Industrialisation in Africa
and Donor's Functions
as Facilitator
Matsuo WATANABE
Visiting Senior Advisor
Japan International Cooperation Agency

Contents• Key principles of industrial strategy• A JICA assistance in Zambia• Donor's role in industrial policyIndustrial strategy: Keys
• More than labour intensive manufacturing – services and agriculture
also considered• Clear and objective criteria to discover the industries through trialand-error process• Maintain transparency in the process• Establish a process of P-P dialogue• Support with discipline (punishment and exit strategy) and applycompetition• Policy measures can be scaled-up as institutional capacity develops

What are missing for
African industrial policy execution?
• Role model to emulate• Policy space -- narrow vis-a-vis Asia in 1970-80s• Diverse development strategies (local context)• Institutional capacities to implement 'full-scale'industrial policy• Significant public-private partnership

A JICA assistance in investment promotion in Zambia(as until July 2008)

Objectives• To transfer Asian experience to Africa• To substantialise a country-led trade & investment promotion
initiatives (and industrial development) through intensive faceto-face dialogues• To materialise actual investments to Africa rather than justgiving advises or recommendations• To address "We know the problem and what to do, but not
how to do"Approach• JICA-sponsored advisor—the former vice president of
the Malaysian Industrial Development Authority• Coordination and sharing of vision among threepartners of development – political leaders, private
sector and civil service• Selected 12 priority sectors based on country’s
existing and latent potentials – even the landlocked isconceived to be an advantage (sub-regional air cargo hub)
• FDIs from Malaysia and India and joint ventures havealready takes place: mobile-phone factory, telecom,
ICT college and specialised hospital …

Donor's function (1)Information management
1. Ex ante information of client country: what are needed• First hand country study (qualitative & quantitative)• inputs for designing plausible attsitance strategy
2. Information of supply side: who can supply what
• Complehensive know-how (on different stages ofdevelopment process)• Applicable to client country
3. Matching information: not just matching service• World-wide network• Lessons from past experience (successes & failures)

Donor's function (2)Consulting'Consulting Aid‘, like Business consulting service• insight: the way the client country realise FDI-led
industrialisation and economic growth• to construct taylor-made strategies and pursue fortangible results• to encourage client to develop better insights andfurther actions by producing continual results

Donor's function (3)Catalyst and Back-ups
1. Catalyst to enhance the effect of project• financial support: infrastructure, industrial estate• technical support: operational know-how, business forum

2. Logistics and 'Authority'• JICA with diplomatic resources (with EoJ endorsement)• Contacts with investors• logistical support by JICA to reduce 'transaction cost' by giving
authority and credibility• lobby for investment environment• Play-up at international arena

Not so sure about the donor's functions?
• 2nd generation PRSPs: a wish list with no priority, budgetary
corroboration, consistency between the purposes and means.
• Gaps between:(a) the proponents and opponents of the Washington Consensus
policies in the failures of market and government(b) Asia and Africa in industrialisation performance(c) intention and implementation in industrial policy in many Africancountries(d) in donor practices bet/ 'telling what to do' and 'working withclients to show how to do' .
• Mere removal of market distortions do not bring substantial, tangible
industrial development by its own• Why did past industrial policy initiatives in developing countries fail,if the donor functions would have not needed?

Note: 12 selected areas
1. agriculture
2. cotton
3. mineral extraction
4. health and medical service
5. ICT
6. tourism
7. education (higher &specialised)
8. air and land transport hub
9. economic zone
10.SME
11.streamlin administrativeprocedures
12.financePoints• Landrocked → No labour
intensive manufacturing• Quick result → smaller-scale FDI• Knowledge-intensive, regional
center of excellence → education(BA, Master) /medical (fortests/treatments, e.g. magnetic
resonance imaging (MRI),
angiograms, angioplasty)• Existing potential → geographical,
spare capacity of Lusaka airport

Note: Initial Acheivements
1. Policies, laws, regulations, government services•
12 sector analyses and policy proposals have been duly filed byZambian themselves, o/w 8 approved and implemented.
•The progresses are monitored by the respective ministries andreported to the President every month.
2. Information for investors has been publicised•
GoZ put out a project bulletin and profiles of Zambian companies
and disseminated to investors.
•With these, GoZ dispatched investment promotion missions toMalaysia (2006) and India (2007 & 2008)•
Business forums for Asian investors in Zambia. These effortsmaterialized as the actual investment projects.
3. Public administration system is being consolidated.
•GoZ is working to establish an E-governance system, agovernmental Clients Charter and Integrated Approval Systems .

Note: Relevance of Asian Experience;
No magic formula, but...
1. Commonality: top-down style political process and British
public administration system.
2. Effort to unite the people and national vision with a longterm planning. Vision 2020 Vision 2030
3. Development path: formerly a resource depended
economy to transform to leading exporters of electronics
products by FDI-led industrialization
4. Peer counseling: Sharing the colonial legacy and has
achieved a remarkable success in a game where the rule
was set by others.
5. Well-versed in various operations: comprehensive andpractical know-how relevant to the economies at theearlier stage of development today