Enterprise Map Project

The aim is to provide a uniform and complete account of a country’s industrial capabilities

Users : Governments , Firms , Investment Agencies , Domestic Content Offices

Volumes available : Ethiopia , Ghana , Tanzania Zambia ,Mozambique

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What are the industries we see (almost) everywhere?

Food , Drink : Wide range , Sugar , Beer

Metals: Drawn Wire, Galvanized Sheet.

Plastics : Moulded Products, Heavy Pipes

Building Materials : Cement ,Bricks , Tiles

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Ethiopia’s Traders

Tanzania: why do we have 5 dominant diversified

companies?

Ghana: How Aquafresh moved from Textiles to Soft Drinks

Mozambique : Three phases of industrial Development

Zambia : Downstream Copper ?

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Re-capturing the domestic markets for soft drinks

How to make drawn wire

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What are the industries we see (almost) everywhere? Food , Drink : Wide range , Sugar , Beer Metals: Drawn Wire, Galvanized Sheet. Plastics : Moulded Products, Heavy Pipes Building Materials : Cement ,Bricks , Tiles

Within this range of Industries , there are some really excellent companies …

Bakhressa Flour Mills , Tanzania

Lafarge Cement , Zambia

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Selling to a ‘safe’ local market

High transport costs or tariffs protect from imports

Entry is ‘safe’ and low productivity and quality does not preclude viability

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There is no international supply chain with other firms whose quality standards you must meet

It is this last point that looms largest as we move to mid-ground manufacturing

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Where do you want to be in 20 years time?

Who exports what?

An (arbitrary) definition of core manufactured exports …

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The Lesson

You Don’t have to advance to mid-level manufacturing to become a mid-income country …

But all those countries that have made this transition are at least mid-income countries

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Question 1: who’s doing what?

Question 3: what barriers are they facing?

Question 2: where will advancing capabilities come from?

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Not primarily a question of technological know-how

Where is Auto Components?

Working Practices

Technical Know-How

Level of sophistication

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A Tanzanian Story: Access to Land

Anna Temu of Power Foods Industries Ltd

Gagan Gupta of Kamal Steels Ltd

Firms are inventive; no barrier is absolute; but mid-size firms with growth potential suffer

Ethiopian Priorities

A good environment in many ways

But FDI opportunities may be lost

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1. Reforming Investment Agencies

2. Integrating Domestic Firms into Oil and Gas Industry Supply Chains

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Ethiopia’s growth will not continue without a deepening of industrial capabilities

This requires a major surge of FDI

No agency has a more important role in employment creation than the EIA

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Most Investment Agencies , including EIA , are focussed on licencing, regulating, informing and monitoring

The small minority of highly successful agencies have a different approach

EIA can become a top class agency within two years

The first step is to shift the focus from licences to employment creation

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EIA emphasises the monitoring of all firms who obtain licences(Is this wise?)

It offers help on request to all firms (Good!)

It does not actively seek prospects

It does not follow firms that are operational

It does not emphasise relationship building

This means it is exploiting only one of the 4 channels of job creation

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Prime Minister level

Head of Agency level

Professional staff level

The key is Leverage : under the pre-reform model , the number of firms with which the agency could interact is very restricted

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The new Director General Mr Fitzum Arega is personally very active in relationship building

The issue is how to get leverage, going from 20 firms to 200 or 300

This requires a major organizational and cultural change in the Agency

How can this be achieved

My role and modus operandi

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The key to expanding, reshaping and focusing on relationship building is:

1. A drastic re-assessment of priorities

2. New staff hires, and training

3. A cultural shift in the approach to relations: “anticipating problems” versus “putting out fires”

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Of the 1,353 licence holders in the 2007 cohort , there were 168 firms of size 50+

Just 37 of these became operational

They account for 9,468 projected jobs , or 75% of all projected jobs from operational firms

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Only 23% of Firms of size 10+ have become operational

Changing this to 50% would double the number of jobs created

The best way to do this is by relationship building: Catch them before they cry for help

The critical time is 1 year post licence

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Appointment of new Director General Fitsum Arega

Mr Arega’s initiatives on salaries and on a major recruitment drive

The building

Information and image

Mr Arega’s re-organization of the industry groups

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Select the ones with most potential

Understand their situation - where they are in the process of becoming operational

Identify any obstacles or problems

Agree how EIA can try to help

Build personal relationships

Keep in regular contact

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A Window of Opportunity

A Bargaining Power Reversal

Building Industrial Capabilities through integration in the Supply Chain

Learning from Global Best practice

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The Columbian Experience

The role of technical Services

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Narrow Focus

Unrealistic Expectations

Futile businesses (Petro chem)

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Tullow Oil in Ghana and Uganda

BP in Azerbaijan

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The role and nature of a Local Content Unit

The initial Phase: Takoradi Port

Understanding the huge breadth of opportunities

The Offshore Phase

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Using the Enterprise Map volume in Ghana

Training centres (Business and Technical)

The role of private and public agencies in firm training

A 2 year timescale

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How they work

Open recruitment by firms

Possible scale

Payoffs

Pitfalls

spinoffs

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How to build university faculties and programs

Timescales and opportunities

Long run prospects

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How to avoid favouritism and corruption

Open processes but realistic targets

Misconceptions in International Agencies

Getting real with governments: understanding what is feasible (a lot !)

Reacting effectively to standard put-downs from (some) Multinationals

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Knowing local capabilities (The Enterprise Map volume)

The concept of Approved Vendor Status

How firms become approved Vendors

The open tender for Approved Vendors

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A lead local contractor (by sector)

Building the supplier base via the lead local contractor

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Construction

Services (helicopter leasing)

Retail(port development)

Catering ( Safety Standards)

General manufacturing (furniture)

Engineering (lessons from Ghana; Finding foreign partners for local firms in the chain)

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Domestic Content Rules and how MNCs can circumvent them

A win-win negotiation approach

Partnering with host governments

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Setting up the Unit

Appointing training partners

Two models of training : in-house secondment versus centre-based courses

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