Cover Image
close this bookThe Courier N 143 - Jan - Feb 1994 Dossier: Fighting Poverty - Country Report : Niger (EC Courier, 1994, 96 p.)
close this folderACP
View the document57th ACP Council of Ministers
View the documentDevelopment Council
View the documentCDI transformation supported by the private sector

CDI transformation supported by the private sector

Industrialists prepare for the LomV mid-term review

Restructuring of the Centre for the Development of Industry, including the introduction of private sector participation in the running of the CDI, is now firmly on the agenda. This was something which clearly emerged from the speeches delivered at a conference entitled 'Perspectives of Industrial Cooperation ACP-EC', held in Brussels on 9 December. The conference, organised under the auspices of the Belgian presidency of the European Union, indeed, called for a separation of the 01 from the ACP-EC institutions.

Unfortunately, the ACP presence at the colloquium was limited. The vast majority of participants came either from European enterprises and organisations or from the institutions of the European Union. The priorities of European and ACP companies were examined but there was little convergence over what was needed to revitalise the African economy.

Most of the European industrialists present wished the CDI to become a source of information on ACP markets and a training centre for the thousands of administrators which, in the eyes of the industrialists, Africa lacks.

A large number of the industrialists believe that corruption is one of the most important problems faced by African economies - even more important than the lack of trained administrators in government and industry. When a member of the Belgian private sector had finished his tirade against what he viewed as the 'corruption' of African officials, the conference hall of the Palais d'Egmont resounded with the applause of his peers. He was echoing the words of Maria Luisa Cassagnmagnago Cerretti, the co-President of the ACP-EC Joint Assembly, who had said in her opening address: 'Even if it is insidious, it is deep-rooted in the ACP countries.'

There was a general consensus on the need to enhance the powers of Chambers of Commerce vis-is the governments of ACP countries.

The ACP representatives felt that new structures for finance and partnership were needed. What was desired was a form of partnership which was based on the aims of profitability in the medium-term and of transferring technology. The President of the Paramaribo Chamber of Commerce and Industry in Suriname, Woei A Sioe, emphasised transfers of this kind. He said: 'You cannot impose development on a top-down basis by beginning with industries which depend on imports. We have our forests. The Rio Conference wants us to keep them. But we want to develop, so we need partnerships to guarantee the transfer of technology. Despite everything, in three years times our industries will be even more left behind by those in the West. What we need is protection.'

Eric Derycke, the Belgian Secretary of State for Development Cooperation, supported the idea of protection: 'There must be some form of protection or, at the least, support for the most vulnerable countries.'

Skeleton in the closet

The question of protection brings to light one of the skeletons in the closet of European policy with regard to the ACP and other developing countries. This is symbolised by the import of cheap European meat into West Africa, which threatens the traditional animal husbandry of the recipient countries, while at the same time the European Union finances projects aimed at improving livestock rearing in the region. According to George Rubagumya, Director of the Ugandan Investment Authority, 'we must find a compromise to rationalise production.' This debate also touches on the employment policies of the Member States of the European Union, a policy area which has never, to this day, been reconciled with European development policy. Patrick Guitard, a representative of French business, made a plea for European coherence: 'The integration of the European market with those of the ACP countries is in contradiction with other polices of the European Union, such as those set out at the GATT talks.'

There was an obvious separation between the case of the Caribbean and Pacific countries and that of Africa, in the realm of industrial development. Luis Ritto, from the industrial Cooperation Division in Directorate-General VIII of the European Commission, declared his conviction that 'the Caribbean and the Pacific islands are doing fine. Their institutions are good and we can have cooperation programmes with them through the CDI. Africa, on the other hand, is a lot more complicated.' He added: 'The ACP countries have not responded to our study on the protection of investment whereas Eastern Europe, one year later on, is taking up our proposals.'

The lack of investment in the ACP countries, especially in Africa, was one of the most important items on the agenda. Equity funding was suggested, amongst other solutions proposed by the delegates. It was noted, however, that family companies often do not show a profit on the balance sheet. In addition, in the case of private companies, the executives tend not to want to declare large dividends because these are taxed.

From the African financial sector, Sanou Mbaye, responsible for the private sector at the African Development Bank (which grants the majority of its loans to Morocco, Tunisia and Nigeria), said he could see continuing difficulties. Mbaye advocated regional integration as the solution to the economic problems of the African states. This, he said 'would require a convergence of development policies.' However, in the light of the fact that there are currently two hundred regional cooperation organisations which have yet to show any positive results, Mbaye admitted that 'there is no political convergence at present.' He considers the total absence of an internal banking sector to be a great hindrance. 'In Zaire, for example, the local banks have been eliminated. They were the only ones to lend in the medium and long term.'

Problems in external financing

The external financial sector remains problematic. These credit lines are very rarely used, according to Alistair Boyd, Assistant Chief Executive of the Commonwealth Development Corporation (CDC). Boyd is dissatisfied with the number of loans granted by the Development Finance Institutions (DFIs), such as the CDC. He said: 'Out of 198 projects financed last year by the DFIs, only 40 involved new enterprises.' Boyd reiterated the danger of ignoring the small and medium enterprises, which 'only represent 16% of the private enterprises financed by the DFIs. That is also in view of the fact that the private concerns receive only 40% of DFI financing, as opposed to the 50% granted to the public sector.'

Various ideas were suggested for improving the CDI. One such suggestion is for the CDI to assist small and medium enterprises in Europe and in the ACP countries by providing them with reliable information on the African markets, African businesses and sources of finance. This would reduce the additional costs of these companies, which can reach a high level of their total budget. At present, the majority of the CDI's clients have a turnover of between one and two million ECUs.

The possibility exists that the running of the CDI will be handed over to the private sector, with the exception of long-range policy. It is also possible that the CDI may be incorporated into DG VIII of the European Commission. Whatever the case, Eric Derycke, in the Belgian Ministry for Foreign Affairs says some form of decentralisation is certain 'for reasons of financial and administrative efficiency. All the CDI has managed to do so far is to provide guides for equipment supplies and to support training programmes on production and maintenance.'

Some restructuring of the CDI appears unavoidable given the popularity this idea enjoys amongst European businesses, the European institutions and within the organisation itself. All hangs on an agreement between the European Union and the ACP countries during the negotiations on the second part of LomV which will start at the beginning of 1994. Until such an agreement is reached, it remains to be seen if delocalisation and privatisation will become the central doctrines of a new partnership between the African, Caribbean and Pacific countries and the European Union.

Stewart YOUNG