WORLD TRADE  
ORGANIZATION  WT/AFT/W/1 
3 April 2006 
 
 (06-1520) 
Aid for Trade Task Force Original:   English 
  
 
COMMUNICATION FROM ZAMBIA ON BEHALF OF THE LDC GROUP 
  
 The following communication, dated 20 March 2006, is being circulated at the request of the 
Delegation of Zambia on behalf of the LDC Group. 
 
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VALUE CHAIN ANALYSIS AS A BASIS FOR 
IDENTIFYING NEEDS AND GAPS 
 
 
I. BACKGROUND 
• The Hong Kong Ministerial Declaration in Paragr aph 57 states that ”Aid for Trade should aim 
to help developing countries, particularly LDCs , to build the supply-side capacity and trade-
related infrastructure that they need to assi st them to implement and benefit from WTO 
Agreements and more broadly to expand their trade”.   
 
• LDCs and some other developing countries, par ticularly countries in Sub-Saharan Africa, face 
supply-side constraints which limit their ability to take full advantage of these new potential trade opportunities.   
 
• The impact of the existing trade related initia tives technical assistance, such as JITAP and 
Integrated Framework, on addressing supply-side co nstraints has been limited.  There is need 
to facilitate the identification of gaps  in a more structured manner.   
  The Value Chain Analysis is one of the tools that can be used to effectively pin point the 
needs and gaps that Aid for Trade Projects could focus on so as to deliver maximum value for the 
least possible costs in economies and Devel oping and Least developed countries.   
  The analysis can be approached by using a th ree-pronged approach to  identify areas of action 
and support as indicating by the following:    
i. Carry out a series of Value Chain Analyses (VCA ) in sectors that have been declared as 
priority sectors.   
 
ii. A process whereby the private sector (either clusters of businesses or business associations) 
will prepare proposals for funding which will improve the export capacity.   
 
iii. A cost-benefit analysis of opening up new areas of further investment.   
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  II. OBJECTIVE OF THE ANALYSIS 
• To increase competitiveness of the privat e sector and expansion of exports 
• Enhance productivity and value addition. 
• Identify, cost and propose the measures needed  to minimise impediments and improve the 
environment for both public and private investment. 
• Promote better understanding of the characteristics and inefficiencies of specific value chain. 
• Strengthen linkages along the primary-to-finished goods supply chain.  
• Identify new market opportunities and measures of ensuring sustainability.  
• Identify interventions concerning policy, institu tional and administrative reforms as well as 
physical infrastructure needs with the greatest impact on efficiency along the value chains. 
 III. SCOPE OF WORK 
 The VCA could focus on sector or product le vel and could also involve examination of 
international and regional export markets assessments.   A compilation of indicative data at the product level to achieve the following goals: 
 
o evaluate and quantify how the macroeconomic environment has affected the 
competitiveness of this product; 
o quantify the effects of the inefficiencies of logistics, current infrastructure network, 
supporting services and regulatory impediments on firm’s competitiveness/ productivity in the strategic sectors as identified above; 
o prioritise policy, procedural and physical constraints along the value chains; 
o compare with internationally r ecognised benchmark/standard; and 
o recommend policies and interventions to reduce inefficiencies and improve 
competitiveness of the firm.  
 
• A compilation of cost, time and reliability factor s in obtaining inputs (where applicable) and 
delivering products to final markets.  
 
• Identify major bottlenecks that apply to each section of the value chain in the areas of 
physical infrastructure, logistics (including customs procedures and facilities, technical barriers to trade, such as standards for prod uct quality and testing, certification processes, 
etc); other supporting services; business/ investment climate issues (policy and regulatory 
impediments, administrative requirements, etc. ), and availability and cost of finance and 
skilled labour; 
 
IV. KEY OUT PUTS OF THE VALUE CHAIN ANALYSIS/STUDY: 
• Highlight institutional and policy linkages betw een the value chain performance and specific 
policies, regulations and standards origina ting from either the public or private sector. 
 
• Identify which specific institutional and policy m easures would help in enhancing the private 
sector’s ability to improve the value chain pe rformance, and more effectively enhance the 
indigenous labour force and productive capacity fo r eventual integration into the regional and 
global supply chain. 
 
• Recommend measures that will improve productiv ity and performance along the value chain, 
including measures to take advantage of prefer ential trade agreements and other international  WT/AFT/W/1 
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  agreements to help strengthen the implemen tation of a sustainable export lead growth 
strategy. 
 
• Develop a list of priority reforms that, if implemented by government, would improve the 
competitiveness of domestic products in regional and international markets. 
 
• Develop a database network that can be used to update the data collected for the value chain 
analysis.  This database can serve as a strategic plan ning tool by the government to monitor 
and evaluate the impact of strategic interventions  and identify other distortions that impede 
growth and competitiveness along the value chain.  In addition, the network could be used to 
prepare reports that provide useful  information to the private sector.  
 
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