Yutaka Yoshino, The World Bank with John Akoten. Nairobi, May 7,

Transcription

1 Yutaka Yoshino, The World Bank with John Akoten Nairobi, May 7, 21 1

2 f Enterprises (thous sand) Agg gregate Number of Micro Small Medium Large Aggrega ate Sales Volume ($ billion) Aggregate g No. of Enterprises Aggregate g Volume of Sales Data Source: World Bank Enterprise Surveys 2

3 In Africa, domestically owned enterprises are underperforming in terms of productivity and sales performance $ PPP P Median Value Added per Worker Median Sales per Worker Data Source: World Bank Enterprise Surveys Domestically Owned Foreign Owned 3

4 More Productive Largerfirmsaremoreproductive are more inafrica. Foreign owned firms are larger than domestically owned firms. Data Source: World Bank Enterprise Surveys Larger 4

5 Beyond size, manager s education, capital intensity, access to finance, and access to market matter. Blinder Oaxaca Decomposition of Performance Gap between Domestically Owned and Foreign Owned dfirms in Africa Non Local Market Sales Accessto Formal Finance Capital Intensity Manager's Post Sec. Educ. Size Large Size Small Data Source: World Bank Enterprise Surveys Sales per Worker Value Added per Worker 5

6 Size matters both in productivity and market expansion. What are coping mechanisms for micro and small enterprises (MSEs) to overcome their constraint and what are their benefits and shortfalls? As one of such mechanisms, this study focuses on industrial i clusters in Africa, which are largely dominated by MSEs. Industrial clusters = concentrations of same or related industries in specific areas. The study focuses on naturally formed clusters, not policy based constructed clusters: WB AERC original case studies of industrial clusters in Cameroon, Kenya, Ghana, Mauritius, and Rwanda, and indepth JICA study in Tanzania. 6

7 Case studies of light manufacturing industrial clusters in select African countries Ratio Inside Outside Differential in Sales per Worker as Ratio of Median Inside to Median Outside among Select Light Manufacturing Industrial Clusters Data Source: Original Case Studies 7

8 Nationwide + Export Markets 1 Inside Outside DifferentialinParticipationandIntensityin and of Sales innon Local Markets: 9 Percentage Point Difference between Inside and Outside among Select Light Manufacuting Industrial Clusters 8 fference Percentage Point Dif Data Source: Original i Case Studies Inside Outside Differential in Non Local Sales Participation Rate (% point difference) Inside Outside Differential in Non Local Sales Intensity as Percent of Total Sales (% point difference) 8

9 Reason for choosing current location: Better chance to find new customers and input providers is a dominant reason for clusterbased firms to have chosen current locations. Inside of Clusters 3% 3% 31% Better Access to Factors (Skilled Workers, Finance) Better Land and Power Supply Outside of Clusters 6% 7% 63% Better Market Access 44% 43% Others Data Source: Original Case Studies Market access influence firm s location choice within cluster in the case of Arusha furniture cluster. 9

10 % Output Sales Inside of Cluster Outside of Cluster % Imput Purchase Inside of Cluster Outside of Cluster To Same Neighborhood To Other Neighborhoods in Same City To Other Cities in Same Country Exports From Same Neighborhood From Other Neighborhoods in Same City From Other Cities in Same Country Imports Data Source: Original Case Studies 1

11 Industrial clusters in Africa are still early stage: Agglomeration leads to quantitative expansion of same products. Different from more advanced dclusters are more innovation oriented, where agglomeration leads to quality improvements with more differentiated products in the clusters. The vast majority of industrial clusters in Africa are still at the stage of survival. 11

12 Average Business Performance and No. of Enterprises in Suame Magazine Number Thousdand GHC /24 No. of Enterprises Sales Revenue Value Added Source: Iddrisu, Mano, and Sonobe (29) Competition is good: weeding out inefficient firms. But without innovation and differentiation of products, competition does not get translated into growth of enterprises and clusters. 12

13 Constraint in space : mobility andlocation choices Enterprises seek new locations as they grow. Limited location choices hamper their growth. Urbanizationfacilitates increased mobility (optimal locationchoice) choice) of MSEs (e.g., India). Clustering needs to be complemented by urbanization. Constraint in investment and innovation (product dff differentiation): managerial human capital Transform clusters from survival to more innovation driven clusters Access to finance important...but also improving human capital of entrepreneurs is key Poor managerial skills and knowledge in clusters hamper their capacity to obtain credit, invest, and then innovate. 13

14 Probability of Seeking Relocation Sales per Worker (1% higher) Non local sales (1% higher) Being located in cluster Being a member of business association.2 Data Source: Original Case Studies 14

15 Constraint in space : mobilityand locationchoiceschoices Enterprises seek new locations as they grow. Limited location choices hamper their growth. Urbanizationfacilitates increased mobility (optimal locationchoice) choice) of MSEs. Clustering needs to be complemented by urbanization. Constraint in investment and innovation (product differentiation): managerial human capital Transform clusters from survival to more innovation driven clusters Access to finance important...but also improving human capital of entrepreneurs is key Poor managerial skills and knowledge in clusters hamper their capacity to obtain credit, invest, and then innovate. 15

16 Graduated Enterprises (7) Remaining Enterprises (12) Experience in formal sector Age Years of schooling Years of vocational training Years of prior experience in similar business Years of management experience Number of employees 1998/ Marketing to quality-conscious customers (% of revenue) 1998/ Direct procurement (% of material cost) 1998/ Source: Sonobe, Akoten, and Otsuka (29) 16

17 Sound spatial and urbanization policy at the local level Access to land and weak policy framework of market based land allocation: serious IC constraint Optimal spatial allocation of infrastructure and other public goods; transparent and predictable zoning policy Addressing negative externalities from agglomeration (congestion, pollution) Cluster targeted targeted managerial human capital development Cluster targeted training, leveraging knowledge spillover within clusters. Build capacity for enterprises to hire, generating opportunities for employment. Facilitate formalization ation and abilitytoto access credit; linkage with large enterprises. Regional integration Reaching global markets is challenging; reaching regional markets more feasible. Help microenterprise expand market space and build regional economies of scale Expand access to sales markets as well as inputs (e.g., BDS) 17