Source: DTI and IMF.
2. While recognising that the political
situation and stability may vary from country to country, the export potential
of these countries could be further boosted. Britain could do more to help these
countries by assisting their development by aiding their growth of exports.
3. South Africa is now enjoying a period when
its interest rates have been at their lowest, through sound financial
management. This has led to an increase in private consumption and business
spending. The changes in the political situation since 1994 have gradually
created a consumer demand from the emerging black middle class. The GDP is
anticipated to grow by 3.5% this year.
4. South Africa is in need of skilled labour
to cope with the continuing inward investment the country is experiencing as
well as advancing its Black Empowerment initiatives, especially in relation to
promoting middle and top management opportunities and developing its SME’s. To
meet these needs for a highly trained labour force will provide opportunities
for British companies involved in education and training.
5. Although South Africa’s budget deficit is
smaller than anticipated and its external debt at a manageable level, there is
nevertheless a need for more credit underwriting facilities, especially for
housing. The British Government should see this as a special need which is
important to South Africa's stability and should look forward to special
measures to assist.
6. Mozambique had enjoyed a steady growth in
recent years that won international recognition but unfortunately suffered a
major setback in the devastating storms that engulfed the country earlier this
year.
There is now an acute shortage of skilled
labour to cope with the huge rebuilding programme that needs to be embarked upon
in view of the large amounts of aid that the country has received and is
receiving. These training needs also provide special opportunities for British
Educational Export Service.
7. Mozambique’s GDP growth almost reached
double digits before the storms and was ripe for further expansion.
8. At the political level, the current
instability in Southern Africa requires careful attention. One facet of this is
putting the extra effort to be put into trade facilitation assistance,
especially to those countries trying to maintain economic stability.
9. Angola, Namibia, Botswana, Swaziland,
Lesotho, Malawi and Zambia have a need for a range of housing developments from
social housing to business projects which also have to attract inward investment
and greater credit underwriting facilities.
10. The UK has not fared well in taking-up
EUROPEAN UNION (EU) funding particularly to assist SMEs in the Export markets
and we hope that the new operation will improve this situation, particularly
with respect to trade in Southern Africa.
11. EU funding for joint ventures between
European and overseas SMEs is under review by the Commission and future
development needs careful watching to ensure a user-friendly outcome i.e. future
schemes can be swiftly administered and decisions taken promptly
12. To improve the UK’s support and
promotion of exports, a review was commissioned by the Government and undertaken
by Sir Richard Wilson, the Cabinet Secretary, and some of the key issues were as
follows:
i. To streamline the process by moving away
from the then existing machinery which was a combination of involvement from the
Department of Trade & Industry (DTI), the Foreign & Commonwealth Office
(FCO), other interested Government Departments, the Scottish, Welsh and Northern
Ireland offices, Business Links, Local Authorities and numerous other groups.
ii. To replace the above with a completely
unified DTI-FCO a trade promotion and development operation was established, led
by a Chief Executive (Sir David Wright), formerly UK Ambassador to Japan.
iii. The new operation, BRITISH TRADE
INTERNATIONAL, incorporates Trade Partners (UK) specialising in promoting
exports and Investment UK which focuses on attracting foreign investors to the
UK, are staffed principally by personnel from the DTI and FCO and remain
employees of their respective departments.
iv. The Chief Executive reports to a board
made up of senior personnel from the DTI and FCO and the Export Credit Guarantee
Department (ECGD), representatives from the Scottish, Welsh and Northern Ireland
administrations and the Private Sector.
v. Overseas trade promotion and delivery is
dealt with primarily by FCO personnel.
vi. We have examined these developments with
relation to southern Africa although our comments may have a wider application.
Section 4: Scope for Improvement.
1. The new BRITISH TRADE INTERNATIONAL is up
and running and most of the recommendations of Sir Richard Wilson’s review
have been implemented to achieve a new ethos and a shift in emphasis to trade
development (to encourage and assist new players, especially SMEs, to the
overseas export markets) rather than trade promotion (which focused on the
traditional export promotion, basically assisting access to overseas markets).
Both the organisation and its modus operandi could be further strengthened to
face-up to the stiff competition from other exporting countries.
2. The new organisation is still top heavy
with civil servants and light on private sector personnel. The introduction of
WEBSITES has given better access to the more general or routine trade
information, resulting in reduced staff numbers. Therefore the private sector's
questions or enquiries are more likely to be business orientated seeking more
specific information, hence the need for more private sector personnel with
practical experience.
Greater use should be made of the export
promoters with the BTI, who are generally people with a great degree of
knowledge in markets that they have specialised in previously.
Currently those individuals have no decision
making powers within the UK trade policy-making process and this means that
their advice is not necessarily taken despite its being based on their long
market experience.
3. The private sector should be consulted or
questioned more on what it really wants from the new organisation. It is
understood that the regional international group interface with the private
sector is being reviewed at present. Much care must be put in the Terms of
Reference for the new trade advisory groups so that they lead to the enhancement
of facilitating trade. The civil service currently sets the policy which leaves
the advisory groups with no executive functions. As these groups have extensive
business experience, consideration should be given to devolving some powers to
chairmen of the respective advisory groups. Any changes to be made should ensure
that greater use of the private sector input.
4. A greater sense of cohesion and less
separatism should be instilled into the organisation. Every effort should be
made to avoid unnecessary delays in the handling of enquiries from the private
sector.
5. To achieve a good culture shift in the
organisation there should be more emphasis in recruiting marketing specialists
at all levels below the Chief Executive from the private sector rather than
having an over-reliance on the public sector. Creating thriving private sectors
in the Southern African markets will generate multiple benefits which can do
more for the poor than pouring money into mainly socially desirable schemes.
6. Familiarity with local customs and
practices and market knowledge could be more closely pursued with less of the
"Big Brother" knows best syndrome, as two-way partnerships are more
sustainable in the future.
7. Experienced personnel from the local
communities in the areas targeted for increased export business should be
recruited as many companies or Governments there are influenced by the
percentage of "locals" involved directly in the contract or in the
negotiating process.
8. High calibre, locally recruited staff
should be considered for senior trade orientated positions and in many cases
these could be senior to UK staff currently in post. While recognising that all
overseas diplomatic posts have some locally engaged commercial officers, we
would like to see more of them and some of them at a higher level.
9. Notwithstanding the outcome of the review
of the role of Business Links and the Small Business Service (SBS), Chambers of
Commerce, through their practical business experiences, should be more involved
in the process.
10. The compilation of trade statistics could
be improved. It is important to know where and what we are doing well or not as
the case may be. This may facilitate setting benchmarks that could assist this
comparison process. It is also vital to have access to information on what our
competitors are selling to these regions. Also the concerns of locals on issues
that adversely affect their lives and livelihoods, e.g., the aids epidemic and
crime should be addressed in the same forthright manner in which trade is
sought.
11. Although this paper mainly focuses on
trade, namely exports and imports, the operation of the invisible markets
sometimes has a greater impact than the visible markets and it would be helpful
if more resources are put into accessing these figures and were reported
alongside each other as approximately 40% of overseas earnings are generated by
the invisible markets.
12. The UK businesses should consider closer
co-operation with South African companies in the form of partnerships or joint
ventures because of their knowledge of the local markets especially in the
housing, educational and utilities, e.g. Mozambique, where redevelopment
projects are substantial in size following the recent floods.
Section 5: Recommendations.
1. The Southern African Development Community
(SADC), with a population of approximately 145 million, is a huge export market
and an area with special problems and needs special assistance. More resources
should be devoted to develop measures to monitor our trade in this area, to
improve on our existing trading figures which in percentage terms is low as
highlighted in the table on page 4. The speed with which we respond could be
improved as was experienced in the aftermath of the Mozambique storms compared
to our competitors.
2. The personnel representing the UK trading
opportunities in these areas should have a higher percentage of people of colour
(whether local or from the UK - both are important) than hitherto has been the
case as this is sometimes a deciding factor in the awarding of local contracts.
Our competitors have benefited well from adopting such a strategy.
3. The position regarding target setting for
the new trade improvement organisation (BTI) should be clearly defined.
Clarity on who does the setting and, more
importantly, who does the monitoring is needed.
4. More captains of industry should be invited
to play an active role in the running of the new organisation, adding value
through their experience. The success of the Export Promoters Scheme shows that
industry recognises the worth of market knowledge. Where private sector
personnel are brought into the organisation their effectiveness should be
enhanced by integrating them into the management process by giving them proper
powers and responsibilities.
5. As well as sending FCO/DTI staff to
overseas missions, at times consideration should be given to recruiting private
sector personnel with sound knowledge of the local markets.
6. UK private sector firms should receive
guidance in trade-facilitation rather than assistance with marketing only.
7. There is a rapidly growing middle class in
the Southern African area and special emphasis should be given to these groups
and their needs. Demutualisation of a few insurance companies greatly increased
the buying power of the locals.
8. The ECGD should relax some of its stringent
criteria in providing cover for UK companies operating in these areas and
especially SME’s who are seeking new business opportunities. In selective
parts of the world like southern Africa there may be a case for taking social
and political factors into account as well as economic factors in determining
the level of ECGD cover.
9. Research should be instituted in the
correlation between exports and the accompanying invisible earnings, e.g.
bulldozers sold are recorded but not the consultancy that is involved in the
project or insurances with Old Mutual or Sanlam from SA which are reinsured with
LLOYDS.
Section 6: Conclusion.
1. Every effort should be made to improve on
the UK’s share of the business in the southern African trading area by
bringing in more expertise into our trade development initiatives.
2. This process would have an added advantage
as these individuals would often be engaged in skills transfers in assisting
local businesses. This would improve our trading standing as we would then be
seen as not only being there to do business, but to assist and educate at the
same time. The shortage of skilled local labour is a serious concern for almost
all the Governments concerned and we should do more to assist.
3. It is important that the UK is being
portrayed as a caring trading partner concerned in the general well-being of the
area and making advice and funding available to locals on such issues as:
Coping with the AIDS epidemic
Attacking rising crime
Internal security
Improving utilities
Seeking UK and EU funding
Housing and Education (including training).
4. Many of these initiatives could, in turn,
become business opportunities.
5. The UK should encourage countries
possessing the capacity to exert positive "multiplier effects" upon
their respective regions in terms of boosting cross-border trading. A
sympathetic approach from ECGD is vital here.
6. Efforts should be made to encourage
international conglomerates that operate from the UK and the region to
liberalise their recruitment and procurement practices to enable a greater input
from the UK and other parts of the region.
7. It is hoped that this paper might assist
Labour Ministers concerned with trade in seeking accountability from the new
British Trade International while trying to improve its service delivery at the
same time. Equally it could assist in the UK’s efforts to help local firms in
Southern Africa and personnel accessing UK trade and job opportunities.
