICATORSINDICATORS IMPACTIMPACT

Tunisia +8% per year for beneficiary enterprises


Industrial ProductionIndustrial

ProductionTunisia +8% per year for beneficiary enterprises


Industrial ProductionIndustrial

Production

Tunisia 500 000 dollars invested per enterprise


Upgrading InvestmentsUpgrading Investments



Upgrading InvestmentsUpgrading Investments

EmploymentEmployment Tunisia+ 5 % per year for beneficiary entreprises

Tunisia+ 5 % per year for beneficiary entreprises

EmploymentEmployment Tunisia+ 5 % per year for beneficiary entreprises

Tunisia+ 5 % per year for beneficiary entreprises

ExportExport

Tunisia + 18 % per year for beneficiary enterprises 11 % of enterprises that have started

exporting did not export before the upgrading programme



ExportExport





Impact of the Industrial Modernisation ProgrammeImpact of the Industrial Modernisation Programme The example of TunisiaThe example of Tunisia

No.16

The purpose of the ONUDI action is to design regional programmes to streamline and modernise industries and services supplying demand in 4 African regions (CEDEAO+Mauritania, CEEAC/CEMAC, SADC and COMESA) divided into 2 phases:

― A launch/start-up phase; and ― A deployment phase at the level of each of the 47 member countries.

Specifically, in the context of the freeing and opening up of the economy of these regions, the aim of the programme is to:

― Support the restructuring drive, competitiveness and the growth of the industries and associated services;

― Stimulate regional integration.

No.17

For greater success in modernising the For greater success in modernising the agricultural and food-processing industry in agricultural and food-processing industry in

ACP countries: Lessons learnedACP countries: Lessons learned• Ensure sustainable actions at all levels of the process;• Involving the private and financial sector at an early

stage of the programme;• Ensuring the process is perfectly adapted to the

country in question;• Gaining and building trust between all stakeholders;• Allocating increased importance to the modernisation

of the business environment as well as to the business itself.

No.18

THANK YOU FOR YOUR ATTENTION

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SMEs competitiveness and upgrading: current issues and challenges