1. Towards achieving the Millennium Development Goals (MDGs)

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1 Speech by Yasuo Hayashi, Chairman and CEO of JETRO UNCTAD High Level Segment Meeting Promotion of Trade and Investment Plan for Africa September 15 th, Towards achieving the Millennium Development Goals (MDGs) One of the keys for Africa to achieve sustainable economic growth and end poverty which are in line with the Millennium Development Goals (MDGs) is for African markets to be further linked into the world economy. In recent years, Africa has enjoyed average annual growth of over 5%, due to increased foreign direct investment related to rising resource and commodity prices. During this time, African companies with innovative business models have emerged as key players and are helping to integrate the African market into the world economy. We need to help further the corporate activities of such firms and support the foundation for Africa s sustainable development. We can do this by working to boost trade and investment in Africa, and today I would like to share what JETRO and Japan is doing towards this goal. 2. JETRO s support activities for Africa Introducing African products to the world market Expansion of exports is an integral part of a country s industrial development, so JETRO has been working on various projects and activities aimed at boosting African exports to Japan, a mature market with very high standards. This past May, we held African Fair 2008 as an official event of the 4 th Tokyo International Conference on African Development (TICAD IV). The event featured exhibits by more than 350 companies from some 40 African nations, with over 46,000 visitors and more than 1,400 businesses inquires during the five-day fair. Several participants are still in talks with potential Japanese partners, and we are hoping that the event will yield much fruit for both sides. In addition to helping African companies take part in such large-scale fairs in Japan, we also work on several long-term projects aimed at helping African firms enter the Japan market. 1

2 One project focuses on shea butter, which is made from the resin of shea trees, a native of western Africa. Consumers in the West are very familiar with shea butter products, such as soaps and skin creams, which are known for their mildness and moisturizing qualities. But traditionally, foreign firms have imported just the basic raw shea butter from Africa and made finished products elsewhere: the UK s Body Shop and France s L OCCITANE offer two examples. Under the project, African shea butter producers make their own products in Africa and export finished products, such as soaps. Our experts worked with a collective of women shea butter producers in Ghana to improve soap quality to the level required by the Japanese consumers. The soaps made their way to the Japan market, in cooperation with a Japanese importer and retailer of natural products called Tree of Life. The success of this project has contributed greatly to increasing the income of those producers. In fact, a group of shea butter makers from Ghana were invited to African Fair, where they gave live demonstrations on how the butter is made. I spoke with one of the women, and was happy to hear from her that, because of the shea butter project, she was able to get much needed dental work. In another of our Africa-related projects, we worked to boost direct exports to Japan of cut flowers from East African countries such as Kenya and Ethiopia. Traditionally, cut flowers from East Africa are exported first to Europe and then to countries like Japan, via Dutch auctions. But JETRO s program facilitated the export of the flowers directly to the Japan market. Our experts worked with producers on everything from color and size to quarantine matters, so that the flowers would meet Japan market standards. The project has been a great success: Ethiopia s exports of cut flowers went from just 260 in 2005 to 4.8 million in 2007, and exports from Kenya tripled to about 10 million flowers in the same period. The launch of direct flights between Dubai and Japan (by Emirates Airline) also helped this. In addition to these activities, we conducted evaluation surveys in the Japan market, presented samples at trade fairs and conducted various PR activities. As part of the Yokohama Action Plan adopted at TICAD IV, JETRO launched a new program, Access Japan, to increase the number of successful cases that I just mentioned. For each African product promoted 2

3 under this program, we carefully choose the best combination of schemes, from marketing surveys and technical guidance to invitational programs for African producers to take part in trade fairs in Japan as well as study tours. Until recently, our programs to promote exports to Japan from least developed countries (LDCs) have been conducted in response to requests from individual LDCs. Recognizing, however, that an effective and promising approach to bringing LDC products to the Japan market is to tailor such products precisely to the needs of Japanese importers. We also started a new program in 2007, in which we partner with Japanese companies willing to import products from an LDC. Our experts then provide advice and guidance to the LDC firms on product quality, labeling, and other areas. A number of goods from Africa have been successfully imported into Japan through this program, including sisal bags from Kenya and tea from Malawi. Foreign firms often point out that there are many demands to enter the Japan market, regarding, for example, product quality, delivery deadlines, etc., but once you do enter the market, entering others should be relatively easy. In addition, JETRO places importance on exports of these successful products to third countries, in cooperation with related organizations like UNDP. In view of the merit of LDC, it is of great value to expand JETRO s support into third countries particularly to Asian market by using to the maximum extent an accumulated know-how. 3. Furthering foreign direct investment in Africa At TICAD IV, I had the opportunity to speak with several African leaders, and the message I got was that Africa is looking to Japan and Asia to build sustainable growth for the future. And one way for this is to boost Japanese investment in Africa. They said that, 50 years ago, Africa was ahead of Asia in terms of development, but now the reverse is true; and apart from civil wars and other conflicts, Africa has not really benefited from partnerships with Western countries. 3

4 We held a symposium as part of TICAD IV to introduce Africa s investment environment and business potential to Japan s business community, attracting an audience of 700 people. The conclusion to emerge was that, to enhance the dynamism of African business and let the benefits of growth be shared throughout African society, governments and the public sector need to play a larger role, in addition to the efforts made by individual firms. Such public-private collaboration is required to do business in African economies, which still have high risks and costs. There are basically three tasks towards achieving this: 1) One is improving Africa s business environment. Despite the continent s booming economy, doing business in Africa still means facing many obstacles. Issues to be addressed by the public sector range from the establishment of good governance and transparency to improvement of legal systems and their operation, reinforcement of infrastructure and development of human resources. 2) The second task is supporting firms corporate social responsibility (or CSR) activities, which include fighting infectious diseases, getting involved in community development and also assisting in education. Such activities truly deserve positive government support. 3) The third task is implementing official development assistance that reflects the needs of the private sector. Close public-private partnerships are the key to promoting investment into Africa. There are many examples of how such partnerships can be effective, such as with Pamir Private Power Project in Tajikistan, which used a combination of financing from donor countries, recipient countries, private financial organizations and companies, to construct a power plant that has resulted in lower electricity costs for the country. Among the several Japanese companies expanding their business in Africa, I d like to mention Sumitomo Chemical, which manufactures the Olyset Net, an insecticide-impregnated mosquito net that helps protect against malaria. The firm s plant in Tanzania employs 3,200 people, and they recently announced plans to build another in Nigeria, with hopes of creating 5,000 4

5 jobs. The nets not only help protect people from Malaria they are said to have saved some 2 million lives but create abundant local employment. Another example is a business started in Uganda by Yuichi Kashiwada in 2000, called Phenix Logistics. Mr. Kashiwada first went to Uganda in the 1960s to set-up a shirt factory for a Japanese company, Yamato. But when the company ran into difficulty because of cheap imports from China flooding the market, he bought the factory from Yamato and started his own company, Phenix but this time making shirts made from locally grown organic cotton. This helped distinguish his firm, and it s doing very well today. By next year, Phenix expects to have over 1,000 employees in Uganda. Such companies also raise income levels and promote technology transfer into Africa. I think we need to increase the number of such positive examples to further drive Africa s growth. 4. Results of TICAD IV One of the main achievements of TICAD IV was the Yokohama Action Plan, which set out specific goals, specified key players and established a follow-up mechanism to monitor the activities. In addition to JETRO s Japan market cultivation program in the area of trade and investment, the Japan Bank for International Cooperation (JBIC) set-up a fund to promote investment in Africa, providing US$2.5 billion over the next five years. And the Japan International Cooperation Agency (JICA) which takes a lead role in LDC development in many fields will train up to 500 people in its trade official development course by 2012, expand the number of its trainees in the private sector to 1,500, and extend the One-Village, One-Product (OVOP) campaign to 12 countries. In the area of natural resource development, the Japan Oil, Gas and Metals National Corporation (JOGMEC) is setting up a special support and aid system targeting Africa. All of these activities are recognized as contributing to the achievement of the MDGs. 5

6 One resource-development scheme aims in particular to combine the efforts of the private sector with Official Development Assistance (ODA) targeting infrastructure development. Moreover, as with industrial and agricultural products, it is vitally important that resource-rich LDCs get their resources into international markets at fair prices. Pursuing such fair evaluation, through integrating with the world economy in a sustainable manner, will certainly aid a country s development and of course maximize the value of such resources. As I have explained, JETRO is working to do its part to aid Africa s development and facilitating its full integration into the world economy. Therefore, it is particularly disappointing that the July WTO trade talks collapsed, as special treatments for LDCs were left hanging. Also, with the collapse of the talks, I think we will see more free trade agreements (FTAs), in addition to the current 148. But such FTAs do not necessarily benefit the LDCs, especially in Africa. Apart from intra-regional African agreements such as the Southern African Development Community (SADC) and East African Community (EAC), Africa has only one extra-regional FTA South Africa s trade deal with Europe. Africa on the whole is not yet in a position to negotiate international trade deals, so there is concern that it would be left behind in global development. Therefore, early resumption of WTO talks is hoped for. I think if we all step up efforts in the areas I mentioned, we will come a lot closer to achieving the Millennium Development Goals. Thank you very much. 6