1

Private Sector Development in AfricaPrivate Sector Development in AfricaAprilApril 113, 3, 20201010, Tokyo, Tokyo

Go Shimada, Director Go Shimada, Director

Private Sector Development DivisionPrivate Sector Development Division

Industrial Development Department, JICA Industrial Development Department, JICA Shimada.Go@jica.go.jpShimada.Go@jica.go.jp

© Shinichi Kuno and Kenshiro Imamura

AgendaAgenda

１．Private Sector Development and JICA, in context of AfD (Aid for Development)

2. Key Messages of the JICA Report on the Economic Development in Africa and the Asian Growth Experience

3. Case study 1： Industrial Policy support to Ethiopia

4. Case study 2： Zambia ToH (Triangle of Hope) Project

Birth of New JICA on October 1, 2008Birth of New JICA on October 1, 2008

Consolidation of ODA implementation tools for the new JICA1. The new JICA integrates JBIC’s operations covering Japanese ODA loans and overseas investment, and part of MOFA’s grants2. The new JICA provides more strategic and effective ODA as a single agency centrally managing technical cooperation, loans and grant aid

* Except for certain items retained by MOFA required for policy commitments

Grant aid*

MOFA

Technical cooperation

JICA

ODA loans

JBIC(ODA)

Multilateral Assistance

Bilateral Assistance

Multilateral Assistance

ＯＤＡＯＤＡＯＤＡＯＤＡ

The new JICA

- T/C: US$ 1,596 million- ODA loans: US$ 8,402 million

- GA: US$1,118 millionNew JICA: US$11,116 million

FY2008:JPY 103.5/USD (DAC rate)FY2009:JPY 97.60/USD (IFS rate for April 31, 2009)

FYFY20082008

US$1,016 million

US$1,486 million

US$7,440 million

FYFY20092009

New JICA’s Message

①①①① Addressing Global AgendaAddressing the global agenda, including climate change,

water, food, energy, infectious diseases and financing

②②②② Reducing Poverty through Equitable GrowthPursuing sustained poverty reduction through inclusive and

equitable growth

� Integrated Assistance● Combining policy support, institution building, human capacity

development, infrastructure development, etc.

● Cross-border and cross-sector assistance

� Seamless Assistance● Speedy and continuous aid delivery from emergency relief to

rehabilitation/reconstruction and to peace-building

● Meeting flexibly development needs according to a specific

development stage from least developed countries to middle income countries

� Integrated operations of 3 aid modalities

� One of the world’s largest aid agencies

Inclusive and Dynamic Development

③③③③ Improving GovernanceStrengthening policies, institutions, organizations,

human resources as underpinnings of development

④④④④ Achieving Human SecurityProtecting people from threats and building societies

where they can live with dignity

� One stop shop for Japan’s ODA

� Establishing the JICA Institute

� Promoting Development Partnerships● Promoting public-private partnership

● Applying technologies and knowhow

● Strengthening partnerships in the international aid community

� Enhancing Research and Knowledge Sharing● Enhancing research function on development by drawing on its

abundant field experience

● Sharing research findings and leading discussions on

international development assistance

� Achieving synergy of merger （（（（Speed-up, Scale-up,Spread-out））））

� Tackling complex and difficult issues flexibly with the

field-based approach

� Fostering expertise for providing

professional solutions

� Efficient and transparent operation

Vision

Mission

Birth of

New JICA

Strategy

AfT accounts for over a half of total loans.AfT accounts for over a half of total loans.

Total Loans and Loans for AFT （（（（2004-2008, USD million)

Exchange rate (DAC rate)2004: JPY108.1/USD, 2005: JPY110.1/USD, 2006:JPY111.6/USD, 2007:JPY117.8/USD, 2008: JPY103.5/USD

Technical Cooperation and Grant AidTechnical Cooperation and Grant AidTechnical Cooperation and Grant AidTechnical Cooperation and Grant Aid

Europe2%

Asia46%

Africa23%

Middle East8%

America16%

Oceania4%

World1%

Asia Africa Middle East America Oceania Europe World

LoansLoansLoansLoans

Oceania1%Middle East

4%

Africa14%

Asia81%

Asia and Africa are the main regions for JICAAsia and Africa are the main regions for JICA’’s AfTs AfT

.JICA’s Aid for Trade by Region （2007）

Technical Cooperation and Grant AidTechnical Cooperation and Grant AidTechnical Cooperation and Grant AidTechnical Cooperation and Grant Aid

Tourism2%

Trade Policy and Regulations2%

Mineral Resources and Mining2%

Industry9%

Fishing5%

Forestry7%

Business Support Services andInstitutions

7%

Banking and Financial Services2%

Energy Generation and Supply6%

Communications8%

Transport and Storage16%

Agriculture34%

Transport and Storage Communications Energy Generation and Supply

Banking and Financial Services Business Support Services and Institutions Agriculture

Forestry Fishing Industry

Mineral Resources and Mining Tourism Trade Policy and Regulations

LoansLoansLoansLoans

Forestry10%

Communications2%

Industry2%

Agriculture10%

Business SupportSevices andInstitutions

3%

Transport andStorage

32%

Energy Generationand Supply

41%

JICA aims to improve aid effectiveness through synergy between JICA aims to improve aid effectiveness through synergy between

loans, and technical cooperation and grant aidloans, and technical cooperation and grant aid

Economic Infrastructure

75%

Building Productive Capacity

68%

JICA’s Aid for Trade by Sector （2007）

8

▲▲▲▲Map Ta Phut Port

▲▲▲▲Lam Ta Khong Pumped Storage Power Plant

▲▲▲▲Suvarnabhumi International Airport

▲★▲★▲★▲★Sihanoukville Port

▲★▲★▲★▲★Cai Mep-Thi Vai Port▲▲▲▲Leam Chabang Port

▲▲▲▲Tan Son Nhat International Airport

▲▲▲▲Phu My Thermal Power Plant

●●●●National Road No.1

★★★★Yangon Port

▲▲▲▲Yangon International Airport

▲●▲●▲●▲●Baluchaung Hydro Power Plant

●●●●National Road Route 6 and 7

East-West Economic Corridor

Southern Economic Corridor

North-South Economic Corridor ▲●▲●▲●▲●Nam Ngum Hydropower Station

▲▲▲▲Nam Leuk Hydroelectric Power Plant

●●●●Vientiane International Airport

▲▲▲▲Cai Lan Port

▲▲▲▲Pha Lai Thermal Power Plant

▲▲▲▲Hai Phong Port

▲▲▲▲Hai Van Tunnel

▲▲▲▲Da Nang Port

●●●●Pakse Bridge

●●●●Bridge over the Mekong River

▲▲▲▲Second Mekong International Bridge

Major Economic Infrastructure and JICA Projects

●●●●National Road Route 9

▲Loans ●Grant Aid ★Technical Cooperation

Mekong

River

Naypyidaw

Vientiane

Bangkok

Phnom Penh

Hanoi

Kampong Cham

Siem ReapSisophon

Mawlamyine PhitsanulokMukdahan

Pakse

Hue

Da Nang

Hai PhongChiang Rai

Vung TauHo Chi Minh

Development

Triangle

Thailand

Lao PDR

Vietnam

Cambodia

Myanmar

Trat

Yangon

Nong Khai

Savannakhet

Kunming

9

Second Mekong

International Bridge

People arriving at Savannakhet from Thailand. The

bridge changed the movement of goods and peopleOne stop service is provided at the custom

office of Laos Boarder

MyanmarMyanmarMyanmarMyanmar

CambodiaCambodiaCambodiaCambodia

ChinaChinaChinaChina

Lao PDRLao PDRLao PDRLao PDR

ThailandThailandThailandThailand

VietnamVietnamVietnamVietnam

GRDP(USD/person)

1,500 -1,200 - 1,500900 - 1,200800 - 900500 - 700400 - 500300 - 400200 - 300100 - 200

0 - 100

GRDP per capita in GMS Countries and Regions

00 4040 80 (h)80 (h)

(A) A Few Years Ago(A) A Few Years Ago

(B) After CBTI/CBTA (B) After CBTI/CBTA

CompletionCompletion

MyanmarMyanmar

ThailandThailand

Lao PDRLao PDR

ChinaChina

VietnamVietnam

CambodiaCambodia

Source: Univ. of TokyoSource: Univ. of Tokyo

Time Distance Between GMS Countries

: Paved Road: Paved Road: Paved Road: Paved Road

: Missing Link: Missing Link: Missing Link: Missing Link

: On: On: On: On----going projectgoing projectgoing projectgoing project: On: On: On: On----going projectgoing projectgoing projectgoing project

(Japan(Japan(Japan(Japan’’’’s Assistance)s Assistance)s Assistance)s Assistance): Candidate projects: Candidate projects: Candidate projects: Candidate projects

(Japan(Japan(Japan(Japan’’’’s Assistances Assistances Assistances Assistance））））

Burundi

Mali

Sudan

Kenya

Guinea Burkina Faso

Ghana

Rep.

Congo

LiberiaCote

D’Ivoire

Tanzania

Sierra Leone

D.R.

Congo

Angola

Namibia

South Africa

BotswanaMozambique

Mauritius

Zambia

Nigeria

Niger

Ethiopia

Eritrea

DjiboutiGambia

Madagascar

EgyptLibya

Tunisia

Morocco

Algeria

Mauritania

Chad

Central

African R.

Gabon

Cameroon

Malawi

Rwanda

Lesotho

Swaziland

Somalia

TogoBenin

Western

Sahara

●OSBP (Chirundu)

GuineaBissau

Uganda

TAH: Trans African HighwayTAH: Trans African HighwayTAH: Trans African HighwayTAH: Trans African HighwayOSBP: One Stop Border PostOSBP: One Stop Border PostOSBP: One Stop Border PostOSBP: One Stop Border Post

N’DJAMENA

WINDHOEK

WALVIS BAY

BEIRA

HARARE

NAKARA

DURBAN

LUSAKA

MOMBASA

LAGOS

Senegal

CAIROAGADIR

TAKORADI

LOBITO

JOHANNESBURG

LUANDA

NAMIBE

ADDIS ABABA

KHARTOUM

DAKAR

Map is edited based on NEPAD STAP and TAH

●OSBP (Namanga)

DAR ES SARAAM

Zimbabwe

MTWARA

Regional Infrastructure (transport)Regional Infrastructure (transport)

KHARTOUM

Burundi

Mali

Sudan

Kenya

Guinea Burkina Faso

Ghana

Rep.

Congo

LiberiaCote D’Ivoire

Tanzania

Sierra Leone

D.R.

Congo

Angola

Namibia

South Africa

BotswanaMozambique

Mauritius

Zambia

Nigeria

Niger

Ethiopia

Eritrea

DjiboutiGambia

Madagascar

Zimbabwe

EgyptLibya

Tunisia

Morocco

Algeria

Mauritania

Chad

Central

African R.

Gabon

Cameroon

Malawi

Rwanda

Lesotho

Swaziland

Somalia

Togo

Benin

Western

Sahara

●Chirundu

Guinea

Bissau

Uganda

N’DJAMENA

WINDHOEK

WALVIS BAY

BEIRA

HARARE

NACALA

DURBAN

LUSAKA

MOMBASA

DAR ES SALAAM

LAGOS

Senegal

CAIROAGADIR

TAKORADI

LOBITO

MTWARA

JOHANNESBURG

LUANDA

NAMIBE

ADDIS ABABA

DAKAR

●Namanga

-Rusumo

●Mfun

●Malaba

-Kazungula

◇◇◇◇◇◇◇◇ OnOn--going projects going projects ◇◇◇◇◇◇◇◇

3

87

14

111 9

102

51718

12

1315

16

4

6

Construction and Technical support

Construction

Technical support

Technical support before TICAD IV

-Taveta

-Lungalunga/Horohoro

-Busia

-Isebania/Sirai

-Nemba-Kanyaru

-Mutukula

-Gatuna/Katuna

-Kobero

-Tunduma/Nakonde■Oshikango

■Wanela/Sesheke

●:On-going■:Past assistance- :Candidate

<Construction of facilities>

Chirundu

Namanga

Mfun

Rusumo

<Facilitation of Legal Procedures>

Chirundu

Rusumo

<Capacity Building>

-Custom administration in EAC

-Training for border officials at Chirundu

Present Status of OSBP ProjectsPresent Status of OSBP Projects

West Africa Power

Pool

Central Africa Power

Pool

Southern Africa Power

Pool

East Africa Power

Pool

：Loans ：Grant ：T/A

Power Pool:

There are currently 4 power

pools in Sub-Sahara Africa

and the trade of power is free

within regions.

Regional Infrastructure (power)Regional Infrastructure (power)

� “Industrialization Strategy” as a process – NOT a piece of document

� A trial and error process: be aware, some may end up in flops, but it has be embraced as part of the game

� Support measures adopted in accordance with institutional capacity – one may as well begin with neutral – cross sectoral – measures

� Most support measures are permissible for LDCs, even under today’s international rules

Key Messages of the JICA Report on the Economic Key Messages of the JICA Report on the Economic

Development in AfricaDevelopment in Africa and the Asian Growth Experienceand the Asian Growth Experience (1)(1)

Key Messages of the JICA Report on the Economic Development Key Messages of the JICA Report on the Economic Development

in Africain Africa and the Asian Growth Experienceand the Asian Growth Experience （２）（２）

� Africa needs to sustain and accelerate growth through export-oriented industrialization

� Governments in Africa ought to have more policyspace to discover and help develop growth-leading industries through trial-and-error process

� A call for establishing “Industrialization Strategy” process in Africa

Some unique features of the Asian experienceSome unique features of the Asian experience

� Diversity in terms of development strategy, role of the state and growth-leading industries – consequence of the country’s effort of strategic responses to the changing conditions

� Existence of public-private partnership for addressing private sector constraints, developing future strategy and facilitating coordination

� Long-term (transformational) perspective in development strategy, which formed economic and social basis of development and guided private sector investment

Diversified Paths of Development in AsiaDiversified Paths of Development in Asia

� Diversity across Countries

− Domestic Capital-Dependent vs. Foreign Capital-Dependent

− Natural Resource-Rich vs. Natural Resource-Poor

− Interventionism vs. Liberalism

� Diversity over Time

− IS → EO → (IS ⇔ EO) → Globalization

� Diversity in growth-leading Industries

− Heavy industry, consumer electronics, textiles, agro-processing, human resources, ICT …

� A self-owned process of strategic responses to the

changing environment and challenges/opportunities

“Asian Dynamism”

� Geographic diffusion of industrialization –

growth: a regional phenomenon

� Within each country, industrialization

proceeds from low-tech to high-tech

� Also known as the Flying Geese Pattern

� Clear order and structure (with a possibility

of re-formation)

Structural Transformation in East Asia

Japan

NIEs

ASEAN4

Latecomers

Latest

comers

Country

Time

Garment Steel Popular TV VideoDigital

Camera

1

32

1 Japan

Garment Steel

Popular

TV Video HDTVCompetitiveness

Time

Competitiveness

TimeCompetitiveness

2 Garment

Japan

NIEs

ASEAN4

LatecomersLatest

comers

International Division of Labor3

Garment SteelPopular

TV Video HDTV

JapanNIEs

ASEAN4

Latecomers

Latest comers

Transition of Development Strategies in AsiaTransition of Development Strategies in Asia

LongLong--term (transformational) Perspective in term (transformational) Perspective in

Development StrategyDevelopment Strategy

Through tripartite dialogue b/w public-private-academics,

� Identify the long-term vision of the country’s economic development

� Discover growth-leading industries based on existing and latent potentials

� Identify the constraints surrounding the growth-leading industries

� Devise measures to remove the constraints and as well as make necessary investments (infrastructure, HRD etc.) to support the industries

Key principles of Key principles of ““Industrialization StrategyIndustrialization Strategy””

� Industries mean more than manufacturing –includes services sector and agriculture

� Clear and objective criteria to discover the industries and maintain transparency in the process

� Establish a “process” of P-P dialogue

� Support with discipline (punishment and exit strategy) and apply rule of competition

� Proceed as institutional capacity develops

Role of the international communityRole of the international community

� Embrace diversity of development strategies in Africa and support countries with strong commitment to advance own strategy

� Sustain efforts to maintain/enhance market accessof African products

� Invest in large-scale infrastructure with regional impact

� Support technological capacity building in Africa

Action by Action by GoJGoJ/JICA to advance IS in Africa/JICA to advance IS in Africa

� Support to the dialogue-based formulation of “Industrialization Strategy”, incorporating Asian experience, in some selected African countries� commitment by GoJ expressed in TICAD IV Action Plan

� The process needs to be harmonized with other processes – investment in infrastructure and other business operations

� Donor coordination needs to be heeded – including “Growth Diagnostics” – to promote mutual learning and complementarity between the two processes

Case Study 1: Industrial Policy Support to Ethiopia

G8 Hokkaido

Toyako Summit

(Jul. 2008)

Symposium

: Economic Development

in Africa and the Asian

Growth Experience

(May 2008)

Follow up Japan’s enhanced support to Africa

The Initiative for

Policy Dialogue (IPD)

：：：：African Taskforce Meeting in Addis

Ababa (Jul. 2008)

TICAD IV

(May 2008)

Support to formulate development

policy

Exchange of views on industrial

development strategy, and

recommendations by the Japanese

side based on Asian development

experience.

Support to nurture private

companies

Technical cooperation of JICA for

enhancing competitiveness of

private companies on the basis of

JICA’s experience in Tunisia.

Request from Prime Minister Meles（July, 2008）

Industrial development support framework

in Ethiopia

The project of policy dialogue

on industrial development

The project on quality and

productivity improvement

(KAIZEN)

The project of policy dialogue on Industrial Development

AprMay Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar AprMay Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr

Policy Dialogue

Kaizen Project

　

4) Project and Action　with MoTI

1) Quality &

Productivity

Improvement by Kaizen

3) Sectors　with MoTI

1) Policy vision　with Prime Minister’s Office

2) PASDEP

　with MoFED & MoTI

Schedule of HLF

2009 2010 2011

Sharing of Japan's

Experience

1st

Report

Review on Policies &

Strategies

Review on PASDEP

Review on MoTI's

Implementation

Depth Review & Recommendation

on MoTI's Implementation in

Selected Sub-Sectors

PreparationSector Study

(phase 1)

Pilot Projects

(phase 2)

Disemination

(phase 3)

2nd

Report

Progress and Findings of Study Project

The project on quality and productivity improvement （（（（KAIZEN）））） （（（（1））））

What is KAIZEN?

KAIZEN, in Japanese management, means “continuous

improvement” of productivity and quality without

additional cost, in a participatory process and a bottom-up

approach.

This management practice method has spread among

Japanese companies in Japan and abroad. JICA has also

offered assistance for KAIZEN to many developing

countries in Asia and Latin America in particular.

The project on quality and productivity improvement （（（（KAIZEN）））） （（（（2））））

Profile of the project

1. Objective:� To formulate a national plan for enhancing activities

on quality and productivity improvement for Ethiopian enterprises in industrial sector

� To formulate a manual for explaining and guiding the quality and productivity improvement activities

� To transfer relevant skills and techniques to the staff members of the Kaizen Unit, Ministry of Trade and Industry

2. Period:

2 years (August 2009～April 2011)

3. Implementing Institutions:- Ministry of Trade and Industry (MoTI)- Japan International Cooperation Agency (JICA)

• Situation analysis on quality and productivity

improvement activities of Ethiopian industry

• Visit to the factories in industrial sector for preliminary

diagnosis

• Preparation for the pilot project

a. selection of methodology for quality and productivity

improvement

b. set the criteria and selection process for the pilot

companies

c. selection of 30 pilot companies

Phase

1

The project on quality and productivity improvement （（（（KAIZEN）））） （（（（3））））

Major activities -1

• Formulation of a National Plan including an Action Plan

of KAIZEN

• Formulation of a Manual

Phase

3

• Implementation of the pilot project

a. to visit the pilot companies to diagnose the situation,

and to give guidance on the quality and productivity

improvement activity (KAIZEN) with the staff

members of the Kaizen Unit, MoTI

b. to repeat factory visit periodically and give KAIZEN

advice and to monitor the KAIZEN process

c. to evaluate the pilot project and compile

recommendations to the factories

Phase

2

The project on quality and productivity improvement （（（（KAIZEN）））） （（（（4））））

Major activities - 2

Spreading out the KAIZEN movement from

Ethiopia to other African countries

− Calling for coordination and sharing of vision among threepartners of development – political leaders, private sector and civil service

− Capitalizing on Asian (Malaysian) expertise and experience, a case of South-South cooperation supported by JICA

− Selected 12 priority sectors based on country’s existing and latent potentials and prepared T/I promotion package– even “landlocked-ness” is conceived to be an advantage, as being a potential for developing Air-Cargo Hub & Inland Port within the sub-region

− Business promotion is being advanced with Malaysia and India. Some agreements for joint ventures have already been concluded for establishing mobile-phone factory, telecom. college and specialized hospital …

Case Study 2: Investment climate development in Case Study 2: Investment climate development in

Zambia (Triangle of Hope Project)Zambia (Triangle of Hope Project)

Concluding remarks

� “Industrialization Strategy” as a process – NOT a piece of document

� A trial and error process: be aware, some may end up in flops, but it has be embraced as part of the game

� Support measures adopted in accordance with institutional capacity – one may as well begin with neutral – cross sectoral – measures

� Most support measures are permissible forLDCs, even under today’s international rules

Thank you for your attention