Designing Value Chain / M4P Programs in Nigeria

Transcription

1 Designing Value Chain / M4P Programs in Nigeria Ismail Radwan World Bank October 13 th Sheraton Towers Abuja Ismail Radwan

2 Overview I. The Cluster Approach II. The Value Chain Approach III. Nigeria The Theory IV. Nigeria The practice Ismail Radwan

3 Ismail Radwan I. The Cluster Approach

4 Nigeria is already a powerhouse in Africa 300 GDP US$ billions (2005) 250 South Africa Nigeria Cote d'ivoire 50 Tanzania Sudan Congo, D.R. Ghana Angola Mauritius Uganda Namibia Eritrea Lesotho Cape Verde 0 Botswana Senegal 100 Mali 1000 Gabon LN GDP per capita US$ (2005) Ismail Radwan

5 The Nigerian economy remains heavily dependent on oil Nigeria: GDP per capita US$ 2000 constant World Oil Price (RHS) US$/barrel 2000 constant Oil represents 97% of export revenues and 85% of government revenue. Ismail Radwan

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7 Nigeria attracts US$14 in FDI per capita less than the continent average of US$22 and far behind world leaders like Singapore at US$4, FDI per capita US$ Regional Averages Chile China Ghana India Kenya Korea, Rep. Malaysia Nigeria Philippines Poland South Africa Thailand EAP ECA LAC SSA What can be done to improve this performance? Ismail Radwan

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9 Ismail Radwan Entertainment

10 Ismail Radwan II. The Value Chain Approach

11 Ismail Radwan Generic Value Chain

12 Value Chains A new Paradigm Traditional Value Chain starts with core competencies Assets Core Competencies Inputs, Raw Materials Products Service Offering Channels The Customer Customer Priorities Channels Offering Inputs, Raw Materials Assets Core Competencies Ismail Radwan

13 Value Chains Changed Thinking The value delivery system vs. the traditional model Traditional product-oriented system Create the product Make the product Sell the product Product design Process design Value delivery system Procurement Manufacturing Service Marketing Research Advertising Promotion Sales and distribution Price Choose the value Provide the value Communicate the value Understand value drivers Select target Define benefits, price Product, process design Distribution Service Price Procurement manufacturing Sales message Advertising Promotion, public relations Ismail Radwan

14 Ismail Radwan III. Nigeria The Theory

15 Ismail 15Radwan Meat Value Chain

16 Meat Value Chain Analysis Results Trading system is multilayered and complex leading to low returns along the chain but the accumulated effect has significant impact on final price to consumer (or farm-gate price in the case of price-taker) Many stages of handling which compromise the condition of the animal and the quality of the meat In Kano/Kaduna, the transformation rate is 68% from animal husbandry (50,000 Naira) to traditionally retailed meat (84,000 Naira) Transformation Rates for Beef in Kano/Kaduna with Traditional Retail Outlets Ismail 16Radwan

17 Ismail 17Radwan Meat Value Chain Analysis Results (Cont.) Traditional market meat chain in Lagos has higher final product price due to higher transport and labour differentials and greater willingness to pay, thereby making it a more expensive market Longer distances mean increased travel times which distress the animal more than situation in the north No cool chain utilized in traditional market, therefore marketing window is very short Value increases by 96% from animal husbandry (50,000 Naira) to traditionally retailed meat (97,800 Naira) Transformation Rates for Beef in Lagos with Traditional Retail Outlets

18 Meat Value Chain Analysis Results (Cont.) In Kano/Kaduna, the transformation rate is 170% from animal husbandry (50,000 Naira) to supermarket retailed meat (135,000 Naira) The value is much higher than the traditional retail prices due to product differentiation T-bone, filet mignon, sirloin, etc., which is not available in the open air markets Transformation Rates for Beef in Kano/Kaduna with Modern Retail Outlets Ismail 18Radwan

19 Meat Value Chain Analysis Results (Cont.) In Lagos, the transformation rate is 198% from animal husbandry (50,000 Naira) to supermarket retailed meat (149,200 Naira) The value is higher than Kano/Kaduna due to both higher transport and labour differentials and a greater willingness to pay. The value is also higher than the traditional retailing outlets due to product differentiation T- bone, filet mignon, sirloin, etc., which is not seen in the open air markets Transformation Rates for Beef in Lagos with Modern Retail Outlets Ismail 19Radwan

20 Ismail 20Radwan Leather Value Chain Map

21 Leather Value Chain Analysis Results Complex, multi-layered trading system developed to connect the skin sources of supply to the tanneries The value of skins transformed into finished leather increases by 113% Value increases from 22 million Naira for salted goatskins to 34.6 million Naira for tanned leather to 46.8 million Naira for finished leather Transformation Rates for Leather Ismail 21Radwan

22 Leather Value Chain Analysis Results (Cont.) Value Chain Analysis Results Skins are largest cost item in each stage of processing 64% in tanning & 74% in finishing due in part to poor animal husbandry, careless handling and high rejection rates There is little or no return even when the EEG is factored in losses would occur if subsidy was eliminated 22Long cycle time mean high working capital requirements Ismail Radwan

23 Ismail Radwan IV. Nigeria The Practice

24 Ismail Radwan Wholesale & Retail Industry

25 Ismail Radwan Hospitality Industry

26 Tourism Value Chain Study: Framework Market / Destination Analysis Map Key Economic Agents Measure Performance and Benchmark Explain Performance Gaps Solution Design Products offered Demand Sources Contribution to GDP / Growth Potential Govt. Policy or strategy International tour operators Travel Agent / Domestic Operators Tour product providers other service providers Expenditure / Cost breakdown Number of tourists, length of stay, av. Room rates Market Structure and gaps in the chain Accommodation (capacity, quality, price etc.) Infrastructure & Logistical Support Visa and immigration issues Licensing and certification issues Land market and credit market Leveraging best / good practice cases Ismail Radwan

27 Ismail Radwan Nigeria Entertainment Industry

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29 Value Chain Approach : Key Lessons Benchmarks provides quantitative metrics that can be tracked over time and across countries Catalyses momentum for policy and institution reform Provides an effective platform for public private dialogue. Creates a bottom-up policy agenda with champions who have a stake to lobby for reform. Ismail Radwan

30 Value Chain : Policy Implications Draw on successful lessons from other countries / regions Establish a conducive business environment Provide good infrastructure Strengthen knowledge institutions and links to private sector Strengthen industry and professional associations. Ismail Radwan

31 Thank you!!!!! Ismail Radwan Ismail Radwan

32 Designing Value Chain / M4P Programs in Nigeria Ismail Radwan World Bank October 13 th Sheraton Towers Abuja Ismail Radwan