Asia-Africa Cooperation in Export Promotion
Enhancing Asia-Africa Trade through
Export Promotion in Africa:
The Seoul Framework for Cooperation Seoul, December 14-16, 1998
1. International trade has increasingly become the main engine of economic growth. For over three decades since the mid-1960s, Asian countries, particularly in East and South-East Asia, have achieved high rates of economic growth coupled with reduced income inequality and substantially improved standards of living. Investment in human capital and physical infrastructure, and the adoption of market-friendly and export-led policies have been instrumental in achieving this remarkable performance.
2. On the other hand, Africa's share in world trade has declined from 3.1 percent in 1990 to 2.2 percent in 1995 and less than 2 percent in 1997, as a result of over-dependence on a limited range of commodities coupled with policies that did not favor expansion of external trade. Africa has therefore not been able to take advantage of the opportunities offered by the emerging liberalized and globalized world economy.
3. Export promotion and diversification are among the major goals of Africa's growth-oriented strategy and the Asian experience is of particular relevance in this regard. In this context, the Forum on Asia-Africa Cooperation in Export Promotion was held in Seoul, from 14-16 December 1998 at the initiative of the Government of the Republic of Korea, and in cooperation with the United Nations (Office of the Special Coordinator for Africa and Least Developed Countries, OSCAL). This initiative is consistent with the recommendations of the Secretary-General of the United Nations as contained in his report on the "Causes of Conflict and the Promotion of Durable Peace and Sustainable Development in Africa", as well as the Tokyo Agenda for Action, adopted in October 1998 at the Second Tokyo International Conference on African Development (TICAD), which also placed great emphasis on Asia-Africa cooperation.
4. The Forum was attended by 70 participants, including relevant high government officials, executive heads of trade and investment promotion centers, senior representatives of chambers of commerce and business communities from 25 African and 10 Asian countries, as well as representatives of 7 regional and sub-regional organizations in Africa and Asia, and the United Nations system (list of participants attached). The Forum provided the opportunity to review both the Asian experience and the challenges facing Africa in export promotion and diversification as well as devise this framework for cooperation and equal partnership.
II. Asian Experience and Challenges facing Africa
5. Successful elements of the export-growth strategies used in Asian countries include institutional mechanisms aimed at facilitating access to imported inputs at world prices, easing external market penetration, and improving government-business relations. Other elements relate mostly to building and enhancing capacities such as universal primary education, wide access to secondary, vocational and higher education with emphasis on science and technology, entrepreneurship development, particularly for small and medium-scale enterprises, and building a competent civil service, including the provision of adequate incentives.
6. The main challenge facing Africa is to sustain and improve upon the recent economic gains characterized by an average annual growth of GDP well above population growth. Indeed, accelerated economic growth is also of paramount importance if Africa is to reverse its increasing marginalization as reflected by quantitative indicators, particularly its small share of world trade, the limited inflows of foreign direct investment, the heavy debt burden, the relatively low utilization of communication technology, the falling standards of education, the deteriorating health services, and the declining food self-sufficiency ratio.
7. There are, however, some positive developments in Africa that must be taken into account in meeting the above challenges. These include, for most African countries, the implementation of sound economic reform programmes, the adoption of democratic principles, and the move towards economic cooperation and integration. These positive developments are essential to the export-led growth strategy.
8. African countries should aim at sustaining high rates of growth, by pursuing policies that substantially increase the mobilization of domestic savings necessary for building critical capacities which diversify and expand production structures, and that facilitate the integration of their economies in the global trade and financial system. On the other hand, such a growth-oriented strategy would require more ambitious and coordinated support from Africa's development partners, including the provision of broad-based financial and technical assistance. No doubt, Asian experience and expertise, particularly in capacity building and institutional mechanisms, are identified as important components for export promotion in African countries.
III. Areas for Asia-Africa Cooperation for export promotion in Africa.
(a) Capacity Building
9. A major requirement for Asia-Africa cooperation in general, and in capacity building in particular, should be based on the basic principle of African countries' commitment to create an enabling environment for foreign investment, including efforts towards projecting a better image of the continent as well as building confidence. They should, among others, disseminate successful experiences and examples on the continent. On the other hand, Asian countries should look at Africa as an opportunity for investment and mutual benefits.
10. Furthermore, Asia-Africa cooperation in capacity building should be guided by the present context of globalization and trade liberalization. Such cooperation should take place at inter-regional, regional, sub-regional, national, and enterprise levels, as may be required, and should cover the relevant areas of infrastructure, human resources development, financing, marketing, information gathering and dissemination.
11. Asia and Africa should devise a joint strategy aimed at expanding their markets both in the two regions and in those of third parties, through such measures as industrial relocation and investment aimed at diversifying production structures. Such a strategy would include capacity building measures for African countries.
12. Measures required for capacity building in the areas outlined above include:
(i) institutionalization of cooperation at policy and business levels;
(ii) encouraging the representation of African organizations in Asia;
(iii) promoting cooperation among the media in the two regions;
(iv) improvement in the organization of trade missions between the two regions, in making them more result-oriented;
(v) promoting cooperation among consultancy services in the two regions;
(vi) promoting triangular technical cooperation;
(vii) encouraging direct support at enterprise level for improving product competitiveness including by technology transfer, through enterprise to enterprise cooperation, or official development assistance;
(viii) use of sub-regional organizations as vehicles for capacity building;
(ix) promoting TCDC activities in human resources development;
(x) cooperation in the organization of sub-regional, regional, and inter-regional trade fairs;
(xi) information networking on trade and investment opportunities, and on trade facilitation methods, including among Chambers of Commerce and the business communities; and dissemination of country profiles and trade related publications.
(b) Institutional Mechanisms
13. In order to expand exports, it is necessary for African countries to build their institutional capacity in export promotion. In this regard, different institutional models for export promotion were discussed, notably the Singapore, Indian and Mauritian models. It was agreed that different institutional frameworks were appropriate for different countries, and that no hard rule exists as to the "correct" route to follow.
14. Two specific issues of Asia-Africa cooperation with respect to institutional mechanisms were highlighted. They include project formulation, and technical obstacles to export promotion.
15. With regard to project formulation, the following was noted:
(i) The cost of carrying out feasibility studies is prohibitive in many African coun tries, especially for the entrepreneurs. Therefore, every effort should be made to alleviate this constraint. In this regard,use could be made of more simplified and economical pre-feasibility studies methodologies, such as UNIDO's mini COMFAR (Computer Model for Feasibility Analysis and Reporting);
(ii) In many African countries, it is difficult to mobilize long-term financing for project implementation. In this regard, the Asian experience in the use of development banks for providing such finance was noted.
16. With regard to technical obstacles to export promotion, the following was noted:
(i) Design, packaging and quality control skills are lacking in many African countries. In this regard, it was suggested that Asian institutes of design and packaging and African Trade Promotion Organizations(TPO) should cooperate more closely to build the capacity of the latter in this area;
(ii) Considerable information barriers exist with regard to African knowledge on potential export markets. It was suggested that African TPOs have access to existing trade data bases through a more coordinated approach, and that better use should be made of market surveys;
(iii) It was agreed that better use could be made of donor support in the area of training and human resources development for trade promotion, and KOICA's training programmes were noted in this regard;
(iv) It was agreed that African countries should make more use of trade missions as well as regional trade and investment fairs, notably in collaboration with Asia in the spirit of Asia-Africa cooperation as expressed by this forum. In this regard African countries were invited to participate in the Asia Pacific International Trade Fair (ASPAT) to be held in October 1999 in Seoul, and in September 2000 in New Delhi. Asian countries were invited to participate in the Eighth All-African Trade Fair in Abidjan in 2000. Participants were also invited to the African exhibition organized by Japan External Trade Organization (JETRO) in Tokyo, and to the first Asia-Africa Business Forum, both to be held in 1999.
IV. Implementation and follow-up
17. Participants recommended that Asian and African countries, in their bilateral and multilateral cooperation endeavors, should ensure that due attention is given to the measures outlined in this framework. Furthermore, participants in this Forum agreed to organize similar meetings on a regular basis to review the implementation of these measures. To that effect, it was recommended to set up a Steering Committee, including initially, the Korean Government, UNITED NATIONS/OSCAL, UNDP, and OAU, to ensure an immediate follow up to this Forum. The composition of the Steering Committee will be reviewed upon further consultations.
18. The Seoul Forum provided a unique opportunity for various actors to exchange views on practical aspects in the field of trade and export promotion, and to explore ways and means of strengthening Asia-Africa Cooperation in this critical area. Participants in this Forum, from Asian countries on the one hand, and from African countries on the other, reaffirmed their strong will and determination to cooperate in a pragmatic and practical manner, to promote trade and joint ventures among them in a mutually profitable spirit. The participants expressed their appreciation and gratitude to the Government of the Republic of Korea for this important initiative, and for the excellent facilities put at their disposal, which greatly contributed to fruitful deliberations. In this regard, participants adopted a vote of thanks to the Korean International Cooperation Agency (KOICA) and the United Nations Office of the Special Coordinator for Africa and Least Developed Countries (OSCAL), the co-organizers of the Forum.