|Exporting Africa: Technology, Trade and Industrialization in Sub-Saharan Africa (UNU, 1995, 434 pages)|
|Part I. Exporting Africa: an analysis|
|5. Main findings of the study: a synthesis|
The study found that internal linkages (i.e. within the country) are limited. While there were some linkages among firms which shared premises in the industrial estates, there were only isolated cases of subcontracting arrangements outside these networks. There is little subcontracting or local procurement of manufactured inputs in the exporting firms. Large firms have only infrequent relations with small firms except for the purchase of some repair and maintenance services. Information and technology diffusion among firms is minimal except for very informal channels.
Several factors explain this situation. First, import dependence over a long time has pre-empted the search for local alternative linkages. For instance, in the eases of NEM, Afrocooling and Matsushita, the lack of linkages reflects the pattern of import substitution industrialization which emphasizes import-dependent assembly. Second, access to tied donor finance reduced the need to search for local sources of supply. Third, the capability to search for various local suppliers had not been developed. Fourth, some firms competed with their potential suppliers of technological services rather than being assisted by them. For instance' Themi of Tanzania produced farm implements, some at least of which were also being produced for the domestic market by two research and development institutions. The competitive relationship between the firm and the institutions which are supposed to provide technological services was not conducive to the development of technological linkages between them. Lastly, poor inter-sectoral linkages may reflect poor infrastructural facilities for small firms, biases in policies and in credit markets and the lack of an extension network.
Industry associations had made attempts to promote interactions among local firms by harmonizing production processes (e.g. identification of excess capacity in individual firms and possibilities of subcontracting, trading in spares, joint quality control, etc.). The ease studies showed that in isolated incidents firms which receive large export orders have subcontracted some of the work to other firms. Inter-firm trade in unfinished products is very rare.
The creation of linkages or establishment of input-producing activities, have been influenced by government policy. For instance, in the case of textiles and brewing, the establishment of some input-supplying activities was influenced by government policies discouraging imports (e.g. yarn and malt in Nigeria). Some of these firms have achieved such tremendous expansion that they now export as well as selling on the local market. In the case of the brewing industry in Nigeria, the search for local alternatives was intensified with the introduction of restrictions on importing barley. Increasing success with local substitutes for barley malt improved the capacity utilization rate for the industry. The search for local substitutes for imported barley malt involved most of the firms in investment in R&D, as well as substantial plant conversion. Their efforts were complemented by the independent research endeavour at the Federal Institute of Industrial Research, Oshodi (FIIRO), which, through some of its research report series, demonstrated that lager beer could be produced using only sorghum. Today, most of the more successful firms use maize and sorghum in their beer production process.
The case studies found that buyers and consumers of the firms' products provided useful market information. They were very instrumental in inducing product quality improvements. The interaction with export markets, which are more demanding, was particularly effective in this respect.
Linkages with marketing agents have been common among exporting firms which are not large enough to afford large investments in building their marketing capabilities. The role of marketing agents had been observed to be important in South Korea but there seems to be one difference; that is, Korean firms selectively let foreign buyers do much of the marketing during the early stages of export development but this role was gradually transferred to the firms or to local trading institutions. This progressive transfer process does not seem to have taken place as yet except for some firms in Mauritius.
Various problems of infrastructure have been pointed out in the country studies as obstacles to the attainment and maintenance of competitiveness in export markets. Supportive infrastructure is an important prerequisite for successful exporting. Expensive, sporadic and unreliable transport and communications are a serious impediment to the exporters of non-traditional goods. Reliability of delivery is also critical. High transport costs contribute greatly to the lack of competitiveness of exports. Poor telecommunications and constant power and water interruptions also raise the costs of doing business and compound the problem of lack of information. To obtain electricity, some firms had to purchase generators or other equipment which is ordinarily supposed to be purchased by the national electricity supply authorities. This added unnecessary costs to the operations of the firms.
Information flow is very important if firms are to respond to opportunities which arise from time to time. It was one thing to introduce supportive facilities, it is another to make full use of the facility. Some firms were found not to be aware of the existence of some of the facilities which were supposed to assist them.