iso 9001 accreditation as a strategic global trade growth lever for tp os

Quality Accreditation Of Trade

Promotion Organizations As A

Strategic Lever For Global Trade

Growth Dr. Olayiwola Oladapo March 2016 1

Table of Acronyms

Dr. Olayiwola Oladapo March 2016 2

CzechTrade Czech Trade Promotion Agency

EPC Export Promotion Council of Kenya

EU European Union

FDI Foreign Direct Investment

FIEO Federation of Indian Export Organizations

ISO International Organization For Standardization

MATRADE Malaysia External Trade Development Corporation

NEPC Nigerian Export Promotion Council

NEXIM Nigerian Export-Import Bank

NIPC Nigerian Investment Promotion Commission

OECD Organization for Economic Co-operation and Development

PROCOMER Export Promotion Agency of Costa Rica

QMS Quality Management systems

TPOs Trade Promotion Organizations

WTO World Trade Organization

ZIMTRADE Zimbabwe Trade Development and Promotion Agency

Presentation Framework

Impacts of ISO 9001 Standards On Global Trade 7

How TPOs are leveraging ISO 9000/1 Standards 12

Quality Accreditation As Leverage For Global Trade 28

Synopsis 4

3 Dr. Olayiwola Oladapo March 2016

Quality & The of Promotion of Nigerian Exports 33

Conclusion and Recommendations 40

Synopsis

• International trade literature has identified that missing trust

between trading partners leads to less trade.

• It also identified that the use of international standards can

increase this trust between trading partners (WTO 2005)

• It is therefore not happenstance that nations that have made

huge success in the international trade arena have also had

exporting firms who placed high premium on international

standards and particularly on ISO 9000/9001 certification.

• This is more evident with developing nations who have been

successful in exporting their products into developed markets


Synopsis

• It is an open secret that nations desirous of success in

international trade also deliberately champion Quality and

standard accreditation of organizations involved in international

trade.

• This presentation highlights the correlation between successful

internalization of trade/export and preponderance of exporting

firms with international standards accreditation in any nation.

• It also attempt at drawing the critical linkage between the Quality

Management focus of Trade Promotion Organizations and

successful trade and export promotion and development


Synopsis

• It established with compelling trans continental evidence that

Trade Promotion Organizations championing export and trade

internationalization are walking the talk about international

standards by themselves becoming ISO 9001 accredited.

• It therefore presents a compelling imperative for Trade Promotion

Organizations to develop standards and quality management

capability in order to increase their effectiveness and success in

trade promotion by becoming ISO 9001 accredited.

• This imperative is more compelling and relevant for all Agencies

and institutions behind promotion of trade and export in Nigeria


Impacts of ISO 9001 Standards On

Global Trade

Why National Trade Promotion

Organizations (TPOs) are

Championing Local

Compliance To Global

Standards


International trade literature

has identified that missing trust

between trading partners leads

to less trade.

It also identified that the use of

international standards can

increase trust between trading

partners (WTO 2005).


• Trade research carried out on the effect of

ISO 9000 diffusion on trade and Foreign

Direct Investment (FDI) for the period

1995-2002 empirically established that;

“It has no effect on trade and FDI in developed

nations but by contrast it has a positive ‘pull’

effect for inwards FDI for developing

countries”1.

1. Clougherty, J. A., and M. Grajek (2008) 'The impact of ISO 9000 diffusion on trade and

FDI: A new institutional analysis', Journal of International Business Studies no. 39 (4):613-

633. Dr. Olayiwola Oladapo March 2016 9

• Evaluating the impact of ISO 9000 on trade

between 91 nations from 1995 to 2005

revealed the common language of ISO 9000

created benefits between nations and there

was an “enhanced competitiveness effect .

..[to]involve a robust positive push with

respect to home nation exports.”2

For example, “the exports of European nations

increase the most when other nations adopt ISO

9000.”3

2&3: Pg 32-Clougherty, J. A. & Grajek, M. (2011) “International Standards and

international trade: Empirical evidence from ISO 9000 diffusion, Working Paper, March 25,

University of Illinois at Urbana-Champaign & European School of Management &

Technology. Pg 32 &33 Dr. Olayiwola Oladapo March 2016 10

• In particular, the ISO 9000 standards family for quality

management system (which is the most widely used

international standard) has been demonstrated to

reduce information asymmetries, signal quality,

and increase trust between trading partners.

• The economic Impacts of the ISO standards especially

ISO 9001 on trade and export is channeled through

three different operational vehicles thus;

Trade and

Export

Promotion

Organizations

International

Trade and Export

Companies

Total National

Exports and

Trade Receipts

ISO Standards ISO standards


How Trade Promotion Organizations

(TPOs) are leveraging ISO 9000 (Now

9001) Standards Dr. Olayiwola Oladapo March 2016 12

1

2

3 4

5

6

Export powered developing

economies have Trade Promotion

Organizations that value quality as

evidenced by their ISO 9000

certification Status


Benchmark Review Study of 6

Trade Promotion Organizations

from the Developing world spanning

Asia, Africa, Europe and Latin

America showed that :

What Do 6 Trade Promotion

Organizations have in Common?

They are all Trade Promotion Organizations that

devoted significant resources into building institutional

strength and capacity in overall Quality Management

leading to exceptional successes in

internationalization of their national exports


Trade Promotion Mandate

Represents directly or indirectly, over 100,000 exporters

across India. (73.6 % of the total exports from India)

India Annual National Exports- $318billion

• Manufactured goods over 63%,

• Crude & petroleum Products (including coal) 20.0%

• Agric & allied products 13.7%

Vision

Championing Ministry of Commerce’s Vision “to make

India a major player in the world trade by 2020”

Year Of ISO 9000/1 Certification

Not Available

Federation of

Indian Export

Organizations



With 5 Local branches and represented worldwide at 40

locations in major commercial cities, MATRADE facilitates the

development and promotion of Malaysia’s export to the world

Malaysia Annual National Exports- $234Billion

Integrated Circuits, Refined Petroleum, Petroleum Gas , Palm

Oil and Crude Petroleum

Vision

Positioning Malaysia As A Globally Competitive Trading Nation”

Mission

Promoting Malaysia's Enterprises To The World


2007

Malaysia

External

Trade

Development

Corporation

(MATRADE)



With 13 regional offices created in cooperation with the network of

Czech Chambers of Commerce and 30 representative offices in 26

countries worldwide, CzechTrade main objective is to promote

international trade and cooperation between Czech and foreign

companies.

Czech Republic Annual National Exports -$174Billion

top exports of the Czech Republic are Cars, Vehicle Parts, Computers,

Telephones and Insulated Wire

Vision

To be the first choice for Czech companies when penetrating and

developing international markets.”

Mission

To contribute to the export growth of our clients through our

professional services


2002

CzechTrade



Represent 2,441 exporting companies and facilitates Trade and

export into 156 destinations

Costa Rica Annual National Exports- $11Billion

Integrated Circuits , Office Machine Parts, Medical Instruments,

Bananas and Tropical Fruits

Vision

To be the strategic benchmark for the private business sector in

terms of foreign commerce and investment, in order to promote

the development of the country.

Mission

facilitate and promote commerce abroad and investment.


2005

PROCOMER/

Costa Rica



Primary objective is to address bottlenecks facing exporters and

producers of export goods and services in order to increase the

performance level of the export sector

Kenya’s Annual National Exports- $6Billion

Tea, Refined Petroleum, Cut Flowers, Coffee and Legumes

Vision

To excel in positioning Kenya’s goods and services as products of

choice in the regional and international markets

Mission

To attract, expand and sustain the market share of Kenya’s

exports through product identification, development and marketing


2008

Export

Promotion

Council of

Kenya(EPC)



• Promote existing Zimbabwe trade

• Develop new exports, by market and product, for Zimbabwe

• Promote export-related investment advise Government on matters

related to trade, exports and investment

Zimbabwe Annual National Exports- $3Billion

Raw Tobacco, Gold, Nickel Mattes, Diamonds and Ferroalloys

Vision

Growth in prosperity and employment generation in Zimbabwe

through increased trade

Mission

To provide world standard services to Zimbabwe’s exporting

community so as to enhance global competitiveness, mindful of the

environment impact of business operations.


1994 & 2015

ZimTrade /

Zimbabwe


What Does These 6 TPOs ISO 9001

Certification Status Say About Them?

It means they have had their systems,

processes and organization objectively and

thoroughly audited against the ISO 9001

Quality Management System (QMS) and

found to meet all the requirements of the

Global ISO 9001 QMS Standard.


1



An evidence that they are committed to total

quality management philosophy;

– a customer focus

– a quality focused supplier management model

– a continually improving process approach

implemented throughout the organization,

– critical processes and their interactions are

benchmarked with international best practice,

sustainable, understood and documented

– a strong management commitment to all these

facets of the ISO 9001 QMS.


2



“It is a strong indication that the management

and operational practices leading to their

product and service delivery are of the highest

quality comparable to globally accepted

standards”


3

Compelling Evidences From Research

How International Trade and Export

Companies benefit economically

from ISO Accreditation


Key Economic Benefits of ISO Standards

to International Trade Companies

Key benefit 1 : Streamlining

internal

operations. Key benefit 2 :

Innovating and

scaling up

operations

effectively Key benefit 3 : Creating or

entering new

markets.

Please Note: The research that established these 3 levels of benefits spanned

enterprises of varying sizes from small companies of 25 employees with an annual

sales revenue of approximately USD 4.5 million to large conglomerates of several

thousand employees boasting an annual revenue exceeding USD 2.5 billion.

Culled from “Economic Benefits of Standards” ISO 2014 Publication Pg. 9


• Certification to international standards has been

found to be “particularly important for exporters in

developing economies, who compete with firms in

developed countries that have longer histories and

better reputations in export markets.

• Firms that are certified as meeting international

standards create favorable perceptions of their

company or brand and attract buyers.”4

.”5

4&5: Otsuki, T. (2011) “Effect of ISO standards on exports of firms in Eastern Europe and

Central Asia: An application of the control function approach,” Osaka School of Inter-

national Public Policy: Discussion paper, DP-2011-E-00, Pg 2, and 10 Dr. Olayiwola Oladapo March 2016 26

• In a study of 35 ISO 9000 certified and 35 non-

certified companies across a range of industries

matched on size and industry, all of which were

listed on the Singapore Stock Exchange over a 6

year period, “ISO 9000 certification is associated

with significant improvements in profit margin,

growth in sales, and earnings per share.”6

• “The two main dimensions positively affected from

the ISO 9000 implementation are improving

operating efficiency [and] better control of business

operations.”7

6: Sharma, D. S. (2005) “The association between ISO 9000 certification and financial

performance.” The International Journal of Accounting, Vol. 40, Pg 170

7:Cagnazzo, L, Taticchi, P & Fuiano, F. (2010) “Benefits, barriers and pitfalls coming from

ISO 9000 implementation: the impact on business performance,” WSEAS Transactions on

Business & Economics, Issue 4 Vol. 7, Is- sue. 4, Pg 315 Dr. Olayiwola Oladapo March 2016 27

Quality Accreditation As Leverage

For Global Trade

Linkage Between Growth of National

Export Revenue and Quality

Accreditation


Empirical Linkage has been

established between the

Preponderance of firms with ISO

9001 certificates in a country, &

the country’s total exports/

imports and Foreign Direct

Investments


The Equation Linking ISO 9000

certification to Export, Imports and FDI

No of Firms

with ISO

9000

certificates

I

n

c

r

e

a

s

e

Foreign

Direct

Investments +

National

Export

Volume

and Value

I

n

c

r

e

a

s

e

I

n

c

r

e

a

s

e

No of Firms

with ISO

9000

certificates

I

n

c

r

e

a

s

e

Dec

rease

National

Imports

While


• A research used a gravity model to investigate

the diffusion of ISO 9000 standards on

international trade using trade data from 101

countries in the period of 1995 – 2001, which

clearly show the empirical role of ISO 9000

standards on international trade.

It found that “10% increase in the number of

firms awarded with ISO 9000 certificates in a

country leads on average to 0.27% increase in

bilateral exports and 0.26% decrease in

bilateral imports of that country8

8. Grajek, M. (2004). Diffusion of ISO 9000 Standards and International Trade.


• Another research using data from 1995-2002

evaluated the impact of ISO 9000 certification on

trade flows and Foreign Direct Investment of

OECD countries in the period of 1995-2002,

comparing three different country-pair types:

developing to developed, developed to developing,

and developed to developed. The research

established that;

Exports from developing countries to developed countries

will increase by 1.16% when number of ISO 9000

certificate increases by10% and FDI of developing

countries from developed countries will increase by $69,600

with one additional certificate.9

9. Clougherty, A. J.and Grajek, M. (2008). The Impact of ISO 9000 Diffusion on Trade and FDI: A

New Institutional Analysis. Journal of International Business Studies, 39(4),613-33 Dr. Olayiwola Oladapo March 2016 32

Quality & The Promotion of

Nigerian Exports


The Trade and Standard’s Environment

In Nigeria

“Nigeria seems to have the relevant manpower but

lacks the resources and necessary vintage

infrastructure to properly harness inputs into

standard development.

In as much as it is desirous to remain an important

player in the global trading arrangement, political

will, lack of adequate resources and necessary

infrastructure, capacity to conduct scientific

research, and to integrate properly into the global

standardization process, are binding constraints for

Nigeria”10


10. World Bank : Africa Trade and Standards Project – Nigeria, 2012. http://go.worldbank.org/CVCZQB4HZ0

http://go.worldbank.org/CVCZQB4HZ0


The Trade and Standard’s Environment

In Nigeria

“For example, apart from the fact that standardization

equipment is obsolete, communication equipment are

generally nonexistent coupled with inadequate

computerization, all these aggravating the problem of

effective participation in international standards

setting process.”10


10. World Bank : Africa Trade and Standards Project – Nigeria,2012 http://go.worldbank.org/CVCZQB4HZ0


The Effect of Quality Assurance on Nigerian

Exports

Between 2002 and 2010, Nigeria had 211( Two Hundred

and Eleven) Agrifood export product rejections from EU

markets an average of 22 annually11

“231(Two Hundred and Thirty One) Reasons were cited for

EU rejections of agrifood product imports from Nigeria in

the years, 2002–2010”12

“Between 2007 and 2012, the following African nations had the

these total rejects of exports in major foreign markets for not

meeting international quality standards; Algeria 3, Benin

Republic 2, Egypt 95, Ethiopia 3, Gambia 5, Ghana 51, South

Africa 56 and Nigeria 102. Nigeria as the largest economy had the highest rejects”13.


11. UNIDO Meeting Standards, Winning Markets, Trade Standards Compliance 2015 pg 19

12. UNIDO Meeting Standards, Winning Markets, Trade Standards Compliance 2015 pg 21 13. Olusegun Aganga Nigeria’s Former Minister of Industry, Trade and Investment, April 2015

ISO 9001 Quality Accreditation Status of

Primary Institutions facilitating Trade

Development and Promotion in Nigeria


No Trade

Facilitation

Agency

Core Mandate ISO 9001 or any other

ISO Family Standard

Accreditation Status

1 Standards

Organization Of

Nigeria (SON)

• Preparation of Standards relating to products,

measurements, materials, processes and

services amongst others and their promotion

at National, Regional and International levels;

• Certification of products, assistance in the

production of quality goods and services;

improvement of measurement accuracies

and circulation of information relating to

standards.

Yes

2 Nigeria

Investment

promotion

Commission

(NIPC)

• To encourage, promote and co-ordinate

investment in the Nigerian Economy

None


No Trade Facilitation

Agency


ISO Family Standard


3 Nigerian Export-

Import Bank

(NEXIM)

• Provision of export credit guarantee and

export credit insurance facilities to its clients.

• Provision of credit in local currency to its

clients in support of exports.

• Establishment and management of funds

connected with exports.

• Maintenance of a foreign exchange revolving

fund for lending to exporters who need to

import foreign inputs to facilitate export

production.

• Provision of domestic credit insurance where

such a facility is likely to assist exports.

• Maintenance of a trade information system in

support of export business.

None





No Trade Facilitation

Agency


ISO Family Standard


4 Nigerian Export

Promotion Council

1) To promote the development and

diversification of Nigeria’s export trade

2) To assist in promoting the development of

export-oriented industries in Nigeria

3) To spearhead the creation of necessary

export incentives

4) To actively articulate and promote the

implementation of the export policies and

programs of the Nigerian Government

5) Coordinate and monitor export promotion

activities in Nigeria

None




Conclusion & Recommendations


Conclusion

Meeting Quality Standards is One

Of The Biggest Hurdles For

Successful Export of Nigerian

Products to Global Markets and a

formidable challenge to Nigeria’s

economic agenda of achieving

effective diversification of Nigerian

Export product base!


ISO 9001 certification (and other

ISO family standards relevant to

international trade) is an

Institutional Strengthening

Imperative For all the Trade

Facilitation Agencies in Nigeria

and export focused organizations!


Recommendation

Not only should the Nigerian

Government walk the talk on its

resolve to diversify the economic

from Oil export dependence to

non- Oil exports by encouraging

export organizations to achieve

global quality certifications, they

should also provide incentives to

support such organizations to do

so !


Recommendation

E-Mail: [email protected]

Tel. No 234-0818-726-3973

Dr. Olayiwola Oladapo

Managing Practice Partner

• Organizational Development and Transformation

• Human Capital Strategy and Development

• International Development

• Public Policy Analysis and Public Sector Reform

44

For Further enquiries kindly

direct them to the address

provided below.

Dr. Olayiwola Oladapo March 2016

mailto:[email protected]

iso 9001 accreditation as a strategic global trade growth lever for tp os

Economy & Finance