Closing remarks by H.E. Mr. Pierre Claver Ndayiragije at the World Export Development Forum 2014 (en)
Delivered on 17 September 2014 by H.E. Mr. Pierre Claver Ndayiragije, Ambassador and Permanent Representative of the Republic of Burundi to the United Nations Office and other international organisations in Geneva at the closing session of World Export Development Forum, Kigali, Rwanda.
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In my role as Chairperson of the WTO Committee on Trade and Development, it is my pleasure to provide some closing remarks for the World Export Development Forum 2014.
I congratulate the CEO of the Rwanda Development Board Francis Gatare and Ms Arancha González, Executive Director of ITC, for the resounding success of the Women's Vendor and Exhibition forum and the World Export Development Forum. I am certain I speak for us all when I commend the quality of the speakers, and of the debate and the manner in which these three days unfolded in a spirit of partnership. It was truly an opportunity to talk business and do business.
These three days have confirmed that SMEs have a critical role to play in raising global competitiveness and sustaining development and poverty reduction. The employment creating role of SMEs, especially for women and youth, is of particular importance for developing and least developed countries. Developing the international competitiveness of SMEs is an opportunity to also upgrade skills and support innovation and entrepreneurship.
The discussions made it clear that the landscape of value chains has created opportunities for SMEs – as importers, exporters of goods and services or as suppliers to larger multinationals. This opens new opportunities but offers new challenges.
Seizing new opportunities
To seize these new opportunities, policymakers, business associations, trade support institutions and SMEs must work in unison to create conditions for SMEs to better integrate into regional and value chains.
First, reduce the cost of doing business across borders. These include addressing transaction costs such as customs and border procedures and modernizing logistics. The WTO Trade Facilitation Agreement is an important input into addressing the cost and time of trading, including in the areas of transit and providing increasing transparency and predictability of customs procedures.
For landlocked developing countries -- and we have many in Africa -- it is important to work with partners on border crossing and trade facilitation reforms. The competitiveness of producers and traders in landlocked countries is linked to the quality of port and customs procedures in neighbouring countries.
Second, use the power of the digital economy to transform the potential of SMEs to compete. The digital economy is booming in Africa. African digital entrepreneurs have a tremendous opportunity to contribute to transforming how goods and services are produced, traded and consumed. We have seen that ICT is helping governments rapidly transform the business environment such as the increasing use of mobile technology to connect markets and undertake financial transactions. A complement to the digital economy is increasingly using e- platforms to increase the capacity of policy makers and SMEs in developing countries. The launch of the ITC SME online academy was welcomed as a contribution to this.
Third, invest in services to activate new market opportunities. The reach of the services sector extends far beyond the value of direct services trade. ‘Embedded’ services constitute a large and growing share of the value of manufactured goods and agro-produce. This is often described as the ‘servicification’ of production, and brings new opportunities for SMEs.
The potential of services is hampered by overly burdensome regulations. Public-private dialogue is the way forward to balance the need for regulations which are business friendly, and also tackle social objectives with minimal market distortions. Service providers need to organize themselves in business advocacy groups to effectively engage in this dialogue.
And fourth, focus on emerging markets as new opportunities for SMEs. Fast growth and greater purchasing power in developing countries is reshaping global supply chains. There are new opportunities to transfer knowledge, attract investments and diversify products and markets. The challenge remains for destination governments to ensure that investments occur in sectors that create jobs and add local value.
Addressing the barriers
The discussions also brought out the need for governments and the private sector to address barriers to internationalization. Among them are:
Access to finance. This is perceived as a major obstacle. Banks perceive SMEs as a large, diverse and complex segment with a broad risk spectrum. The evidence however, shows that SMEs, especially women owned SMEs, are reliable customers with minimum risk. When banks and other financial institutions lend to SMEs, they usually provide small loans with short tenures to mitigate risk, until there is sufficient credit history to warrant larger lending volumes. Fortunately, there is growing attention to the impact investment market which is poised to provide a complementary source of capital. The major challenge will be how to allay concerns about the risks, when regulatory reforms have not yet been carried out. This is where government policies can play a crucial role - by accelerating the development of local financial systems over the long term and providing specific incentives, such as tax breaks and guarantees to attract impact investors, in the short term.
Encouraging innovation. SMEs find it hard to keep up with technological change because they generally employ few technical specialists, and because it takes resources to continually purchase new technology. Yet SMEs can be incubators of new technologies and a source of innovation. In the last decade, these incubators have grown significantly across Africa. Many are in traditional sectors such as agribusiness.
Entering new markets. This requires substantial investment in information gathering on foreign prices, consumer preferences, standards, testing requirements, and appropriate distribution channels abroad. Cash-strapped SMEs will find it harder to make the investments to plug these information gaps. This is where International organisations such as the ITC can help address these market information gaps.
The importance of branding and marketing as a means to support investments in quality and innovation and enter new markets may result in access to higher value added segments and diversify both exports and export markets.
Meeting an array of quality and sustainability standards.
The discussions reiterated the need to change the perception of standards as an impenetrable barrier. The focus should be on ensuring compliance as a means to increase and diversify exports. This is possible if we build on existing resources and methodologies in a collaborative way and reduce duplicate efforts that contribute to proliferation of standards, multiplication of audits or assessment methodologies.
Tourism constitutes the single largest foreign exchange earner for many developing and least developed countries. Its trickle-down effect reaches deep into the local economy. New institutional partnerships can explore innovative ways to help local goods and services providers add value, certify quality and attain sustainable supply volumes. We must broaden the scope of traditional tourism operators, to look at internationalizing export-ready SMEs in crafts, agri-food and creative and environmental services.
These discussions over two days have contributed to an enhanced understanding of how policy makers need to craft and implement policies with input from the private sector and trade and investment support organizations to help SMEs use trade as an engine for sustainable growth and jobs. We were encouraged to see the ITC partner with the UN world tourism Organisation to unlock this potential.
Ladies and gentlemen, inclusive economic growth is a pillar of the post-2015 UN Millenium Development Agenda, now under discussion. The forum noted that an effective way to promote women’s empowerment is through targeted procurement of goods and services from women-owned enterprises that would ensure that women receive an increasing share of available contracts. Institutions and associations can do more to prepare women business owners to become preferred suppliers and meet buyers’ requirements. The ITC initiative and guide on procuring from women vendors hailed as a great tool to help move in this direction.
I sincerely hope that delegates have found the discussions stimulating and thought provoking. New insights and innovative ideas have emerged. The challenge is to translate these ideas into action. It requires strong and innovative partnerships with the Aid for Trade community, the private sector and others in international trade.
As President Kagame said at outset of this conference, the right mindset is critical to transforming economies by creating jobs which citizens want.
I believe this forum- both talking trade and doing business- have contributed to this. I am taking these messages with me to the WTO to contribute to the upcoming Aid for Trade Global Review.