PROMOTING COMPETITIVENESS

Investment in Value Addition and

Technology Transfer

CONFERENCE ON SOUTH-SOUTH COOPERATION CONFERENCE ON SOUTH-SOUTH COOPERATION

SRI LANKA, AUGUST 2008SRI LANKA, AUGUST 2008

Prof Charles G KwesigaExecutive DirectorUganda Industrial Research Institute

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Outline of Presentation

Factors for success Current regional status Value Addition Conclusion Subsequent discussion assume that EAC is a

microcosm of the “South-South world”, albeit at the lower end economically

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FACTS ABOUT EAC

Wealth of resources and favourable climatic conditions

Strong political commitment to EA Federation

Similarity of development profiles key to harmonization of policies, strategies and development agendas

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Critical success factors:

(i) Skilled manpower(ii)Optimal resource allocation(iii)Capacity for Technology Transfer (TT)

and technology development(iv)Sound infrastructure(v) Effective value addition(vi)Quality of products and well designed

processes(vii)Investment in R&D, Science and

Innovation(viii)Promotion of regional trade and joint

strategies for global market(ix)Good governance and political stability

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Regional (EAC) Balance of Trade

*Sources: British Chamber of Commerce Country Profiles (2002 – 2003) & CIA World Fact book (2004 – 2008)

Negative balance of trade due to excessive imports

-4000

-3500

-3000

-2500

-2000

-1500

-1000

-500

02 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8

Year

Bala

nce o

f T

rad

e (

$ m

illi

on

)

Uganda Kenya Tanzania Rwanda Burundi

2002 2003 2004

2005 2006

2007

2008

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Comparison of Regional & Select Country Balance of Trade

In contrast, Southeast Asian countries register positive & increasing balance of trade due to increased export of high value finished products

-5000

0

5000

10000

15000

20000

25000

30000

35000

40000

2002 2003 2004 2005 2006 2007 2008

Year

Bala

nce o

f T

rade (

$ m

illion)

Uganda Kenya Tanzania Rwanda Burundi

South Africa Malaysia Singapore Thailand Taiwan

$54.6 billion

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Challenges faced in EAC Region

Post-harvest losses are very high Exports are mostly raw materials Lack of affordable financing Lack of highly skilled workers Importation of basic goods &

services Limited indigenous technology base Low levels of entrepreneurship

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World Technology Clusters

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EXPORTS COMPARISON(The major difference is level of commitment to industrialization)

Merchandise export earnings 1960-2003

0

50000

100000

150000

200000

250000

1960

1963

1966

1969

1972

1975

1978

1981

1984

1987

1990

1993

1996

1999

2002

Year

US

$ m

illio

n

Korea, Republic of

Malaysia

Singapore

Taipei, Chinese

Thailand

uganda

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VALUE ADDITIONVALUE ADDITION The state of our economies

require, as a matter of priority, that we focus on value-addition.

This requires addressing several necessary conditions (e.g. TT, infrastructure, skills).

The guiding principle is the concept of the “Product Value Chain” which must be understood and adhered to.

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FINANCEMICROFINANC

E, BANKS, ETC.

TECHNOLOGY (FARM

IMPLEMENTS)

FARM INPUTS (SEED,

FERTILISERS ETC.

RESEARCH (e.g. NARO)

TRAINING&

EXTENSION SERVICES

PRIMARY PRODUCT

LOCAL MARKETS

MARKETLOGISTICS

EXPORT MARKET

VALUE ADDED PRODUCTS

RESEARCH (FOOD

SCIENTISTS)

TECHNOLOGY FOR

AGROPROCESSING (Add Value)

FARMER/FARM

CONSUMER

FACILITATORSARE

SALES PERSONNEL

HARVEST

FacilitatorsAre

EPB; AGOA, etc.

The Product Value Chain

Post harvest loss

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Timelines for Technology development

Photography

Modern Photography

Pin Hole Camera 35 mm Camera Digital Cameras(Kodak DCS-100)

1727 107 yrs 1834 157 yrs 1991

Modern Photography

Pin Hole Camera 35 mm Camera Digital Cameras(Kodak DCS-100)

1727 107 yrs 1834 157 yrs 1991

Modern Photography

Pin Hole Camera 35 mm Camera Digital Cameras(Kodak DCS-100)

1727 107 yrs 1834 157 yrs 1991

Modern PhotographyModern PhotographyModern PhotographyModern Photography

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Timelines for Technology development

b) Transistor was invented in 1947 and commercialized in 1953 (6 years later)

Transistor 1947

43 yrs

Vacuum tube diode 1904

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Consideration for effective TT Operability of the technology in the

intended environment Infrastructure to sustain the technology Availability of skills to work the

technology Sustainable supply of suitable raw

materials Intellectual property rights Policies and other political, social and

cultural issues

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Key Players

POLITICAL CLASSPOLITICAL CLASS

TECHNOCRATSTECHNOCRATS PRIVATE SECTORPRIVATE SECTOR

•Stability•Policy development•Resources allocation

Collaboration

•Implement policy•Offer technical services

•Develop enterprises•Promote products

•Effect industrialization

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Collaboration between Institutions

TECHNOLOGY

TECHNOLOGY

ENTREPRENEURSH I P

ENTREPRENEURSH I P

COLLABORATION IN RESEARCHCOLLABORATION IN RESEARCH

MANPOWER AND ADVISORY SERVICES

MANPOWER AND ADVISORY SERVICES

SKILLS IMPROVEMENTSKILLS IMPROVEMENT

MANPOWERMANPOWER

Industry(Private Sector)

Industry(Private Sector)

Technical and Tertiary Institutions

Technical and Tertiary Institutions

University andHigher learning

Institutions

University andHigher learning

Institutions

R & D Institutions

R & D Institutions

Processes

R&D

Skills

Incubation

Innovations

Products

Processes

R&D

Skills

Incubation

Innovations

Products

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WAY FORWARDWAY FORWARD

Invest in R&D and support R&D institutions Establish science and technology academies Reverse the brain drain Invest in infrastructure that supports

competitiveness Establish TT regimes; create business

incubators Create a sustainable indigenous technology base

Joint trade missions INVEST IN VALUE ADDITON; TECH TRANSFER; and

WORK TOGETHER!

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