Gtz fachtage 22 august 2007 bonn german m ller valerie schuster michael nebelung
This presentation is the property of its rightful owner.
Sponsored Links
1 / 24

gtz Fachtage, 22. August 2007, Bonn German M üller, Valerie Schuster, Michael Nebelung PowerPoint PPT Presentation


  • 56 Views
  • Uploaded on
  • Presentation posted in: General

gtz Fachtage, 22. August 2007, Bonn German M üller, Valerie Schuster, Michael Nebelung. Improving the Business Climate Using the Value Chain Approach – Examples from the Ethiopian Pharmaceutical Sector. Agenda. General Approach Example Ethiopia Ethiopian Pharmaceutical Sector.

Download Presentation

gtz Fachtage, 22. August 2007, Bonn German M üller, Valerie Schuster, Michael Nebelung

An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -

Presentation Transcript


Gtz fachtage 22 august 2007 bonn german m ller valerie schuster michael nebelung

gtz Fachtage, 22. August 2007, Bonn

German Müller, Valerie Schuster, Michael Nebelung

Improving the Business Climate Using the Value Chain Approach – Examples from the Ethiopian Pharmaceutical Sector


Agenda

Business Climate and Value Chains

Agenda

  • General Approach

  • Example Ethiopia

  • Ethiopian Pharmaceutical Sector


Ethiopia development in a non market economy

Business Climate and Value Chains

Ethiopia – Development in a non-market economy

Ethiopia’s mental model is still influenced by ideas of a planned economy (“Developmental State”)

  • Lack of market understanding /knowledge

  • Lack of demand orientation

  • Lack of market information

  • Insufficient communication between different market actors

  • Spot-market relationships predominant

  • Lack of structures and institutions such as functioning capital market, associations

  • Inward looking focus: lack of trade relationships with neighboring countries and little exposure to international good practices

Non-market

economy


Ecbp four components for increased competitiveness and employment

Business Climate and Value Chains

ecbp – Four components for increased competitiveness and employment

Quality Infrastructure

University

Reform

ecbp

Private Sector and

Business Development

TVET

System


Bottom up sector development and top down barrier removal via bc indices

Business Climate and Value Chains

Bottom-up Sector Development and Top-Down Barrier Removal via BC Indices

Barrier removal – BC Indices

Sector development

Combination of both

Advantage :

  • Tailored measures to service specific needs of one industry and/or specific actors

  • Quick wins

    Disadvantage:

  • Possible errors in assessing growth potential of chosen sector

  • Sustainability uncertain if supportive measures stop

  • Distortions in the market regarding other sectors

Advantage :

  • Creation of environment for entrepreneurship

  • No distortions of market: Most competitive sectors/companies will grow

    Disadvantage :

  • Sector specific bottlenecks not recognized

  • BC Indices not always up do date

  • Informal barriers to implementation of policy reforms not recognized

  • Actors to carry out policy changes not indicated

versus

Combination of both top-down barrier removal via Business Climate Indices and sector-based bottom-up initiatives proves to be fruitful


Support of overall bc measures though value chain approach

Business Climate and Value Chains

Support of overall BC measures though Value Chain Approach

PPD Fora

Information Exchange

RemovingInformal Barriers

Empowerment Private Sector

Description

  • Sector specific

  • Identification of specific BC bottlenecks

  • Verification of opinion of one group of actors against the opinion of others

  • Constant dialogue between policy makers and companies

  • Removing of informal barriers (e.g. lack of capacity of relevant actors) through (sector) development measures

  • Macro level: (Nation) branding

  • Meso level: CD for intermediate actors

  • Micro Level: technical/managerial upgrading of companies (companies as partners for export/ FDI)

  • Goal: Private Sector to take over new role as advisor, lobbyist, implementer


Ethiopia quo vadis very ambitious targets for ethiopia by current government

Business Climate and Value Chains

Ethiopia – quo vadis? Very ambitious targets for Ethiopia by current Government

South Korea

Ethiopia

Tanzania


Ethiopia s poor ranking in wef index due to infra structure health and education

Business Climate and Value Chains

Ethiopia’s poor ranking in WEF Index due to Infra-structure, Health and Education…

Higher Education and Training

Health and

Education

Country

Institutions

Infrastructure

Macroeconomy

Singapore

Finland

Germany

South Africa

Kenya

China

Ethiopia

India

Brazil

Tanzania

Source: WEF, 2006


Gtz fachtage 22 august 2007 bonn german m ller valerie schuster michael nebelung

Business Climate and Value Chains

… as well as a poor performance in productivity drivers such as market efficiency, technological readiness and innovation

(Ranks of selected country examples)

Technological Readiness

Business sophistication

Country

Market Efficiency

Innovation

Singapore

Finland

Germany

South Africa

Kenya

China

Ethiopia

India

Brazil

Tanzania

Source: WEF


Relatively good overall business climate but poor ease of trading across borders

Starting a business

Dealing with licences

Hiring / Firing workers

Registering property

Getting credit

Protecting investors

Paying taxes

Enforcing contracts

Closing a business

Business Climate and Value Chains

Relatively good overall business climate but poor ease of trading across borders

Ethiopia’s ranking

Overall ranking out of 175 countries

Country

Singapore

Thailand

Germany

South Africa

Kenya

China

Ethiopia

Brazil

Trading across borders

India

Tanzania

Source: Doing Business 2006, World Bank


Verification of world bank results for the pharmaceutical textile leather sector through ppd

Business Climate and Value Chains

Verification of World Bank results for the pharmaceutical, textile, leather sector through PPD

Benchmarking

Stakeholders

Interviews, Analysis, Workshops

  • Policies far better than suggested*

  • Problem rather lies in capacity of actors/ infrastructure

  • Trading across borders:

    • Export: 8 docs, 600 US$ per 20 ft container, 22 days

    • Import: 11 docs, 2,000 US$ per 20 ft container, 40 days

  • Suggestion: capacity of actors, infrastructure

Doing Business Report

  • Overall ranking of Ethiopia fairly good: 97 out of 175 countries ranked

  • Worst performance in trading across borders: 147 out of 175 countries

    • Export: 8 docs, 1,000 US$ per 20 ft container, 45 days

    • Import: 11 docs, 2,455 US$ per 20 ft container, 52 days

  • Suggestion: change policies and regulations

vs.

*also verified by USAID eCLIR for WTO accession


Gtz fachtage 22 august 2007 bonn german m ller valerie schuster michael nebelung

Business Climate and Value Chains

Top-Down Approach Activities derived from Stakeholder Analysis – important, but not enough to make sector competitive

Training &

Communication

Shippers‘

Council

Transport

One Stop Shop

  • Develop comprehensive training schemes for

    • Customs

    • Banks

    • Companies

    • Transportation companies

  • Trust-building and improvement of mutual understanding

  • Creation of PPP – Project to unite exporters and importers and point of contact

    • Vis-à-vis Government regarding export promoting policy changes

    • Vis-à-vis shipping liners regarding reliability and prices

    • Generation of information relevant for traders

  • Establishment of National Trans-port Association:

    • Increase fleet efficiency and utilization

    • Lower costs

  • In-depth analysis of FDI potential in truck fleet and railroad regarding legal regulations and economic viability

  • Support forongoing activi-ties of other actors

    • Establishment

    • Financing


Completion via value chain analysis of ethiopian pharmaceutical sector

Business Climate and Value Chains

Completion via Value Chain Analysis of Ethiopian Pharmaceutical Sector

Functions

Service Inputs

Producedrawmaterial

Import

Manu-facturing

Wholesale

Distribution

Naturally sourcedraw mat.

PSLD

VC Actors

Public Health

Pharmid

Private Retailers

Agents

Local Manufacturers

Foreign Manufacturers

Private Wholesalers

Others

Others

VC Supporting Actors

ecbp

Pharma Association

Banks

MoR

Donors

Manufacturers‘ Association

Customs

MoTI

School of Pharmacy

Customers‘ Association

MoH - DACA

WTO/WHO


Gtz fachtage 22 august 2007 bonn german m ller valerie schuster michael nebelung

Business Climate and Value Chains

Growth targets in pharma sector vs. Challenges identified in Value Chain Stakeholder Workshop/Expert Analysis

Assuming Government targets for domestic production and exports

in mio US $

Challenges

  • To reach targets, FDI is needed, but Ethiopia is not known as potential investment/ production partner

  • TRIPS – need for adjustment of regulations to fully use flexibility of patent rights

  • Duty Issues on imported raw materials

  • Discrimination of local companies in tenders (KIT system)

  • Access to finance (supplier credit)

  • Lack of Capacity of national Drug Administration and Control Authority

  • Lack of GMP certification of companies

  • Lack of technical and managerial (especially regarding marketing) capacity in companies

Domestic consumption

CAGR

41%

Exports

191

38

34

153

0

2005

Total production

2010

Government target for exports/production

Source:MOTI; team analysis


Combined top down and bottom up approach activities

Business Climate and Value Chains

Results achieved

Combined Top-Down and Bottom-up approach Activities

Re-check InternationalBC indices/ Activities

Proved WB indicators to be inaccurate/ current situation in Ethiopia better

Advocacy Tax/Duties/ Access to Finance

Import Duties for raw materials reduced to zero

Macro Level

Advocacy Tenders

Package Tenders opened, 150% more tenders won by local companies

Advocacy Patent Law

Quality of Inspections improved, false foreign drugs banned, feasibility bioequivalence lab

Actions

Technical Support DACA

Meso Level

PhD program in cooperation with local companies started

Technical Support School of Pharmacy

Regular PPD, Elaboration of Development Master Plan, good cooperation with UNCTAD/Regional Initiatives

PPD/Donor Coordination

Support taking advocacy role

Private sector actively engaging in PPD, taking over new advocacy role

Envisaged that 3-4 companies reach GMP qualification mid next year

Support GMP Qualification

Micro Level

First meetings held, regular exchange

Market LinkagesBuyer/Seller/Supplier

International Matchmaking

Negotiations with German investors on the way

Source: Team analysis


Conclusions

Business Climate and Value Chains

Conclusions

Combination of barrier removal and sector development

Potential for further development

Advantages:

  • Tailored measures to service specific needs of one industry and/or specific actors

  • International Benchmarking with other countries possible

  • Systemic and Institutional Change combined with the necessary capacity development for relevant actors (“on the job”)

  • Large and sustainable impact as well as quick wins (helps to keep the motivation of the actors up)

  • Larger amount of resources to really boost industrial development in selected sectors

  • Identification of potentials for transfer to other countries/regions


Thank you for your attention

Business Climate and Value Chains

Thank you for your attention


Backup

Business Climate and Value Chains

Backup


Export procedure 1 2

Business Climate and Value Chains

Export procedure* (1/2)

Receiving

Letter of credit

Bank

permit

Export

declaration

Transport

to Djibouti

Description

  • Mode of payment by beneficiary: L/C; Telegraphic Transfer, CAD or Consignment

  • Preparation by clearing agent***

  • Verification and inspection of goods**** by customs

  • Truck

  • Rail not available

  • Permission to bring foreign currency to Ethiopia

Agencies

involved

  • Private bank delegated by National Bank**

  • Clearing agent

  • Customs authority (ECuA)

  • Truck company

  • Private bank delegated by National Bank

Time

  • 30 min

  • 1-5 days

  • 2 days from Addis

Costs

  • 0.45 – 0.5 % of value of good

  • ~ 3000 Birr / 20 ft container

  • ~ 4000 Birr / 20 ft container

* Assuming necessary export permit from MOTI has been obtained; **Only coffee and gold exports handled directly by the National Bank; *** Invoice, certificate of origin, bank permit, freight invoice / cargo booking;**** Depending on product additional authorization by Ministry of Finance and Economic Development, Ministry of Trade and industry, Ministry of Health, Quality and Standards Authority of Ethiopia, Ethiopian Intellectual Property Office, Ministry of Agriculture, etc. required

Source: Interviews


Export procedure 2 2

Business Climate and Value Chains

Export procedure (2/2)

Clearance

In Djibouti

Shipment

Bill of

lading

Payment

of Exporter

Description

  • Unloading truck

  • Verification of export declaration and container** by Djibouti customs

  • Loading of vessel

  • Bill of lading collected by clearing agent

  • Docs required by L/C

  • Payment in Birr*

  • Notification of National Bank

Agencies

involved

  • Clearing agent

  • Djibouti customs

  • Clearing agent

  • Shipping company

  • B/L forwarded to beneficiary by handling bank

  • Private Bank

  • National Bank

Time

  • 2 -3 days

  • 1-2 days

  • 1-10 days

Costs

  • Included in clearing agent fee

  • 200 Birr

  • 1000 Birr service charge for money transfer

* Option of retention account: 10% can be kept in foreign currency; 90% can be kept in foreign currency for 28 days in foreign currency account. ** Due to container shortage some merchandize will be containerized and weight in Djibouti

Source: Interviews


Import procedure 1 2

Business Climate and Value Chains

Import procedure (1/2)*

Pro forma

invoice

Insurance for

Goods**

Permit for

foreign currency

Letter of cre-

dit / bank docs

Description

  • Pro forma invoice from supplier to importer

  • Insure goods listed in pro forma invoice

  • Import license

  • Pro forma invoice

  • Insurance

  • Tax identification No

  • Opening of L/C** obtainable from any bank

Agencies

involved

  • Private bank delegated by National Bank

  • Private bank delegated by National Bank

  • None

  • Insurance company

Time

  • 1 day

  • 1-3 days

  • 1-15 days

Costs

  • 0.4-0.5 % of value of good

  • 1% of value of goods

  • 2,5-3% of value of good bank service charge

* Assuming necessary import license from MOTI has been obtained and Importer pays via L/C and not cash against documents; ** Other modes of payment: Cash against documents or advance payment (if sum for advanced payment exceeds US $ 5000 bank guarantee by foreign bank required)

Source: Interviews


Import procedure 2 2

Business Climate and Value Chains

Import procedure (2/2)

Customs

declaration

Clearing

Djibouti

Transportation

to Addis

Clearing

ECuA

Description

  • Preparation of necessary docs by clearing agent*

  • Payment of duties

  • Customs in Djibouti verify sent docs and goods

  • Unloading and loading of truck

  • Payment of port dues & storage

  • Transport via truck

  • Verification of goods and docs

  • Clearing agent

  • ECuA

  • Clearing agent

  • Customs Djibouti

  • Port authorities

  • Clearing agent /freight forwarder

  • Truck company

  • ECuA

Agencies

involved

Time

  • 1-7 days

  • 3-15 days

  • 2 -7 days

  • 1-3 days; occasio-nally up to 2 months

Costs

  • ~ 3.000 Birr for 20 ft container

  • 10.000 Birr for 20 ft container

*Bill of Lading, packing list, invoice, certificate of origin, bank permit, insurance, freight invoice and - depending on product – required additional authorization by Ministry of Finance and Economic Development, Ministry of Trade and industry, Ministry of Health, Quality and Standards Authority of Ethiopia, Ethiopian Intellectual Property Office, Ministry of Agriculture, etc.

Source: Interviews


Core issues regarding input drivers in pharmaceuticals

secondary issues identified by stakeholder workshop

Business Climate and Value Chains

core issues identified by stakeholder workshop

Core issues regarding input drivers in pharmaceuticals

Technical

Skills

Managerial

Labour force

Input drivers

Labour

Productivity

Cross value chain

Networking

Marketing

Information

Capital stock

Revenue

Access to capital

Deprecia-tion

Capital employed

Quantity

Supply of materials

Capital

Invest-ments

Quality

FDI

Productivity

Technology

Domestic savings

Domestic investment

Land

Quality managmt

Capital outflow

Productivity

Duration

Land in use

Amount

Productivity drivers

Legal framework

Interaction with Government

Infrastructure

Macroeconomic stability

Capital market liquidity

Entrepre-neurship

Source: Team analysis


Core issues regarding productivity drivers in pharmaceuticals

secondary issues identified by stakeholder workshop

Business Climate and Value Chains

core issues identified by stakeholder workshop

Core issues regarding productivity drivers in Pharmaceuticals

Public Tenders

Tax

Legal Framework

Macro-economic Stability

Duties

Patent Law

Business Climate

Red Tape

Interaction with Government

Entrepreneur-ship

Corruption

Road/Port

Infrastructure

Capital Market Liquidity

Quality

Electricity

Telecom / Internet

Source: Team analysis


  • Login