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  • WEDF 
  • Discussion Brief for the Export Strategy-Maker

    Trade promotion challenges in Cote d’Ivoire

    Guy M’Bengue – CEO APEX-CI

    Alain Donwahi – PDG EXCELL S.A

    M.A Zando – Consultant APEX-BASE

    Executive Summary 

    Is Your Trade Support Network Working? 

    The trade support network of Côte d’Ivoire has been developed to boost exports and cope with the negative effects of the economic slowdown the country has endured for the past 20 years. Structurally the country’s economic growth was limited by two factors: heavy dependence on traditional agricultural products, and the weight of the public sector on the economy. The trade support network developed by the country tries to address these two issues by targeting the private sector and promoting exports diversification both in terms of products and countries. 

    To be effective, the network should address some basic needs of private exporters. First of all, it should consider improving the country’s export environment. In this regard, progress is needed in export procedures, access to credit, access to technology and business know-how, and access to trade information. Addressing these issues is the prerequisite to a strong and durable trade development in the country. 

    The support services developed by the government use three major instruments, namely governmental agencies and ministries, private organizations, and international organizations’ programmes and assistance. The coordination of these support services is the responsibility of the government. However, it should be noted that the lack of a clear export promotion strategy has weakened the effectiveness of the network. For instance, it is not uncommon to see overlaps in the actions initiated by the different institutions involved. 

    APEX-CI is the National Trade Development Organization of Côte d’Ivoire. As such, it is the country’s main instrument for export promotion. To promote trade, APEX-CI has developed several support services mechanisms. First, the Export Environment Improvement Fund aims at creating a better understanding of the challenges and context of exports, to foster improvements in the business environment. In similar way, the Trade Promotion Advisers Network (Conseillers du Commerce Extérieur) is made of specialists whose responsibility is to advise the government, lawmakers and exporters on major export promotion issues and to help develop effective strategies. To promote an export culture within the population, APEX-CI has also created the APEX-CI Export award for the best university thesis on exports issues, and will co-finance the Exports Young Professional Programme, under which high potential young professional are trained specifically in the area of trade. 

    The Matching Grant Scheme co-finances on a cost-sharing basis export promotion activities, some of which are given in the following list. 

    • Identification of export markets 
    • Market and product research 
    • Matching buyers and sellers 
    • Participation in trade fairs 
    • Training and development 
    • Product Packaging. 

    The Trade Information Centre provides several services for trade information dissemination, including responding to trade and other inquiries, electronic trading through the Internet , and trade publications. 

    Is this support network working? Although no formal assessment has been conducted so far by the government, we have tried to evaluate the effectiveness of the network of services provided. One the evaluation sources is the ITC’s evaluation index for the Trade Support Organizations conducted in 2000. According to the findings of this evaluation the network is effective in terms of private sector orientation, autonomy, financing, personnel, strategic planning, flexibility, and its continuous evaluation process. The weakest point of the network is the lack of a national export strategy and a national consensus for the promotion of exports. To address these issues, APEX-CI is committed to push for deeper structural reforms and to lobby the government. 

    To better address the needs of the exporters, the network should also develop more services particularly in the area of access to credit.  

    Trade promotion challenges in Côte d’Ivoire

    Is Your Trade Support Network Working?

     

    1. Presentation of Côte d’Ivoire economy 

    2. Needs of the private business sector 

    2.1 Exports Environment and Procedures 

    2.2 Access to credit 

    2.3 Access to technology and business know-how 

    2.4 Access to market information 

    3. Support services network 

    3.1 Support services organizations 

    3.2 Links Between the support services organizations 

    4. Support service mechanisms 

    4.1 Advocacy for improvement in the trade and business policy environment 

    4.2 Trade development activities 

    4.3 The Trade Information Centre 

    5. Trade promotion support services assessment 

    5.1 Business environment 

    5.2 Access to credit 

    5.3 Access to technology and business know-how 

    5.4 Access to market information 

    5.5 Overall assessment 

     

    1. Presentation of Côte d’Ivoire economy 

    Despite a strong growth in the 70s, Côte d’Ivoire has been in an economic slowdown and even recession for the past twenty years. Policy-makers and economists now agree that to ensure a strong and sustainable economic development, the country will have to address three main structural constraints, it is facing now. 

    First of all, the country’s economy is heavily dependant on the exports of basic commodities (coffee, cocoa, palm oil, wood, etc.). In 1999, for instance, coffee and cocoa represented 44% of the total exports. In the 70s, while the prices of these products on international market were high, exports of these commodities were the driving force behind the strong economic growth, which was then called "the Ivory Coast miracle". In recent years, the decline of commodities prices on international markets has shown the limits of such an economic structure. It has had a negative effect on the country’s economy and is partly responsible for the economic slowdown Côte d’Ivoire has experienced for the past 20 years. 

    This dependence on traditional products is also coupled with a dependence on traditional markets. This is the second structural constraint facing the economy. Trade figures show that more than 60% of the country exports is directed towards European Union Countries, with 16% going to France. This situation weakens the country’s export structure. It is therefore necessary to diversity its markets. An approach towards non-traditional couples products-markets is an indispensable component of an effective trade promotion strategy for the country. 

    Thirdly, the weight of the public sector on the economy is still strong. The government, with the help of international organizations, has tried to address this issue, principally through the privatization programme. So far, 60 public enterprises have been privatized. However, the state is still the major player in the economy, and the financial difficulties encountered by the government today are real hindrances to the economic development of the country. Some improvements are therefore still needed. In particular, the country should foster the development of a strong private business sector that will expand the economy. 

       2. Needs of the private business sector 

    To address these three issues, the country plans to count on a strong private sector. However, the private business sector has many hurdles to overcome. This paper analyses some of the needs of the exporting private sector. 

       2.1 Exports Environment and Procedures 

    First of all there is a strong necessity to improve the export environment in the country. One of the biggest problems is related to the legal and administrative procedures for trade. They are heavy and cumbersome. There is a need for improvement in exports regulation to make them more conducive to business activities. Government strategy should also be adjusted to foster the private sector. Currently, custom policies and tariffs as well as fiscal regime are not seen by the business community as favouring trade. 

    The legal and administrative system is not only inefficient, but also it leaves room for corruption and non-ethical practices among civil servants. Fraud is therefore also a problem that needs to be resolved. Fraud impedes the development of trade in that it creates distortion in the market by giving unfair advantage to those who work illegally. It also, discourages foreign partners who have to face the burden of having to deal with the corruption of civil servant. 

    2.2 Access to credit 

    The financial market is at embryonic stage and access to credit for export activities very difficult. 

    Banks are reluctant to give credits to exporters, who have to rely on their own resources to finance their activities. The financial instruments used in international trades are not fully understood and used by exporters. This is compounded by the complex procedures put in place by bankers. As of now, there are no institutions or mechanisms to underwrite export activities with guarantees or cover exports risks. One of the most important needs of the exporting private sector is the creation of an institution specialized in credit insurance for exports. 

    2.3 Access to technology and business know-how 

    As the global market approaches, technical knowledge and business know-how have become important tools for success in trade. Côte d’Ivoire, like most of sub-Saharan African countries, has been left behind by technological developments. The equipment, processes and business knowledge used in the country are not keeping pace with the latest technologies. This will be greatly detrimental to the development of trade. If the situation remains unchanged, the country faces the risk of being confined to a trade "ghetto", left out of the main business stream. 

    2.4 Access to market information 

    One of the biggest challenges facing private exporters is to gain access to market information. Trade research and market information are very important for the development of an effective exports strategy. Unfortunately, exporters in Côte d’Ivoire do not readily have access to this information. The reason is twofold. Local information sources are too few and rarely up to date. Many lack the basic technical equipment for such activity, and scarce resources prevent them from gaining access to studies and databases. Secondly, exporters are often not trained in the analysis of this information and hence cannot take full advantage of the data. 

    3. Support services network 

    3.1 Support services organizations 

    To address the challenges and promote trade, the government has set up a trade-support service network. Along with government agencies and cabinets, one private organization has been charged with the coordination of this network. APEX-CI is the National Trade Development Organization of Côte d’Ivoire. It is an association of private exporters that is co-financed by the private sector, the Government and the World Bank. Its mission is to assist businesses in developing and expanding profitable international trade in products and services, and to try and reduce the basic environmental hindrances to the development of trade in the country. It offers a range of services that have the greatest impact in stimulating trade growth and influencing positively foreign trade policy through advocacy. 

    Along with APEX-CI, other institutions are part of the trade support network. They include the External Trade Advisers (CCE, Conseiller du Commerce Extérieur), a group of experts set up to advise the government and private sector on issues related to trade. The government has also appointed export specialists in Ivorian embassies to organize and promote trade between Côte d’Ivoire and the countries they are assigned to. 

    Other private sector associations are also involved in trade promotion. PROXEMA (Association for the Promotion of Non Traditional Agricultural Exports) is dedicated to promoting and developing non-traditional agricultural exports. By non-traditional, we mean products other than coffee, cocoa, palm oil, etc., the country’s main export commodities. OCAB (the Organization for Pineapples and Bananas) deals with issued related to the trade in these two products. The Federation of Industries and Services of Côte d’Ivoire (FNISCI) is a "patronat" (employer) union, regrouping most of the largest industries in the country. As such, it is also involved in trade support. 

    3.2 Links Between the Support Services Organizations 

    Linkage between these support services organizations is carried out under governmental supervision. Three ministries are involved: the Ministry of Commerce (for internal trade), the Ministry of Foreign Trade and the Ministry of Industry. Alongside these ministries, donors’ organizations are also initiating projects to support the network. The World Bank is involved through its Private Sector Development Project, the French Cooperation Agency through its Private Sector Support Project, and the Canadian International Development Agency through it Non Traditional Export Development and Promotion Project. All these projects have strong export promotion components. ITC is also assisting the government as a member of the JITAP project to help the country cope with the challenges of globalization in the area of trade. 

    The links between all these organizations is very weak, and it is not uncommon to see overlap in the support and projects initiated. There is therefore a strong need for a better definition of the country’s export strategy, along with greater coordination. This is why APEX-CI has been one of the leading organizations behind the creation of The Foreign Trade Advisory Commitee (Conseil Consultatif du Commerce Extérieur) , which is made of representatives of all institutions involved in trade for the elaboration of a national strategy. 

    In the paper we will focus on APEX-CI, to describe the support services mechanisms in place and evaluate it. 

    4. Support service mechanisms 

    APEX-CI has developed three major support services mechanisms. 

    4.1 Advocacy for improvement in the trade and business policy environment 

    Although the solution to most of the problems in the business environment is of the responsibility of the government, APEX-CI is dedicated to foster a change by influencing the creation of a positive trading and general business policy environment through advocacy and lobbying. For this purpose, APEX-CI has developed a strategy using the following instruments: 

    a. The Export Environment Improvement Fund 

    The purpose of this fund is to finance studies, meetings, trainings and other activities targeting government officials, lawmakers and exporters. The goal is to create a better understanding of the challenges and context of exports, and inform the main stakeholders in the export environment in order to induce the necessary changes. 

    b. The Trade Promotion Advisers Network (Conseiller du Commerce Extérieur : C.C.E) 

    A group of specialists in trade promotion have been identified and organized into a network. Their responsibility is to advise the government, lawmakers and exporters on major export promotion issues and to help develop effective strategies. 

    c. Promotion of an export culture 

    To improve the export environment, APEX-CI is aiming at building a strong export culture within the business community. The primary target is young educated people. To reach this target, APEX-CI has created the APEX-CI Export Award, which rewards the best university thesis on exports, involving all the business schools in the country. APEX-CI has also put in place the Exports Young Professional Programme. Under this scheme, young professionals are seconded to export activities in private enterprises. APEX-CI is co-financing this operation. This will help private companies develop their human resources in the exports field, hence improving their capacity in this area. 

    4.2 Trade Development Activities 

    APEX-CI has developed a wide range of trade development activities under the Matching Grant Scheme. Under this scheme, export activities are financed on a cost-sharing basis to individual private sector companies to stimulate export competitiveness. Eligible activities include short-term consulting, market missions, human resources development, productivity improvement and promotion. The services provided to individual enterprise depends on the beneficiary companies’ degree of export readiness. Accordingly, the assistance provided to new exporters is more intensive than that offered to more experienced exporters. The following product and market development activities and services are offered all exporters: 

    • Identification of export markets 
    • Market and product research 
    • Matching buyers and sellers 
    • Participation in trade fairs 
    • Training and development 
    • Product Packaging 

    4.3 The Trade Information Centre 

    As previously noted, one of the challenges faced by the exporters is access to market and product information. To address this concern APEX-CI has put in place several services for trade information dissemination under the management of the Trade Information Centre. The Trade Information Centre (CIC) is a point of contact for most users of APEX-CI’s services. It provides a wealth of trade, marketing and other relevant business information. The main activities of the CIC are: 

    • Responding to trade and other enquiries 

    This entails informing and advising clients on trade and other queries. This service has proved valuable in matching buyers and sellers. 

    • Information dissemination and research facilities 

    The Information Centre library has detailed information is available on both local and foreign countries, individual companies, products, markets, trade statistics, tariffs, trade agreements and general business conditions. 

    • Electronic trading through the internet 

    The Information Centre is also the home of Côte d’Ivoire’s Trade Point offering access to international market information, business opportunities and advertising. 

    • Publications 

    APEX-CI compiles a wide range of printed materials. APEX-CI has also published the Côte d’Ivoire version of Trade Secrets for Small to Medium Sized Exporters. In addition, APEX-CI publishes useful guides and brochures targeted at selected sectors and groups of business public. 

    5. Trade promotion support services assessment 

    APEX-CI has been in operation for less than three years. No formal assessment has been conducted so far by the Government or the World Bank, the two major financers of the organization. The information given here is the result of internal assessment and is also based on ITC’s evaluation index for Trade Support Organizations conducted in 2000 . The internal assessment is the result of feedback from the exporters and evaluation from APEX-CI internal consultants. 

    5.1 Business Environment 

    According to the ITC evaluation, the weakest point of the network in Côte d’Ivoire lies in what are called the "external factors", that is the factors related to the external business environment. In particular, the areas that need the biggest improvement are the structural institutions, the national export strategy and the national consensus for the promotion of exports. In other words, the trade promotion supports services networks lack the required institutions to do better. It is true that apart from APEX-CI, which started operating in 1998, there is no other institution for trade promotion. It is also obvious that no single institution can address all the needs and issues in the exports area. There is therefore a need to strengthen the support networks by initiating other institutions in areas such as export finance, export risk covering, etc. Likewise the national export strategy is not clearly defined. One of the reasons might be the political instability in the country in past years. In this situation it was difficult for government to formulate long-term trade strategy. APEX-CI is now lobbying the new government to develop an adequate national export strategy. The final issue raised by the ITC report on external factors is the lack of national consensus on exports. This should also be addressed by the definition of a clear national export programme and the development of an adequate communication strategy on this issue. 

     5.2 Access To Credit 

    Access to credit is probably the main concern of exporters. In their evaluation of the trade support service network, they point this out as the weakest link of the network. They argue that without the proper resources, any other action is worthless, as exporters do not have the necessary funds to carry on the action plans or activities proposed. To assist exporters in their daily relations with Banks and credit institutions, APEX-CI has published the ITC guide "How to Approach Banks". 

    The trade promotion support service networks in Côte d’Ivoire should be able to provide this type of service. This can be done through specified line of credits in local banks, or the creation of an export development bank. Another option would be that APEX-CI offer financial assistance to the exporters. However, it should be noted that this option could generate some risk associated with the management of this financial portfolio. 

    5.3 Access to technology and business know-how 

    APEX-CI is encouraging the development of technology transfer by offering local and international expertise to exporters. This has really been a challenge. First of all, the cost and availability of foreign expertise represent a barrier to their use by the local exporters. Moreover, local expertise in the field of exports is really scarce. One of the objectives of APEX-CI is to train and develop local expertise in trade and export-related fields. APEX-CI has successfully organized a local consultant database (APEX-BASE), with more than 50 local consultants now registered. As for international expertise, progress has been slow on account of recent political instability. 

    With regard to local consultants, early feedback from the exporters shows that they are willing to pay consultant fees once they have seen the importance of the work done, suggesting that with the right conditions, a local consulting market in exports is viable. 

    In the ITC assessment, APEX-CI was rated lower than average in the internal factor entitled "services". This shows that there is room for improvement in quality and availability of services to exporters. It should be noted however that in the same report, APEX-CI was given top marks for overall internal factors, particularly for strategic planning and financial autonomy. 

    5.4 Access to market information 

    The Trade Information Centre is reasonably well equipped (computers, website, software, hardware and databases). APEX-CI has published the ITC guide "Trade Secrets: The Export Answer Book". In summary, we can say that the Trade Information Centre is functional and ready to assist exporters. Concerning the dissemination of this information, we can note that more than 4,000 people have visited the centre. We now need to develop a more pro-active approach and deliver the information directly to the exporters; as opposed to have them come to the centre. 

    5.5 Overall assessment 

    APEX-CI was commended in the ITC report as The Trade Promotion Organization with the highest index for internal factors in the panel (private-sector orientation, autonomy, financing, personnel, strategic planning, flexibility, continuous evaluation process). Some of the objectives were not reached, partly because of the political instability of the country over the past two years. However, some improvements are needed in terms of services, access to credit, export environment, and the training of a strong local export consulting expertise. 

    Regarding the country business environment, and following the findings of ITC’s evaluation index for the Trade Support Organizations, APEX-CI is committed to push for deeper structural reforms and lobby the government. 

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      Posted 18 August 2010  


     

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