Session 3 -
Competitive Advantage and the Trade
Support Network – What is “Best Practice”?
The Issue:
Competitive advantage can only be realized if the trade support
network is functioning effectively and providing the services
required by the business community. In the majority of African
countries this network is not functioning well and export strategy is
not effectively addressing this weakness.
The Proposition:
“Best
practice” requires:
- That the national trade
support network focuses on competitiveness enhancement not simply
market development and export promotion.
Competitiveness
enhancement requires the trade support network to address issues
relating to capacity and competency development (border-in issues),
the reduction of transaction costs (border issues) and the
identification and pursuit of market opportunities (border-out
issues).
Focus of the Debate:
The
majority of trade support networks in Africa concentrate on
border-out issues. This is not “best practice”.
- That the national network
consists of an export strategy support network and a service
delivery network, with a
single organization having
responsibility for overall coordination.
The strategy support
network must include those organizations that influence the “business
environment”. It should have formal decision-making authority. It
must be structured and have leadership. The service delivery network
should, on the other hand, operate in a less formal manner, being
flexible in its response to specific needs and opportunities.
Focus of the Debate:
Few developing
countries in Africa apply this coordinated network approach. This
represents a major constraint to effective implementation of export
strategy.
The network should service the needs
of exporters, potential exporters and aspiring exporters. Each client
segments has different requirements. Given resource constraints, the
network must prioritize these segments and structure its services to
ensure the long-term competitiveness of the segments.
Focus of the Debate:
Most
export support organizations give priority to export-ready firms.
This is not “best practice”.
The national TPO should operate as a “first-stop shop”, not as a
“one-stop shop”. It should concentrate on the two priority needs of
the business community – finance and information. It should
operate as a referral service to more specialized
organizations in the network.
Focus of the
Debate: Most African TPOs
operate as a one-stop shop, despite their limitations to respond to
the finance requirements of priority client segments and their
inability to provide specialized services. This is not “best
practice”.
Trade support services will always need to be subsidized. Trade support
institutions should, however, endeavour to “run like a business” by
introducing revenue generating schemes that partially offset
expenditure. Moreover, performance monitoring and evaluation should
become a basic element of the institution’s modus operandi.
Focus of the Debate:
African
trade support organizations pay inadequate attention to the
challenges of effectiveness and efficiency. To successfully support
competitive advantage, significantly greater emphasis must be given
to the challenge of running the network like a business.
