Investment Promotion- Practical implications from JICA’s
experience in Zambia and others 3rd High Level Forum for the Phase II of Policy
Dialogue of Industrial Development in Ethiopia
Toru Homma
Senior Advisor on Private Sector Development
Japan International Cooperation Agency (JICA)
Homma.Toru@jica.go.jp

Addis Ababa, 16 January 2013

Contents
1. Introduction: investment promotion
2. Some examples: Zambia with JICA
3. Some examples: Other countries

4. Summary of the JICA’s Investment
Promotion Basic Study in Ethiopia
5. Summary and implications for Ethiopia21. Introduction: investment promotion
 Investment promotion - why investment should bepromoted?
Financial flow; Investment for Development; FDI’s spillover effect; necessity for growth Investment promotion - what about investment climate
improvement / doing business?
Doing Business Report (2003-); WDR (2005)
 Investment promotion - is country promotion
 Investment promotion - quantity & quality of investment
 Investment promotion - Investment Promotion Agency (IPA)
Necessity for IPA’s capacity dev.; IPA’s function
 Investment promotion – JICA’s approach
Other country’s case including Zambia
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Major approaches for investment promotion

Effective
Investment
promotion
Increase ofinvestment

Quantity

Quality

IPA’scapacitybuilding

JICA’s assistance

Development

Investment policy reform

Investment climate
improvement
Source: Homma

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What should be considered forinvestment promotion and facilitation ?
Policy Framework for Investment (PFI), developed by
OECD with Japan’s initiative, suggests:
1. Business environment and investment promotion: Does
the government have a strategy for developing a sound, broadbased business environment and within this strategy, what role isgiven to investment promotion and facilitation measures?

2. Investment promotion agency (IPA): Has the government
established an investment promotion agency (IPA)? To what extent
has the structure, mission, and legal status of the IPA been
informed by, and benchmarked against, international goodpractices?

3. Monitoring IPA performance: Is the IPA adequately funded
and is its performance in terms of attracting investment regularly
reviewed? What indicators have been established for monitoring
the performance of the agency?
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What should be considered forinvestment promotion and facilitation ?
4. Streamlining administrative procedures: How has thegovernment sought to streamline administrative procedures toquicken and to reduce the cost of establishing a new investment?
In its capacity as a facilitator for investors, does the IPA take fulladvantage of information on the problems encountered fromestablished investors?

5. IPA dialogue mechanisms: To what extent does the IPA
promote and maintain dialogue mechanisms with investors? Does
the government consult with the IPA on matters having an impact
on investment?

6. Costs and benefits of investment incentives: Whatmechanisms has the government established for the evaluation of
the costs and benefits of investment incentives, their appropriate
duration, their transparency, and their impact on the economic
interests of other countries?
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What should be considered forinvestment promotion and facilitation ?
7. Promotion of investment linkages: What steps has thegovernment taken to promote investment linkages between
businesses, especially between foreign affiliates and local
enterprises? What measures has the government put in place toaddress the specific investment obstacles faced by SMEs?

8. Drawing on international expertise: Has the government
made use of international and regional initiatives aimed at building
investment promotion expertise, such as those offered by theWorld Bank and other intergovernmental organisations? Has the
IPA joined regional and international networks?

9. Information exchange networks: To what extent has thegovernment taken advantage of information exchange networks forpromoting investment?
www.oecd.org/daf/investment/pfi
7Investment Promotion Agency (IPA)?
4 Roles for an IPA•Advocacy within government to seek necessary
approvals or urge the removal of obstacles toinvestment;•Image building to promote the country as aninvestment destination;•Investor servicing or facilitation to help solve problems
faced by existing or potential investors; and•Targeting or investment generation by actively seeking
out investors based on national development plans orother criteria
Source: OECD, IFC

IPAs in Africa? examples
Botswana: BEDIA

Kenya: KIA

Rwanda: RDB

D.R.Congo: ANAPI

Malawi: MIPA

Senegal: APIX

Egypt: GAFI

Mauritius: BOI

Tanzania: TIC

Ethiopia: EIA

Mozambique: CPI

Uganda: UIA

Ghana: GIPC

Nigeria: NIPC

Zambia: ZDA

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2. Zambia
A case on cooperation in investment promotion
Started with a concept “Triangle of Hope”
Presidential Initiative topromote TOH inspired by
JICA Malaysian consultant;
12 Taskforce* / Action
Agenda created under
Presidential / Cabinet Office

Streamlining Public
Administration
ZDA & other organisations:investment application
process/manual, one-stop
service/e-government,
monitoring, after careservice, client charter,
guidebook, tracer study etc.

Government
Will

Triangle of
Hope (TOH)
Phase 1 (2006-09)
policy driven;
Phase 2 (2009-12)
capacity development*12 Taskforces:
Edu, Health,Tourism, Agri,
Cotton, Finance,
Aircargo,
Streamlining, ICT,
MFEZ, Mining,
MSME)

Private Sector
Participation
Involvement PS in TOH
process; Targeted investment
promotion missions (Malaysia,
India, SA, Japan); diversified
sector investment attraction,
sector/project profiles etc.

Source: modified by author from JICA (2010)9

Zambia
A case on cooperation in investment promotion








Objectives: Improvement of business climate conducive forinvestment (laws & regulations) and capacity development of theGovernment with private sector in investment promotion.
Phase I (2006-2009): policy driven, Phase II (2009-2012)“Zambia Investment Promotion Project (ZIPP) - TOH”): Capacity
building
Coordinated and monitored by Presidential Office andimplemented by Zambia Development Agency under Ministry ofCommerce, Trade & Industry and JICA in cooperation with
relevant ministries
South-south (Asia-Africa) cooperation using Malaysian and other
Asian experience and expertise on investment promotion
Dato’ J.
Jegathesan,Former Deputy
DG of MIDA

Source: JICA (2011).

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Zambia: Investment Promotion
Project activities: shifted to very practical on-the-ground activities in the
middle of the Phase 2
1. ZDA’s capacity to provide quality services with relevant organizations
1-1. Prepare subsector profiles with line ministries' officials
1-2. Establish a operation monitoring system
1-3. Establish an investment monitoring system
1-4. Prepare and utilize investment promotion tool kits
1-5. Prepare user-friendly manuals for investors
1-6. Receive feedbacks from private sector investors
2. ZDA’s capacity for investment promotion missions
2-1. Accumulate hands-on experiences through missions
2-2. Follow up investment ideas/projects formulated in the missions
3. Smooth implementation of TOH Action Agenda
Source: JICA (2011)

Targeted
investment
promotion
mission/seminars
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Zambia: Investment Promotion
Achievements and contributionsSuccessful projects include: Africa’s almost first mobile phonefactory; a large-scale university invested by Malaysian investors; ahospital project invested by an Indian medical enterprise group etc.
(diversification; knowledge-based industries are prioritized)
Contributions include: Capacity of ZDA as IPA is enhanced
and services for investors are
improved (aftercare, targeted …)
 Doing business results improved:
became the world No. 7 reformers andpositioned at 7th in Sub-SaharanAfrica in DB ranking (2011) Increase of FDI inflow (see right: 2011
become 4 times bigger than that of2006)
Source: UNCTAD (2012),
 Diversification of investment towards
processed by author.
non-traditional sector such as
education and health; contribution to Source: JICA (2011, 2012).
economic transformation

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Zambia Development Agency (ZDA)
Multi-functional one-stop agency
ZambiaPrivatization
AgencyZambiaInvestment
CentreExport BoardofZambiaZambia Export
Processing
Zones Authority

Small Enterprises
Development
Board

Merged and created Zambia Development Agency (ZDA) By Act No.11/2006 and operationalised in 2007
 Vision: “To become a world class Agency in the
promotion and facilitation of trade andinvestment for economic development.” Mission: “To promote and facilitate investment,
trade, competitiveness and the development of
MSMEs by providing comprehensive services ina transparent, innovative and efficient manner.”

Integration !
Source: JICA (2011).

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Zambia: Commerce, Trade and Industrial
Policy and JICA’s cooperation
Vision2030

Fifth National Development Plan (2006-2010): Upstream/downstream
manufacturing activities based on mining & agro-industry

Commerce, Trade and Industrial Policy (CTI Policy) 2009-(10 years)
PolicyCom&Trade Inv. Promo. ThematicIndustrial
Framework
PolicyPolicyIssues
PolicyVision: to develop a competitive, export-led manufacturing sector that contributes
20% of GDP by 2015
Priority Sectors
MSMEs
Rural
1. Processed Foods (60% of manufacturing GDP)SME Dev Industrialization
2. Textiles and Garments (15% of manu.GDP)(=OVOP?)
Policy3. Engineering Products (14% of Non Trad. Exp)
4. Gemstones (10% of NTE)
5. Leather and Leather Products (3% of NTE)
6. Wood and Wood Products (8% of manu.GDP)
Industrial Strategy
To be prepared as a vehicle to implement Industrial Policy(Source) Elaborated by the author, based on various documents and papers issued by the Government of Zambia,
the Ministry of Commerce, Trade and Industry of Zambia and Zambia Development Agency

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Industrial Strategy for Engineering Products:
with JICA’s assistance MCTI/ZDA’s capacity development on formulating industrial strategy:

focusing on Engineering Products as one of the 6 priority sectors
 1st Half of the Project (2011-12) - CD through drafting a strategy
 Issues: (a) strategy formulation mechanism (WG & Council), (b) Staff
CD incl. analysis & ownership creation, (c) Contribution to private
sector management resources
 Activities: (1) Survey on current situation, (2) Strategy formulation
unit creation, (3) TT on definition & analysis on eng. products, (4)Analysis on market, linkage & technology, (5) Strategy outlining &drafting, (6) Seminar for stakeholders Copper fabrication sector and Iron/Steel sector are selected astarget sub-sectors
 Created “Industry Strategy for Engineering Products: The Hub of
Manufacturing of Engineering Products in the Region”
 2nd half of the Project (2013): (1) Pre-F/S on Direct Reduced Iron
(DRI) production potential, (2) Pilot training &TOT on selected
processes on iron and steel
 Collaboration with TOH Project: Promoting investment in engineering
sector
Source: modified from JICA (2011) and Iwase (2012).

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Example of Steel Making Company in Zambia
Established in 2010, 3000t/month, Started export to neighboring
countries, Preparing for Direct Reduced Iron making (the one which JICA
recommended for Ethiopia)“Landlocked
country?
Land-linked
country!”
Photo: Homma (2011)16

Multi Facility Economic Zones (MFEZ)
 Idea was created under TOH as one of the 12 Taskforces
 “industrial areas for both export orientated and domesticorientated industries, with all the necessary infrastructure
provided”
 MFEZ incentives
 Priority sectors: ICT, Health, Education & skills training,
Manufacturing, Tourism, Processing (agricultural products,
forest products, non-ferrous metals & their products,
gemstones) (Investors Guide Handbook, ZDA (2012))
 Lusaka South MFEZ: 2100 ha land; 15 km from Lusaka
City and 35 km from the Lusaka International Airport;
Government of Zambia, supported by JICA and the
Malaysian Kulim Hi-Tech Park (KTPC), is working on a
Development Master Plan.
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Kaizen in Zambia
QC Circle based: already nationwide: KIZ
 Started in 2009 by dispatching JICA Senior Volunteer to Zambia

Manufacturing Association (ZAM): then responsibility moved to ZDA
where JICA expert stationed within the TOH Project QC Circle is featured as the entry point: widespread involvement of
manufacturing sector, non-manufacturing sector and public sector
 Annual Zambia National Kaizen Conference: started in 2010; 30
teams participated in 3rd Conference in 2012; 4th Conference will beheld in 14-15 February 2013

 Kaizen Institute of Zambia (KIZ) is established under MCTI

To be moved under the Cabinet Office and operationalised
JICA Project will start in the middle of 2013
Photo: Adachi (2012).

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[Coffee Break] by the way,
Zambia’s Champion Product? ZAMBIKES
Zambian bamboo-made bicycle: already exported even to Japan

Photo: ZAMBIKES website (2013)19

3. Some examples: Other Countries
Egypt: GAFI
General Authority for Investment and Free Zones
 One Stop Shop (established in 2005) as one of
the most advanced model in the world 300 officials from 43 gov/pvt organisations
 Providing 96 types of services for 1600
customers/day; in total 3000 services/day
 Clear floor arrangement: GF – information, 1F –registration, 2F – after registration
 Mandated to assist other countries: Nigeria (NIPC),
Kenya, Mali, Botswana, Seychelles, Syria etc.
 At the establishing process, thorough analysis was
conducted in order to identify what should becovered: 22 ministries, 78 departments, 349
services
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COMESA RIA
Common Market for Eastern and Southern Africa
Regional Investment Agency

 Unique agency to serve 19 COMESA member
countries including Ethiopia and potential investors inthis area Based in Cairo as the gateway for Europe, Middle Eastand rest of the world Capacity building functions and training programmes(5-10 per year) for less equipped countries oninvestment promotion
 Various publications and handbooks
 Vehicles for regional integration
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Rwanda: RDB
Rwanda Development Board Established in 2008 by merging 9 organizations
including RIEPA (Rwanda Investment and Export
Promotion Agency)
 Super-agency under the Presidential Office: strong
political will
 Rwanda as the World Top Reformer (Doing Business2011): RDB played an important role as One Stop Shop Aggressive investment promotion contributed to raisingcountry image as “open for business”
 Practical challenges on administrative procedures
 Long-term reform process: RIPA  RIEPA  RDB
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Action plans proposed for IPA’s capacity
building in JICA Cambodia Project

Actions for Investment Information Services
Action 1 Periodical update of investment guidebook
Action 2 Periodical update of website
Action 3 Periodical update of QIP manual for investors
Action 4 Establishment of a library of investment-related information & data
Actions for PR Activities
Action 5 Set-up of units specialized in investment promotion of target countries
Action 6 Improvement of investment seminar management
Action 7 Training of provincial governments on investment promotion
Actions for Investment Consultation and Aftercare Services
Action 8 Upgrading of reception desk (Investors Desk)
Action 9 Introduction of an investment approval tracking system
Action10 Establishment and capacity development of aftercare service
Actions for Policy Advocacy
Action11 Formulation of a proposal for investment climate improvement
Actions for Organization and Management
Action12 Preparation and implementation of organizational reform
Action13 Preparation of job description & job flow to enhance inv. Promo. function
Action14 Introduction of task management system for effective provision of service
Action15 Introduction of annual planning and budgeting mechanism
Action16 Planning and implementation of training program
Source: JICA Study Team (2010)23

4. JICA’s Basic Study on Capacity
Development for Investment Promotion in
Ethiopia Period: 5 February – 2 March 2012
 Background: Japanese Government has received an official
request in Aug. 2011 by the Ethiopian Government for Technicalcooperation for EIA’s capacity development for investment
promotion.

 Objective: Fact finding
1. To investigate current policies and the organizational structureof investment promotion in Ethiopia
2. To collect and analyze the views and opinions of foreign
investors and other organizations in Ethiopia and othercountries (esp. India, Saudi Arabia and Egypt)
3. To extract the problems and potentials of the investment
climate and promotion facilitation of Ethiopia
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Major findings of the Study were …
(Note: as of March 2012, before Investment Law amendment)

1. Political strong will to attract more investment is there,
but not compiled explicitly: All refers to GTP with ambitious
targets, but no specific reference to investment promotion in GTP;
Investment Board and NCC play core roles to bring investment as
national agenda; associated strategy is necessary

2. EIA as Investment promotion agency (IPA) is there, but
limited role and resources: Compared with other countries’
IPAs, limited role is mandated to EIA in terms of investment
promotion; human resources and budget are limited; being under
MOI may mislead that EIA has limited sectoral mandate; MOI’s
sectoral development institutes/directorates have significant roles
on investment

3. Economic and business diplomacy is an unique featureand plays an important role: On the frontier of investment
promotion and with supporting mechanism, economic diplomacy isconducted strategically; systematic capacity building is required25

Major findings of the Study are … (continued)(Note: as of March 2012, before Investment Law amendment)

4. Strong and effective one-stop-shop is necessary forstreamlining administrative procedures: There are strong
requests from the private sector for reducing administrative
procedure burden. Further elaborated one-stop-shop is expected
to be set up, perhaps at EIA.

5. Business voices needs to be further carefully listened:
Predictability, prior consultation, real-time information provision,
appropriate land provision etc…

6. Investment incentives are to be carefully designed:
Prioritization and cost & benefit analysis required

7. It needs to wait and see final results of ongoinginvestment policy reform process carefully: Including
amendment of investment law with one-stop-shop, responsible
ministry/office, investment incentive scheme, relationship with
regional governments etc.
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5. Summary and implications
for Ethiopia
3 core elements necessary for investment
promotion: (1) Government will, (2) Streamlining
public administration, and (3) Private sector
participation
 3 aspects to increase investment: (1) Investment
policy, (2) Investment climate, and (3) Investment
promotion
 3 important aspects on IPA: (1) Multiple functions,(2) Positioning of IPA, and (3) Capacity building.
 Investment - Contribution to diversifying investment
and deepening economic transformation
 Targeted and tailor-made promotion
 Promote investment = Give welcoming image
 Promote investment = Promote Ethiopia

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Amesegenalew
Thank you

JICA’s VISION“Inclusive and Dynamic Development”

www.jica.go.jp
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