Competitive Clusters Assessment Report Karen Potter, Private sector capacity specialist Musa Rubin, Textile specialist Jerry Turnbull, Livestock specialist David Yurosek, Horticulture specialist Submitted by: Chemonics International, Inc. Submitted to: Regional Center for Southern Africa, U.S. Agency for International Development Gaborone, Botswana September 2003 USAID Contract No. 690-I-00-00-00149-00 TABLE OF CONTENTS Volume One: Summary Report Acronyms i Executive Summary vii SECTION I Agriculture Sector 1 A. Success Through the Supply Chain 1 B. Utilizing Current, Successful Models 1 C. Local Skills Sets 3 D. Infrastructure 3 E. Transport 4 F. Finance 4 G. Market Information 5 H. SME Participation in the Supply Chain 6 I. Agro-Processing to Integrate the Supply Chain 6 J. Communications 7 K. SPS 7 K1. EUREPGAP, SPS, APHIS and Access to Certification 7 K2. Access and Certification for Namibia and Zambia 7 SECTION II Livestock Sector 9 A. Success Through the Supply Chain 9 B. The Livestock Value Chain 11 C. Communication 11 D. Market Information 12 E. SME Participation in the Supply Chain 12 F. Local Skills Sets 12 G. Finance 13 H. Transport 13 I. Global Leather Value Chain 13 J. Leather Sector 13 K. Poultry Sector 14 L. Beef Sector 14 M. Dairy Sector 15 SECTION III Textiles/Garments Sector 16 A. Success Through the Supply Chain 16 B. Integrated Regional Market Information 19 C. Market Consultation for Group Nine Companies 20 D. Finance 21 E. Transport 22 F. Regional Textile and Garment Association 22 G. Extending Cotton Improvement Programs 24 SECTION IV Private Sector Capacity Development 26 A. SME Participation in the Supply Chain 26 B. Roles of Key Players 26 C. Importance of the Enabling Environment 26 D. Demand-driven Support Services and Linkages 27 E. Role of Intermediary Organizations 28 F. The Hub’s Strategic Role 28 G. Finance 29 SECTION V Conclusion and Recommendations 33 A. Clusters 33 B. Cross Cutting Issues 34 B. Strategic Partnerships for Building Private Sector Capacity 36 CHEMONICS INTERNATIONAL INC. ACRONYMS ACT African Coalition for Trade AfDB African Development Bank AGOA African Growth and Opportunity Act APHIS USDA Animal and Plant Health Inspection Service ARC Agricultural Research Center ASANRA Association of Southern African National Road Authorities ASCCI Association of SADC Chambers of Commerce and Industry ATC Agreement on Textiles and Clothing ATRIP African Trade and Investment Policy project BDC Botswana Development Corporation BDS Business Development Service BECI Botswana Export Credit Insurance Company BEDIA Botswana Export Development and Investment Authority BMC Botswana Meat Commission BOCCIM Botswana Confederation of Commerce, Industry and Manpower BSO Business Services Organization CAWG Customs Advisory Working Group CCA Corporate Council on Africa CFA Constituency for Africa CLUSA Cooperative League of the United States CMC Corridor Management Committee CNFA Citizens Network Farmers Association COMESA Common Market for Eastern and Southern Africa COP Chief of Party CTA Confederation of Mozambican Business Associations CTO Cognizant Technical Officer DFID UK Department for International Development vii CHEMONICS INTERNATIONAL INC. DOE United States Department of Energy DOL United States Department of Labor DOT United States Department of Transportation DSC Dar es Salaam Corridor EBA EU Everything but Arms initiative EU European Union FANR Food, Agriculture and Natural Resources FAO Food and Agriculture Organization FCFASA Federation of Clearing and Forwarding Associations of Southern Africa FDA United States Food and Drug Administration FDI Foreign Direct Investment FESARTA Federation of East and Southern African Road Transport Associations FSIS USDA Food Safety Inspection Service FTA Free Trade Agreement G&S Grades and Standards GDP Gross Domestic Product GMO Genetically Modified Organism GSP Generalized System of Preferences GTN Global Trade and Technology Network HACCP Hazard Analysis Critical Control Point IDC Industrial Development Commission IESC International Executive Service Corps IFDC International Fertilizer Development Corporation IFPRI International Food Policy Research Institute ILO International Labor Organization IMF International Monetary Fund IMPACT Impact Assessment, Monitoring and Evaluation Activity IPA Investment Promotion Agency viii HUB TASK ORDER: RAPID ASSESSMENT CHEMONICS INTERNATIONAL INC. IPPC International Plant Protection Convention IQC Indefinite Quantity Contract IR Intermediate Result ISA Initiative for Southern Africa ISO International Organization for Standardization IT Information Technology LDC Least Developed Country LNDC Lesotho National Development Corporation LOE Level of effort MCTI Zambia Ministry of Commerce Trade and Industry MFA Multifiber Arrangement MIS Management Information System MOU Memorandum of Understanding MUSCCO Malawi Union of Savings and Credit Co-operatives NAFU National African Farmers Union NASFAM Malawi National Association of Smallholder Farmers NDC Tanzania National Development Corporation NEPAD New Partnership for Africa’s Development NGO Non-governmental Organization NTB Non-tariff Trade Barriers NRM Natural Resource Management OECD Organization for Economic Co-operation and Development OPIC United States Overseas Private Investment Corporation PESA Private Enterprise Support Activities PIP Pesticide Initiative Program PMAESA Port Management Association of Eastern and Southern Africa PMP Performance Monitoring Plan ix CHEMONICS INTERNATIONAL INC. RAPID Regional Activity to Promote Integration through Dialogue and Policy Implementation RCSA Regional Center for Southern Africa SAB South Africa Brewery SACOB South African Chamber of Business SACU Southern African Customs Union SADC Southern African Development Community SAEDF Southern Africa Enterprise and Development Fund SAEN Southern African Enterprise Network SAIBL Southern African International Business Linkages SANAS South African National Accreditation System SARA Southern African Railway Association SARS South African Revenue Service SATIEC South African Textile Industry Export Council SATRN Southern African Trade Research Network SCCC SADC Sub-committee on Customs Cooperation SCD SADC Customs Document SIDO Small Industries Development Organization SIPA Swaziland Investment Promotion Authority SME Small and Medium Enterprises SO Strategic Objective SOW Statement of Work SPS Sanitary and Phytosanitary SSATP World Bank Sub-Saharan Africa Transport Policy Program TA Technical Assistance TAZARA Tanzania Zambia Railway Authority TBT Technical Barriers to Trade TCCIA Tanzanian Chambers of Commerce, Industry and Agriculture TDA United States Trade and Development Administration TKC Trans-Kalahari Corridor THA Tanzania Harbors Authority x HUB TASK ORDER: RAPID ASSESSMENT CHEMONICS INTERNATIONAL INC. TNS Techno Serve TO Task Order TOR Terms of Reference TRADE Trade for African Development and Enterprise TRIMS Trade Related Investment Measures TRIPS Trade Related Aspects of Intellectual Property UNCTAD United Nations Conference on Trade and Development USAID United States Agency for International Development USA-ITA United States Association of Importers of Textiles and Apparel USDA United States Department of Agriculture USDOC United States Department of Commerce USTR Office of the United States Trade Representative VAT Value Added Tax WBCG Walvis Bay Corridor Group WCO World Customs Organization WFP World Food Program WTO World Trade Organization ZAMTIE Zambia Trade and Investment Enhancement project ZATAC Zambia Agribusiness Technical Assistance Center ZCSMBA Zambia Chamber of Small and Medium Business Association ZEGA Zambia Export Growers’ Association ZMA Zambia Manufacturers’ Association ZRA Zambia Revenue Authority xi CHEMONICS INTERNATIONAL INC. Executive Summary Introduction The Southern Africa Global Competitiveness Hub is refocusing and realigning its core work to achieve the strategic result of building export competitiveness in the region. With the approval of the Regional Center for Southern Africa (RCSA), Botswana, Chemonics International fielded a four-person team from June 16 to August 22, 2003, to conduct an assessment of key constraints to and opportunities for trade development and improved competitiveness. The assessment team visited nine of the 14 countries covered by the Botswana-based Hub: Botswana, Zambia, Mozambique, Tanzania, Namibia, Malawi, South Africa, Lesotho, and Swaziland. The assessment team evaluated the supply chains and business clusters for three key sectors that have export potential: agriculture (particularly horticulture and grain), livestock/leather, and textiles/garments. Collectively, the team filtered its assessment through this question: How can the Hub refocus and realign its core work to achieve the strategic result of building export competitiveness in the region that leads to the overall goal of increasing trade and investment in the region? To complete its work, the assessment team conducted an examination by country, region and sector. The team identified key constraints to and opportunities for trade development and growth. In addition, the team examined cross cutting constraints regarding how the private sector can improve competitiveness. Finally, the team provided recommendations regarding potential interventions in terms of the Hub’s strategic role through the lens of these findings. The team was comprised of: Karen Potter, private sector capacity development; Musa Rubin, textiles and garments; Jerry Turnbull,