2010/10/18

SME Promotion in Japan andJICA's Cooperation in SME Promotion
October 4, 2010,
Africa Union, Addis Ababa

Go Shimada,Director, Private Sector Development
pDivision
Industrial Development Department, JICA
Shimada.Go@jica.go.jp

1© Shinichi Kuno and Kenshiro Imamura

Agenda2

１．Private Sector Development and JICA
2. Experience of Japan to promote SMEs – A brief
introduction to Japan’s SME promotion
３. Key Messages of the JICA Report on the Economic
Development in Africa and the Asian Growth Experience
４. Case study ： Industrial Policy support to Ethiopia

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2010/10/18

1-1 Birth of New JICA on October 1, 2008
3Consolidation of ODA implementation tools for the new JICA
1. The new JICA integrates JBIC’s operations covering Japanese ODA loans and overseas
investment, and part of MOFA’s grants
2 The
2.
Th new JICA provides
id more strategict t i andd effective
ff ti ODA as a single
i l agency centrally
t llmanaging technical cooperation, loans and grant aid
FY2008FY2008Grant aid*
MOFA
Bilateral Assistance

US$1,016 million

Technical cooperation
JICAＯＤＡ

US$1,486 million

Thenew JICAODA loans
JBIC(ODA)
Multilateral Assistance

US$7,440 million

FY2009FY2009Multilateral Assistance* Except for certain items retained by MOFA required for policy
commitments

New JICA: US$11,116 million- GA: US$1,118 million- T/C: US$ 1,596 million- ODA loans: US$ 8,402 million

FY2008:JPY 103.5/USD (DAC rate)
FY2009:JPY 97.60/USD (IFS rate for April 31, 2009)

1-2 Synergy of Japanese ODA Now Available !
4Technical
Cooperation

Grant

ODA
Loan2

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1-3 AfT accounts for over a half of total loans.
5Total Loans and Loans for AFT （2004-2008, USD million)

Exchange rate (DAC rate)
2004: JPY108.1/USD, 2005: JPY110.1/USD, 2006:JPY111.6/USD, 2007:JPY117.8/USD, 2008: JPY103.5/USD

1-4 Asia and Africa are the main regions
for JICA’
JICA’s AfT
6JICA’s Aid for Trade by Region （2007）
Loans

Technical Cooperation and Grant Aid
Oceania1%

Middle East
4%

Europe2%

Oceania4%

Africa
14%

World
1%

America
16%
Asia
46%

Middle East
8%
Africa
23%

Asia
81%

Asia

AfricaMiddle EastAmerica

Oceania

EuropeWorld32010/10/18

1-5 JICA aims to improve aid effectiveness through synergy
between loans, and technical cooperation and grant aid
7JICA’s Aid for Trade by Sector （2007）
Loans

Technical Cooperation and Grant Aid

Industry
2%

Mineral Resources and Mining
2%
Industry
9%

Forestry
10%
Agriculture
10%

Trade Policy and Regulations
2%

Tourism
2%

Transport and Storage
16%

Fishing
5%

Transport andStorage
32%

Communications
8%

Forestry
7%

Business Support
Sevices andInstitutions
3%

Energy Generationand Supply
pp y
41%

Energy Generation and Supply
6%
Banking and Financial Services
2%

Communication
2%

75%

Business Support Services andInstitutions
7%

Agriculture
34%

68%

Economic Infrastructure Building Productive Capacity
Transport and Storage

Communications

Energy Generation and Supply

Banking and Financial Services
Forestry
Mineral Resources and Mining

Business Support Services and Institutions
FishingTourism

Agriculture
Industry
Trade Policy and Regulations

Major Economic Infrastructure and JICA Projects
North-South Economic Corridor▲Loans ●Grant Aid ★Technical Cooperation▲●Nam Ngum Hydropower Station

Kunming

8▲Nam Leuk Hydroelectric Power Plant

MekongRiver

East-West Economic Corridor▲Yangon International Airport

Myanmar▲Pha Lai Thermal Power Plant

Hanoi

Lao PDR▲Cai Lan PortHai Phong

Naypyidaw Chiang Rai▲●Baluchaung Hydro Power Plant●Vientiane International Airport

Vietnam▲Hai Phong Port

VientianeNong KhaiThailandYangon★Yangon Port

Mawlamyine

MukdahanPhitsanulok▲Second Mekong International Bridge

Savannakhet
HuePakse▲Lam Ta Khong Pumped Storage Power Plant

BangkokSisophon Siem Reap

Cambodia
Trat●National Road Route 9
Da Nang

Development
Triangle

Kampong Cham

▲Hai Van Tunnel▲Da Nang Port
●Pakse Bridge

Phnom Penh
Ho Chi Minh

▲Suvarnabhumi International Airport
pVung Tau

●Bridge over the Mekong River●National Road Route 6 and 7

Southern Economic Corridor▲Phu My Thermal Power Plant▲★Cai Mep-Thi Vai Port▲Leam Chabang Port▲Tan Son Nhat International Airport▲Map Ta Phut Port▲★Sihanoukville Port

●National Road No.142010/10/18

GRDP per capita
in GMS Countries and Regions

Time Distance Between GMS Countries(A) A Few Years AgoChina

China

Myanmary

Lao PDR

Lao PDR

MyanmarVietnamThailandThailand
Vietnam

Cambodia

Cambodia
0GRDP(USD/person)

4080 (h)(B) After CBTI/CBTA
Completion

1,500 1,200 - 1,500
900 - 1,200
800 900
500 700
400 500
300 400
200 300
100 200
0 100

Source: Univ. of Tokyo

1-6 Menu of Technical Cooperation
10Kaizen

Argentina, Paraguay; Tunisia,(P d ti it & Q(ProductivityQualitylit Improvement)
It)

Egypt; Ethiopia; Costa Rica２

SME Consulting
Services System

Thailand, Philippines, Malaysia,

３

One Village
One Product４

Industrial
Policy Dialogue

１

Mexico, Chile, Turkey, Indonesia
Malawi,, Kenya,y , Uganda,
g, Ethiopia,
p ,Nigeria, Chile, Laos, Vietnam etc

Ethiopia, Sri Lanka, Cameroon,
Ghana, Vietnam, Indonesia

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1-6 Technical Cooperation (Cont)
11

Industrial Standards

5Vietnam&M
Measurementt

6

Capacity Development ofCambodia, Vietnam, Philippines,

Investment Promotion Agencies

Mongolia, Indonesia; Zambia; etc

Capacitypy Development
pof

7

Egypt, Mongolia, Kazakhstan

Trade Promotion Agencies

Industrial Park/

8Palestine, Laos

Special Economic Zones

2-1 Experience of Japan to promote SMEs
(weight of SMEs in Japan)

1212

Japan

The share of SMEs in terms of the added value by all industries has
historically been steady at around 55 - 60%, indicating the continuity ofthe firm role played by SMEs despite dynamic changes of the industrialstructure.
Added Value (all industries) (¥ trillion, left scale)

Share in Added Value (%, right scale)

180

100.0

160

90.0

14080.0
70.0

120

60.0
10050.080
40.0600197999395

8991

85

87

810.0

83

077

10.0

79

20.0

2075

4073

Ethiopia

30.0

Source: 2003 White Paper on SMEs inJapan
Note:
SMEs are defined a those ofwhich the capitalisation is lessthan 100 million.

Informal and small manufacturing sector contributes 33% of theindustrial sector output, and 52% of the manufacturing sector’s
contribution in 1996.

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2-2 Changing Goals of SME Policies inPost--War Japan
Post13＜Comparison Between Old and New Policies ＞
Old Basic Law (1963)

New Basic Law (1999)

PolicyConcept● Rectification of the gaps between
large enterprises and SMEs

● Fostering and support of a wide
range of independent andvibrant SMEs

PolicyObjectives● Improved productivity (upgradingof the business structure of SMEs)● Improved trading conditions(correction of the disadvantages inbusiness activities)● Prompting of business
management innovation andstart-ups

Viewpoints
toDetermine
PolicyTargets● SMEs at the bottom of thestructural gap between enterprisesof different sizes● Ability to rectify the gap● The scale of the gap and ability torectify it depend on the size ofenterprise● Difficulty of access to themanagement resources
necessary for business growthand development● This difficulty of access tomanagement resources changes
with the business size)

Source : SME Agency, “New SME Basic Law: Outline of Revisions and Detailed Explanation of Each Article”, Doyukan, 2000

2-3 Planning of SME Policies and SME Agency
14Policy
Planning
Fact-finding(interviews/studies/statistics)

SME Policy
Making Council

SME Agency

Expressing requirements,requests and concerns

Members representing
various circles

Reporting

PoliticiansCompetentgovernment
offices

SME
organizations

Mass media<Stakeholders>

Local publicbodies

Industrial
associations

Academia

Petitionsproblems

andrequests

tosolve

SMEs

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2-4 SME Policy Implementation System
15
METI
Regional Bureaus of the METI

National Level

BudgetOrganization for SMEs andRegional Innovation, Japan(SMRJ)

Prefectures
MutualCooperation

SME
universities

SME Support
Centres

BudgetPolicy-Based
Financial Institutions- JASME- NLFC- Shoko Chukin Bank

MutualCooperation
Business Consultation
SeminarsInformation Service
Dispatch of Expert

SME Level

SME Agency

MutualCooperation

BudgetPrefectural Level

BudgetCreditGuarantee
Corporations

Chamber of Commerceand Industry, etc.(520)Business Consultation
Seminars
Information Service

Human Resources
Development
Programme

CreditGuarantee
Investment
and Loan

SMEs
Note: Compiled from a reference material published by the SME Agency (July, 2008)

2-5 National Measures for Local SMEs Promotion
16

SMEA : Policy

SMRJ : Implementation■SMRJ : (Organization for Small & Medium
Enterprises and Regional Innovation, Japan)- Newly Established in 2004 by Merging JASMEC, JRDC, and ISIF- Staff Number : 811- Capital : ¥1,094 billion (US$10 billion)- Branches & Offices : 10- SME Universities : 9 campuses

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2-6 SMRJ’s Supports for Company Operations
17-HRD program making-Advice of experts-Expert dispatching-Subsidyy for grade
gup
p

Human
Resources

Funding

Infrastructure

Information-Funding, Investment-Leasing facilities-Industrial Parks-SMRJ’s Web sites-Advice counter

3-1 Key Messages of the JICA Report on the Economic
Development in Africa and the Asian Growth Experience18

 “Industrialization Strategy” as a process – NOT apiece of document
 A trial and error process: be aware, some mayend up in flops, but it has be embraced as part of thegame
 Support measures adopted in accordance withinstitutional capacity – one may as well begin
withi h neutrall – cross sectorall – measures
 Most support measures are permissible for LDCs,
even under today’s international rules

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3-2 Diversified Paths of Development in Asia
19

 Diversity across Countries− Domestic Capital-Dependent vs. Foreign Capital-Dependent− Natural Resource-Rich vs. Natural Resource-Poor− Interventionism vs. Liberalism Diversity over Time− IS → EO → (IS ⇔ EO) → Globalization
 Diversity in growth-leading Industries− Heavyy industry,y, consumer electronics,, textiles,, agro-processing,g pg,
human resources, ICT …

 A self-owned process of strategic responses to thechanging environment and challenges/opportunities

3-3 Transition of Development Strategies in Asia

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3-4 Role of the international community21

 Embrace diversity of development strategies inAfrica and support countries with strong
commitment to advance own strategy
 Sustain efforts to maintain/enhance market accessof African products Invest in large-scale infrastructure with regional
impact SupportStechnologicalh l i l capacity
i building
b ildi iin AfAfricai

4-1 Case Study : Industrial Policy Support
to Ethiopia
22

TICAD IV(May 2008)

G8 Hokkaido
Toyako Summit(Jul. 2008)

The Initiative forg (IPD)()
Policyy Dialogue：African Taskforce
Meeting in Addis
Ababa (Jul. 2008)

Symposium: Economic Developmentin Africa and the Asian
Growth Experience(May 2008)

Follow up Japan’s enhanced support toAfrica

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2010/10/18

4-2 Industrial development support frameworkin Ethiopia
23

Request from Prime Minister Meles （July, 2008）
Supportpp
to formulate development
ppolicy
Exchange of views on industrial
development strategy, andrecommendations by the Japaneseside based on Asian development
experience.

Supportpp
to nurture pprivatecompanies
Technical cooperation of JICA forenhancing competitiveness ofprivate companies on the basis ofJICA’s experience in Tunisia.

The project of policy dialogue
on industrial development

The project on quality andproductivity improvement(KAIZEN)

4-3 The project of policy dialogue on IndustrialDevelopment2412

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4-4 The project on quality and productivity
improvement （KAIZENKAIZEN）） （1）25

What is KAIZEN?
KAIZEN, in Japanese management, means “continuousimprovement” of productivity and quality without
additional cost, in a participatory process and a bottom-up
approach.
This management practice method has spread among
Japanese companies in Japan and abroad.
abroad JICA has alsooffered assistance for KAIZEN to many developing
countries in Asia and Latin America in particular.

4-5 The project on quality and productivity
improvement （KAIZENKAIZEN）） （2）26

Profile of the project
1 Objective:1.
 To formulate a national plan for enhancing activities on quality
and productivity improvement for Ethiopian enterprises inindustrial sector
 To formulate a manual for explaining and guiding the qualityand productivity improvement activities
 To transfer relevant skills and techniques to the staff membersof the Kaizen Unit, Ministry of Trade and Industry
2. Period:i d
2 years (August 2009～April 2011)
3. Implementing Institutions:- Ministry of Trade and Industry (MoTI)- Japan International Cooperation Agency (JICA)

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4-6 The project on quality and productivityimprovement （KAIZENKAIZEN）） （3）27Major activities -1• Situation analysis on quality and productivity improvement

activities of Ethiopian industry• Visit to the factories in industrial sector for preliminary

diagnosis
Phase• Preparation for the pilot project1
a. selection of methodology for quality and productivity
improvement
b. set the criteria and selection process for the pilot companies
c. selection of 30 pilot companies

4-7 The project on quality and productivity
improvement （KAIZENKAIZEN）） （4）28

Major activities - 2
 Implementation of the pilot project

Phase
2

a. to visit the pilot companies to diagnose the situation, and togive guidance on the quality and productivity improvement
activity (KAIZEN) with the staff members of the Kaizen Unit,
MoTI
b. to repeat factory visit periodically and give KAIZEN advice
and to monitor the KAIZEN process
c. to evaluate the pilot project and compile recommendations
to the factories

Phase • Formulation of a National Plan including an Action Plan ofKAIZEN
3• Formulation of a Manual14

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Thank you for your attention

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