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The Role of the Private Sector,Soft Infrastructure and

Making Countries Competitive Beyond the roads and bridges

2010

Ms Patricia Francis Executive Director

ECOWAS Aid for Trade Meeting

World Bank’s Prospects for the Global Economy

Global Economic Prospects underestimated crisis

World 2009 2010 2011

GEP2008 3.6 … …

GEP2009 0.9 3 …

GEP2010 -2.2 2.7 3.2

High Income 2009 2010 2011GEP2008 2.6 … …

GEP2009 -0.1 2 …

GEP2010 -3.3 1.8 2.3

Dev. Countries 2009 2010 2011

GEP2008 7 … …

GEP2009 4.5 6.1 …

GEP2010 1.2 5.2 5.8

Sources: GEP 2008-10 (except interest rates and oil prices)

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ECOWAS Aid for Trade Meeting

Socio-economic Impact of the GFC for developing countries

Direct Social Impact (short term):

• Additional 76-90 million people living on less than $1.25 a dayduring 2010• Additional 30 to 50 thousand children deaths from malnutrition during 2009 in Africa

Indirect Social Impact (short and medium term)

•Reduced Government revenue in developing countries, includingdirect taxes, trade-related revenues, etc.

•Increased Government expenditures, including debt-services

•Direct Impact well understood but indirect impact not adequately

focused on by the aid community.

ECOWAS Aid for Trade Meeting

Impact of the Crisis on LDC trade

2007-2009 Export Earnings for LDCs

0

5000

10000

15000

20000

25000

30000

35000

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45000

US

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on

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All Products Crude OilSource: ITC TradeMap

Reporting Countries: Australia, Bolivia, Brazil, China, Chinese Taipei, Colombia, El Salvador, EU27 (less Belgium), Iceland, Japan, Mauritius, Mexico, Singapore,

Switzerland, Thailand, Turkey, United States of America

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ECOWAS Aid for Trade Meeting

Medium-Term Impacts of Primary Commodity Prices in ECOWAS

Cocoa 45%Ores,

slag and ash8%

Rubber8%

Wood6%

Cotton4%

Rest29%

ECOWAS export composition, excluding mineral fuels

Diversification of Exports –

number of exported products

Exporter Within 75%

Benin 7

Burkina Faso 2

Cape Verde 24

Côte d'Ivoire 11

Gambia 21

Ghana 18

Guinea 3

Guinea-Bissau 1

Liberia 2

Mali 1

Niger 5

Nigeria 1

Senegal 35

Sierra Leone 13

Togo 19

ECOWAS Aid for Trade Meeting

Medium-Term Impacts of Primary Commodity Prices in ECOWAS

020406080100120140

0

100

200

300

400

500

US

cen

ts/lb

Copper -US cents/lb

Crude Oil -USD/barrel

US

D/b

arre

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Cocoa - US cents/lb

Cotton - US cents/lb

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ECOWAS Aid for Trade Meeting

Crisis’ Impacts on Exports from Least Developed Countries

Table: LDC Export Performance for Q1 to Q3, Excluding Crude Oil (USD Billions)

Source: ITC TradeMapPlease note that intra-regional trade is not accounted for.Reporting Importers: Australia, Bolivia, Brazil, China, Chinese Taipei, Colombia, El Salvador, EU27 (less Belgium), Iceland, Japan, Mauritius, Mexico, Singapore, Switzerland, Thailand, Turkey, United States of America.

Growth in Value Growth Rate

2008 Q1-3 2009 Q1-3

2007-2009

Q1-3 2008 2009 2007-2009

LDC 6.124 (4.047) 2.077 22% -12% 4%

LDC-WTO 4.979 (2.408) 2.570 21% -8% 5%

LDC non-

WTO 1.183 (1.730) (0.547) 28% -32% -7%

Developing

Countries 441.896 (716.974) (275.077) 18% -25% -6%

World 2,340.555 (4,348.331) (2,007.775) 17% -28% -8%

ECOWAS Aid for Trade Meeting

Crisis’ Impacts on Exports from Least Developed Countries

Table: Volume Changes for LDC Exports (2008-2009) – Excluding crude oil

Source: ITC TradeMapNote: Crude oil comprised 55% of LDC exports in 2008Reporting Importers: Australia, Bolivia, Brazil, China, Chinese Taipei, Colombia, El Salvador, EU27 (less Belgium), Iceland, Japan, Mauritius, Mexico, Singapore, Switzerland, Thailand, Turkey, United States of America

Share of Exports

2008-2009

Q1-Q3 Y-o-Y Growth

HS2 Commodity Volume Values

Total All commodities 100% 2.6% -12.0%

61 Apparel, knit 22% -0.7% -1.8%

62 Apparel, not knit 17% -1.3% 0.5%

27 Mineral fuels, oils, distillation products, etc 13% -19.0% -34.1%

26 Ores, slag and ash 8% 24.7% -22.4%

74 Copper and articles thereof 4% 59.2% -7.3%

03 Fish, etc 4% -0.7% -17.9%

09 Coffee, tea, mate, etc 2% 8.1% -7.2%

44 Wood, etc 3% -28.2% -40.1%

12 Oil seed, oleagic fruits, grain, seed, fruit, etc, nes 2% 34.7% 27.2%

24 Tobacco 1% 11.2% 39.4%

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The World Bank recently released the 2010 Logistics Performance Index (LPI) – a multidimensional assessment of logistics performance,rated on a scale from one (worst) to five (best). Where do ECOWAS members find themselves?

COUNTRY Rank Index

Germany 1 4.11

Singapore 2 4.09

South Africa 28 3.46

Senegal 58 2.86

Benin 69 2.79

Togo 96 2.60

Guinea 97 2.60

Haiti 98 2.59

Nigeria 100 2.59

Yemen 101 2.58

Niger 106 2.54

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Source: Connecting to Compete 2010Trade Logistics in the Global EconomyThe Logistics Performance Index and Its Indicators

COUNTRY Rank Index

Côte d'Ivoire 109 2.53

The Gambia 113 2.49

Ghana 117 2.47

Liberia 127 2.38

Botswana 134 2.32

Mali 139 2.27

Burkina Faso 145 2.23

Guinea-Bissau 149 2.10

Sierra Leone 153 1.97

Somalia 155 1.34

*Cape Verde N/A N/A

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Why should the public and private sectors invest their time, effort and money on improving the soft infrastructure supporting their international movement of goods? Because of the excellent rate of return…

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• The importance of efficient logistics for trade and growth is now widely acknowledged.

• Evidence from the 2007 and 2010 LPIs indicates that, for countries at the same level of per capita income, those with the best logistics performance experience additional growth: 1 percent in gross domestic product and 2 percent in trade.

• The World Bank’s analysis based on the 2007 LPI or similar information has shown that better logistics performance is strongly associated with trade expansion, export diversification, ability to attract foreign direct investments, and economic growth.

…in other words, facilitating trade matters!

A number of initiatives under a soft infrastructure improvement commitment can yield some critical improvements for the trade community. These are not outside the grasp of low-income countries provided that the right thing is being done at the right time and in the right places.

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• Liberalizing logistics services markets – in particular, competitive customs brokerage and trucking services drives up quality and tempers costs

• Coordination among border present government and private sector agencies is a primary time and cost thief.

• Understand your trade community. Know the 5 Ws. A relationship of “trust but verify” is only effective through a foundation of understanding.

• Establish a client-service culture. Public sector to see traders as clients and traders to use officials as enablers who facilitate legitimate and protect the country from unlawful activity. It has been shown to deter corruption.

• Measure. Managing through performance indicators is the most effective means of ensuring that investments and interventions – anywhere from new legislation to a new electronic manifest system – are truly the most relevant solutions for improving the international movement of goods.

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Our role in your success:

PACT II Programme

Objective: Foster intra-regional trade by connecting business and governments to develop specific sectors within regions

Partner: COMESA, ECCAS and ECOWAS

Budget: CAD 20 Million

CBI Programme

Objective: Create sustainable exports in selected countries (6-7)

Partner: TSIs involved in exports promotion and supply/value chain development

Budget: USD 16 Million over 4yrs

Connecting opportunities to markets

Our role in your success:

Mali Mangoes: Creating partnerships with producers in Mali and buyers in

Europe ITC has facilitated broadening markets for Mangoes and increasing export tonnage (2004-2009)

Spices Project: In partnership with the American Spices Trade Association ITC has assisted Ethiopia, Madagascar, Tanzania and Uganda to improve their product quality standards for the spices export markets

Environment: With support from DfID ITC successfully led a campaign to stop certification of organic agro-products from Africa, a £42 million market that could have been lost to Africa..

Gender: ITC is empowering women to engage in productive businesses and thus effectively contribute to income creation and poverty reduction

Delivering long term tangible benefits

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Women and Trade Programme 2009 - 2012Objectives:

• Export success for women-owned SMEs

• Empowering business environment for women

• Effective communications that influence outcomes

• Gender mainstreamed at ITC

Our role in your success:

• European Union

• SMEs play a highly important role in European Union countries. There are more than 23 million SMEs in the enlarged Europe and Europe’s economic performance depends on them

• to a large extent. In the EU, they constitute the vast majority of enterprises (99.8%), provide

• almost 66% of employment in the private sector, while contributing to 57% of value added.

• (Sorurce: : REMOVING BARRIERS TO SME ACCESS TO INTERNATIONAL MARKETS/ by

OECD, 2008)

• Canada

• Small businesses accounted for approximately 26 percent of Canada’s GDP.. Over the

• 2000 to 2007 period, the contribution of small businesses to GDP increased slightly at the national level from 23 to 26 percent.

• (Source: : REMOVING BARRIERS TO SME ACCESS TO INTERNATIONAL MARKETS/ by OECD, 2008)

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SMEs are critical to the success of any country

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Our role in your success:

• United States

• The small business share of GDP in the US has held virtually constant from 1998 through 2004 starting at 50.5 percent in 1998, reaching 49.9 percent in 2000 then rising to 50.7 percent in 2004.

• Small firms with fewer than 500 employees make up

• 97.3 percent of identified U.S. exporting companies. The total known value of exports has continued to increase, nearly doubling to $910.5 billion over the 1996–2006 decade. The small firm share of that value has declined slightly over the past decade, from 31.1 percent in 1996 to 28.9 percent in 2006.

• (Source: The Small Business Economy 2008 / by Office of Advocacy of the U.S. Small Business Administration (SBA) )

• Global Economy

• SMEs are significant contributors to the global economy (accounting for approximately 50% of local and national GDP, 30% of exports and 10% of FDI).Yet they appear to be under-represented in the international economy relative to their contribution to national and regional economies

• (Source: REMOVING BARRIERS TO SME ACCESS TO INTERNATIONAL MARKETS/ by

OECD, 2008)

SMEs are critical to the success of any country