national industrial policies in the regional industrialisation
TRANSCRIPT
Rwanda Governance Board
Ikigo cy’Igihugu Gishinzwe Imiyoborere
Office Rwandais de la Gouvernance
Dr. Félicien USENGUMUKIZA
D/CEO, Research and Monitoring
Rwanda Governance Board (RGB)
Nairobi, June 24th 2013
National Industrial Policies in the Regional
Industrialisation Framework: How to Create the
Linkages?
The Case of Rwanda
Industrial Sector in Rwanda
The industrial sector is currently small, contributing on average around 15 per
cent of GDP annually;
In order to reach the Rwanda Vision 2020, it requires the share of industry to
increase to 26% of GDP
Industry currently employs just 4 per cent of the workforce. This also
requires the industrial transformation in order to achieve the employment
targets ofVision 2020 - non-farm employment will reach 1.4 million;
Rwanda Industrial Sector versus Regional integration: Challenges and
Opportunities :
EAC and COMESA with population of 450 million and combined GDP of close to
$500 billion. Rwandan firms have an opportunity to serve this market, but will
also face greater competition from businesses in countries with larger and
more sophisticated industrial sectors, such as Egypt and Kenya. Effective policy
is required to ensure that Rwandan enterprise can compete regionally and beyond.
37 37 35 38 39 38 38 3632 34 32 32 33
14 1414
13 14 14 1414
15 14 16 16 16
44 43 44 42 41 41 42 4446 46 47 45 46
5 6 7 7 6 7 6 6 7 6 6 6 6
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Agriculture Industry Services Adjustments
Structure of Rwanda’s GDP (2000-2012)
Mining and
quarrying
3%
Manufacturing
43%
Electricity and
Water
2%
Construction
52%
Composition of Industrial Sector by Gross Domestic
Product, 2010
Source: MINICOM, April 2011
Ministry of Trade and Industry Focus areas
Enabling
Business
Environment
Industrial growth for Domestic
Production and Export Diversification
SME Growth for Job Creation
Streamlining the commodity value chains
while promoting fair competition and
protecting consumers
POLICY DESIGN: INCREASE DOMESTIC PRODUCTION FOR
LOCAL CONSUMPTION AND EXPORT COMPETITIVENESS
Time based model for providing sector-specific support
SHORT TERM MEDIUM TERM LONG TERM
Promote new
desirable sectors as
they become feasible
Reduce support to
successful sectors &
provide support to
new feasible sectors
Improve the feasibility
of desirable industries
& promote feasible
sectors
Construction
materials, Bio-plastics
and other high tech
industries
Pharmaceuticals, Chemical
products (including fertilizers)
Textiles, Mineral processing, Construction
materials, Dairy, Agro-processing, Diversified
Tourism
Tea, Coffee, Mineral and Tourism
2010
2015
2020
Cluster Progression Ladder, 2011 - 2020
Commodities &
services
+ Processing & value
Addition
+ Low tech Manufactures
+ Medium to High Tech
Manufactures
DIVERSIFICATION AND VALUE ADDITION
Priority areas of intervention in Rwanda’s Industry
sector
1. Infrastructure
2. Human Resources
3. Improved Access to Finance and Investment
4. Trade Facilitation
5. Technology, Research and Innovation
6. Raw Materials and Industrial Inputs
7. Regulatory Environment
8. Environmental Sustainability
National Industrial Policies
Regional Industrialisation Framework
EAST AFRICAN COMMUNITY
INDUSTRIALISATION POLICY 2012 - 2032
The mission of the EAC Industrialization Policy (2012-2032)
is “to create a market driven, regionally and
internationally competitive and balanced industrial
sector based on the comparative and competitive
advantages of the EAC Region”.
1. Gains from inter-industry trade reflect comparative advantage.
2. Gains from intra-industry trade reflect economies of scale (lower costs) and widerconsumer choices.
3. The monopolistic competition model does not predict in which country firmslocate, but a comparative advantage in producing the differentiated good will likelycause a country to export more of that good than it imports.
4. The relative importance of intra-industry trade depend on how similar countries
are.
• Countries with similar relative amounts of factors of production are predicted
to have intra-industry trade.
• Countries with different relative amounts of factors of production are predicted
to have inter-industry trade.
Intra-industry trade, a challenge for African Region
According to standard industrial classifications, about 25% of world trade is intra-industry trade.
Comparative of Industrialization between Africa and East Asia
in 1970-2010
1970 1980 1990 2000 2010
AfricaEast
AsiaAfrica
East
AsiaAfrica
East
AsiaAfrica
East
AsiaAfrica
East
Asia
Nominal DGP
per capita
(US$)
246 335 900 1,329 780 3018 740 4731 1701 8483
Share in world
output (%)2.75 9.83 3.65 12.94 2.22 18.14 1.85 21.53 2.73 20.69
Share in global
exports (%)4.99 2.25 5.99 3.74 3.02 8.06 2.31 12.02 3.33 17.8
Source: UNECA, Economic Report on Africa, 2013
Resource-based industrialization in East African Region
To consider global, regional and national dimensions of linkage;
Given the diversity of resource endowments, social and economic
backgrounds, East African Region can develop both comparative and
competitive advantage in industrial sector;
By developing backward linkage supply firms to the commodity sectors and
resource-processing industries, East African countries can help to diversify
their technological capabilities and skills base, deepening their industrial
structure;
Moreover, the natural resource sector’s need for infrastructure (to extract
and transport the commodities) enhances the potential for linkages
To develop both intra and inter-industry trade and trade diversification.
… and this requires the strong linkage
For resource-based industrialization, the linkage is
required both regionally and sectorially.
Spatial Linkages:Infrastructure (transport, power, ICT) and
LED
Mining: Concentration, smelting, refining
=> metal/alloy
Forward Linkages:Intermediate products =>
Manufacturing; Logistics ; other sectors (agriculture
, forestry, fisheries, etc.)
Fiscal linkages:Resource rent capture &
deployment: long-term human & physical infrastructure
development
Backward LinkagesInputs:
Capital goodsConsumables
Services
Knowledge LinkagesHRD: skills formation
R&D: tech developmentGeo-knowledge (survey)
Source: Africa Task Force Meeting: Preparing for TICAD V – Agenda
New York, November, 2012
Thank you for your Attention!