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ECA/IND/FOC/001/89
Focus on
African Industry
Volume Ill No. l
UNITED NATIONS
ECONOMIC COMMISSION FOR AFRICA
July 1989
FRONT COVER
Oil Mill in"Maroua, Cameroon
CONTENTS
Editorial ... .
Highlights of Resolutions and Decisions Therefrom of the Ninth Meeting of the Conference of African Ministers of Industry.
Background to the Proclamation of the Second IDDA by the Ninth Conference of African Ministers of Industry ••••••••••••
India in the Forefront of Rural Innovation: Integrated Rural Development Program- mes and Allied Programmes of Training of Rural Youth for Self-Employment (TRYSEM) and Development of Women and Children in Rural Areas (DWCRA) ...•...••.•...•...
Pulp and Paper Industry in Developing Africa: A Need for Change in Strategy ... .
Analysis of Imports, Demand and Policy Implications for African Iron and Steel ••••••••••••••
Creation of a Regional Network for the Development of the Production, Marketing and Application of Fertilizers in Africa ... .
Industrial News and Products •••
Conferences, Meetings, Seminars and Workshops for 1989 ••••••••••••
V
1
6
10
16
23
33
35
38
ARTICLES
1. Articles may be quoted, provided acknowledgement is given of the source (Industry and Human Settlements Division, ECA, Addis Ababa).
2. Articles may be sent for publication in FOCUS ON AFRICAN INDUSTRY in either English or French languages. They should be brief and may be accompanied by drawings, photographs (black), slides and transparencies.
All correspondence should be addressed to:
Chief
Industry & Human Settlements Division
UN Economic Commission for Africa
P .0. Box 3001 Addis Ababa Ethiopia
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11I'-
EDITORIAL
The experience of the previous years and in particular the poor performance of the industrial sector in many African countries has revealed that there are numerous causes of the dismal performance of African industries. These include among others, inadequacy of industrial development policies, inavailability of financial resources to the industrial sector, little or lack of inter- and intra industrial linkages, inadequacy of industrial and entrepreneurial capabilities, smallness of markets for the manufactured goods that are produced,. etc.
Accordingly, this issue (Volume III Number I) is focused on "adjusting Industr- ial Policies towards Development". In this issue the resolutions and decisions of the ninth meeting of the Conference of African Ministers of Industry which was held in Harare, Zimbabwe, from 29 - 31 May 1989, are highlighted especially with respect to the awareness of African countries of the need to readjust their industrial policies so that they become effective instruments for development.
For example, the Conference of African Ministers of Industry emphasized the need to rehabilitate selected industrial plants in African countries, within the context of an appropriate macro-economic and industrial policy framework.
African countries were urged to under- take diagnostic surveys of ailing industries
with a view to formulating policies and designing strategies aimed at improving production techniques, efficiency and product quality in all subsectors and branches of industry. In taking such decisions, the Conference was guided by the experiences of the first Industrial Development Decade for Africa (IDDA) 1981-1990. The problems encountered in the implementation of the programme for the first IDDA should serve in preparing the programme for the second Industrial Development Decade for Africa 1991- 2000 which will address some of the critical issues such as development of entrepreneurship, market integration, development of human resources and technological capabilities.
The experience of India in developing and promoting small-and medium-scale and cottage industries is also highlighted in this issue with a view to demonstrating the feasibility of undertaking such an exercise successfully in the African context. Depending on individual economic and industrial situations, the experience of India could be used by some African countries in formulating and implementing their industrial policies.
Finally, progress in the development of pulp and paper industries in selected African countries is also reviewed followed by an analysis of demand for iron and steel.
V
HIGHLIGHTS OF RESOLUTIONS AND DECISIONS THEREFROM OF THE NINTH MEETING OF THE CONFERENCE OF AFRICAN MINISTERS OF INDUSTRY!/
The ninth meeting of the Conference of African Ministers of Industry (CAMI) which was jointly organized by the secretariats of the United Nations Industr- ial Development Organization (UNIDO) and the United Nations Economic Commis- sion for Africa (UNECA) was held in Harare, Zimbabwe from May 29 to 31 May 1989. The Ministerial Conference was immediately preceded by a meeting of the Intergovernmental Committee of Experts of the Whole on Industrialization in Africa which took place from 22 to 26 May 1989 in Harare.
Thirty four (34) African countries represented by a total of 13 3 delegates of which twenty-two (22) were Ministers responsible for the industrial development.
Also attending were 83 observers of which twenty six were officials from embassies in Harare of the following countries: Belgium, Brazil, Bulgaria, Czechoslovakia, Federal Republic of Germany, France, German Democratic Republic, Greece, Indonesia, Netherlands, Norway, Poland, Romania, Switzerland and Turkey. Other observers included representatives of the following organiz- ations: The African Regional Centre for Technology (ARCT) (Dakar, Senegal), Agri-Energy Roundtable (Washington D.C. USA), Banque Ouest Africaine de Developpement (BOAD) (Lome, Togo) Banque de Developpement des Etats de l'Afrique Centrale (BDEAC) (Brazzaville, Congo), Commonwealth Secretariat, (London, England), Danish International Development Agency (DANIDA) (Copenhagen), ECA/MULPOC, (Lusaka, Zambia), Eastern and Southern African Management Institute, ESAMI (Arusha, Tanzania), Global Mart. Int.
(Atlanta, Georgia, USA), International CouncU of Women represented by Associ- ation of Women in Zimbabwe, International Labour Office, (Geneva Switzerland), International Telecommunications Union, (Geneva, Switzerland) Mano River Union·
(Freetown Sierra Leone), Pan African Telecommunications Union, (KinShasa Zaire), Southern African Transport and Communications Commission, (Maputo, Mozambique), UNCTAJ;J/GATT (Geneva, Switzerland), UNESCO, (Nairobi, Kenya), World Bank, (Washington DC), World Health Organization (Geneva, Switzerland), UDEAC, (Bangui Central African Republic), Zimbabwe Banking Corporation (ZIMBANK), Zimbabwe Automotive Industry (ZAI), Zimbabwe Iron and Steel Company (ZISCO), Zimbabwe National Chamber of Commerce (ZNCC), Confeder- ation of Zimbabwe Industries (CZ!), Zimbabwe Development Bank, Zimbabwe Association of Consulting Engineers (ZACE) and Small Enterpises Development Corporation (SEDCO).
The meeting in reviewing progress towards industrialization in African countries considered, in particular, the implementation of the programme for the Industrial Development Decade for Africa (IDDA), the United Nations Programme of Action for African Economic Recovery and Development 1986-1990 (UNPAAERD) and the African Memorandum on Industrial Development in Africa. In addition to the above, the meetings examined reports on the independent mid-term evaluation of the IDDA, the proposed African Industrial Development Fund and the proclamation of an African Industrialization Day.
1/ This anicle draw heavily fPOm Uie Report on independent mid te1ffl
evaluation of the Industrial Development Decade for Africa (IDDA) and the proclamation of the second IDDA, CAMI.9/20/Add.1.
1
Following detailed deliberations on the issues for which the meeting was convened, some of the resolutions on the main items of the agenda included the following:
(i) Resolution on the African Common Position for the Third General Conference of UNIDO
Stressing the importance of the Third General Conference of UNIDO as a forum for promoting international co-operation in industrialization and the structural transformation of African economies, as well as the implementation of the Industrial Development Decade for Africa, The Conference of African Ministers of Industry
Decided that the issue below, which are included in the agenda of the Third General Conference of UNIDO, are of particular importance to African countries:
(a) The second Industrial Development Decade for Africa;
2
(b) New concepts and approaches for co-operation in respect to industrial development;
(c)
(d)
(e)
(f)
(g)
(h)
Institutional arrangements of UNIDO for Africa;
Development and technology and of human resources;
transfer of development Economic and technical co-oper- ation among developing countries;
The external debt and industrial development;
Industrialization of the least developed countries;
Programme and budgets of UNIDO;
(ii) Resolution on the development and
transfer of technology and development of human resources
Bearing in mind the Arusha Forward- looking Strategies for the Advancement of African Women beyond the United Nations Decade for Women (A. CONF.
ll6/9/sect/4, C. Industrial Development for Africa) as referred to in General Assembly resolution S-13/2 and the United Nations Programme of Action for African Economic Recovery and Development 1986-1990 (A. Africa's Priority Programme for Economic Recovery 1986-1990 (e) Policy reforms (v) Women and Develop- ment),
Reiterating the vital importance of the development of human resources on the basis of a sound conceptual and integrated approach, to the accelerated industrialization,
Having considered the report on the development and transfer of technology and the development of human resources and technological capabilities, and in particular, the report on the integration of women in development, The Confernece of African Ministers of Industry
1. Urged developing countries and regional/subregional organizations to pay particular attention and attach priority to the development and transfer of technology, including strengthening their negotiating capabil- ities for the acquisition of technology, and to the development of industrial skills, particularly technological, engineering and entrepreneurial capabilities, in national human resource programmes, as well as to ensure that adequate resource are earmarked for those purposes in both national budgets and technical co-operation programmes with the United Nations Development Programme (UNDP)
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and other multilateral and bilateral funding agencies;
2. Called on- UNIDO and other relevant international organizations, particularly the regional economic commissions, UNDP, UNESCO and ILO, to continue to intensify technical assistance and other activities in developing countries, particularly in Africa, relating to the development and tran·sfer of technology and the develop;nent of human resources and entrepreneurial capabilities;
3. Reguestd UNIDO to initiate, in consult- ation with the Regional Economic Commissions and other relevant United Nations agencies, measures aimed at establishing regional associations of small-scale industrial enterprises and thus providing a forum for the exchange of information on various aspects of the development of entre- preneurial capabilities;
4. Urged developing count~ies _to continue to implement the Na1rob1 Forward- looking Strategies as they relate
to women and industrial development;
(iii) Resolution on Economic and technicai co-operation among developing countries {ECDC/TCDC)
Recalling the Buenos Aires P~an of Ac~ion for Promoting and Implementing Techmcal Co-operation among Developing Countries as spelt out in document ID/CO NF ,3/31, chapter IV, and the Cairo Declaration on Economic Co-operation among Dev_elop- ing Countries, adopted at the High-level Meeting of the Member Countries of the Group of 77, held at Cairo in August 1986, The Conference of African Ministers
of Industry
I. Urged Governments of developing countries and relev1;1nt regional/sub- regional institutions and economic groupings to allocate adequate resources to the promotion of South-South Co-operation in the industrial field;
2. Appealed to donor countries, financial institutions and relevant international organizations to lend their full support to developing countries, subregional and regional institutions and economic groupings with a view to facilitating ECDC/TCDC arrangements in the industrial field;
(iv) Resolution on the Industrial bevelop ment Decade for Africa, including the contribution of UNIDO to the implementation of the United N'ations Programme of Action for African Economic Recovery and Development 1986-1990
Recalling Resolution 1987 /70 of the Economic and Social Council and resolution GC.2/Res. 2 of Second General Conference of _ UNIDO on the Industrial Development Decade for Africa,
Recalling further resolution 656 .(XXIV) adopted at the fifteenth meeting of the ECA Conference of Ministers responsible for economic planning and development and Res.
2(IX) -of the ninth meeting of the Conference of African Ministers of Industry on the proclamation of a· second IDDA,
Stressing the important contribution that a second IDDA should make to enhance the role of industry in the structural transformation of African economies in the 1990s, The Conference of African Ministers of Industry
I. Called on the General Assembly of the United Nations to proclaim at its forty-fourth session the period 1991-2000 as a second Industr- ialDevelopment Decade for Africa;
2. Urged African Governments and intergovernmental organizations to increase their efforts to make the industrial sector an engine of growth and structural transform-
ation for the African economies and, to that effect, to mobilize the necessary domestic financial and other resources;
3. Appealed to the international community, especially the developed countries, multilateral financial institutions and direct private investors, as well as other develop- ing regions, to increase their financial and technological support to African countries for the imple- mentation of programmes and projects under the second IDDA;
4. Requested the Director-General and the Executive Secretary to ensure that the objectives, strategies and programmes of the second IDDA are fully reflected in their respective Medium-Term Plans in the 1990s.
The Conference of African Ministers of Industry at its ninth meeting took a number of decisions on relevant issues.
On the proclamation of an African Industrialization Day, the Conference decided to:
4
(i) recommend that OAU and the United Nations General Assembly formally proclaim 20 November as Africa Industrialization Day with its commemoration to start in 1990;
(ii) urge all African countries and organizations to lend their full support to the Day and to take all necessary legislative and operational measures, including the allocation of adequate resources and the setting up of suitable institutional arrange- ments with a designated focal point for initiating and monitoring preparations for and the com- memoration of the Day;
(iii) call on the entire international community to lend its support to the Day and to join African
countries it;
in commemorating (iv) request the Director-General of UNIDO, the Secretary General of OAU and the Executive Secretary of ECA to take the necessary steps to ensure the formal proclamation of the Day by the OAU and the United Nations General Assembly at its forty- fourth session;
After noting that the political will of the African countries to establish an African Industrial Development Fund had been demonstrated by 15 members which had ratified that decision and the inability to mobilize the trigger amount of US$20 million as initial capital and after taking also account of the performance of subregional and regional development and finance institutions, it was recommended that the project for establishing the African Industrial Development Fund (AIDF) should be reviewed by the joint secretariats of the OAU, ECA and UNIDO, in consultation with the Ministries of Industry in each Member State, ADB and other subregional development banks, so as to determine the relevance of the Fund in the light of present realities;
The question of regeneration of African industries was equally considered within the context of comprehensive rehabilit- ation and restructuring programmes aimed at increasing utilization of existing industrial capacity. In this connection, the Conference of African Ministers of Industry
(i) emphasized the need to rehabilit- ate selected key industrial plants in African countries, within the context of an appropriate macro-economic and industrial policy framework, as an initial step towards industrial regener- ation;
(ii) urged African countries and organizations to undertake diagnos-
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11(iii)
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tic surveys of ailing industries, especially in key agro-industrial subsectors, with a view to elaborating comprehensive rehabilitation programmes for potentially viable industries and to allocate appropriate resources for that purpose;
stressed that comprehensive programmes, be placed on:
in elaborating rehabilitation emphasis should Marketing, engineering and other skills;
- The role of the private sector;
- Social cost implications;
- Small- industries;
and medium-scale - Improved management;
- Selection of equipment and choice of technology;
- Research and other services
and development technical support - Possible relocation of plants;
and regional/subregional co-operation;
(iv) further stressed that rehabilitation and regeneration of African industries should be linked to improving the capacity in Africa for the production of essential factor fnputs for service and maintenance;
(v) call upon UNIDO, ECA, UNDP, the World Bank, the African
Development Bank (ADB), multi- lateral and bilateral funding agencies and other financial institutions, including African regional and subregional develop- ment banks, to increase and harmonize their activities as well as technical and financial assistance to African countries and organizations in the formul- ation and execution of their industrial rehabilitation and development programmes and in the conduct of rehabilitation studies.
After noting issues surrounding the develoment of food-processing industries in some African countries, the Conference recommended that in order to bring about an accelerated and sustained development of the food-processing industry, member States should:
(i) develop policies and strategies aimed at improving techniques, efficiency and product quality in the informal traditional sector;
(ii) give priority to small-scale food processing industries;
(iii) promote and develop, at both subregional and regional levels, mechanisms for co-operation in the development and exchange of food technologies;
(iv) develop national composite flours programmes in order to reduce wheat imports, save foreign currency which will be used to stimulate the production of local staples.
5
BACKGROUND TO THE PROCLAMATION OF THE SECOND IDDA BY THE NINTH CONFERENCE OF AFRICAN MINISTERS OF INDUSTRY
I. The proclamation of the first IDDA and its objectives
The proclamation of the first IDDA (1980-1990) was the culmination of the thinking process on Africa's economic development since the achievement of political independence of the countries of the continent from 1960. The most important events in the evolution of African conception of industrialization resulted in the adoption of the Lagos Plan of Action in 1980, and the proclam- ation of the Industrial Development Decade for Africa in 1980. While the Lagos Plan of Action is a wide-ranging, covering all sectors of the economy, offering a package of proposals from which policy-makers, governments, plan- ners organizations and donors could choose for implementation, in line with their own requirements and policy priorities, the programme for the IDDA concentrated specifically on industrialization as a key element and prerequisite of economic progress. The Lagos Plan of Action advocated the twin principles of self- sustainment and self-reliance.
The central message of the IDDA as an instrument conceived to translate into reality the Lagos Plan of Action's v1s10n of industrialization, was the development of internal engines of growth. The question of what is an internal engine of growth for Africa can be answered in the following way:
"(a) the deliberate enlargement and consolidation of domestic markets and their combination, through economic co-operation, into markets capable of accomod- ating economies of scale essential for core industries serving multin- ational needs;
(b) the establishment industries generally national basis;
of core on multi- (c) the local linkage (intra-sectoral
and inter-sectoral) of core industries with strategic sectors such as agriculture, transport and communications, building and construction, mining, fuel and power, water supply, and the engineering, chemical and metallurgical sectors etc.;
(d) a steadily expanding volume and variety of production and use of factor inputs of domestic origin (viz entrepreneurship, management, procurement produc- tion marketing and distribution, research and development, man- power, raw materials, equipment, parts, implements and tools, technology, physical infrastructure, institutional infrastructure and services;
(e) the development of a number of critical national capabilities (human and institutional), i.e.
for project identification, develop- ment, management and construc- tion, for negotiating foreign direct participation, for the mobilization and allocation of financial resources, for regulating or influencing the flow of factor inputs, for support services for the public and private indigenous sectors, for monitoring the pace and direction of economic growth (including the progress of self- reliance and self-sustainment) and of living standards"
.Y
2/ Repor-t on the independent mid-tenn evaiuation of the industz>ia7, deoode for Africa (IDDA) and the proclaJNztion of the Second IDDA, CANI.9/20/Add.1, pam 34.
6
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ ,, 'I
The IDDA programme, as a set of objectives, principles and priorities in the industrialization process in Africa, constitutes a small but a crucial com- ponent, a core seed in the design, construction and working of the internal engines of growth. The central and core objective of the programme of the Decade lies in the production, supply and use of factor inputs for designated core industries and the use of the outputs of core industries for promoting the growth of strategic sectors.
2. Industrial development performance during the Decade
The years 1980-1990 have witnessed a series of adverse developments which hampered economic development in general and drastically reduced national and regional efforts aimed at the process of industrialization in Africa. The adverse events included the following:-
(a) the reduction of the demand for Africa's products in world markets due to a global recession and in particular in the industri- alized countries as well as increased protectionism;
(b) a sharp decline in the international prices of primary products on which most African countries depends for budgetary and develop- ment resources. In particular, the collapse of prices of major agricultural and mineral products (e.g. cocoa, coffee, oil copper etc.) created a crisis situation in the countries whose main export and source of income depended upon these commodities.
(c) Parallel to the decline in the prices of primary exports, there was a steep rise in the costs of machinery, equipment, spare parts and technology. Thus,
weaker economies were passed on the inflation of the industrial countries;
(d) In real terms, the quantum of the external flows of development resources declined.
African countries found themselves in a deep economic and financial crisis, unable to import much needed factor inputs for the operation of already existing industrial plants let alone the establishment of new ones. This series of events virtually prevented the implementation of the IDDA programme.
As a result, the economies of African countries performed badly during the Decade: per capita incomes declined, agricultural output failed to keep pace with population growth thus leading to food deficits, mass hunger and starv- ation in many countries in sub-Saharan Africa. The anticipated national, regional and international investments at the time of preparing the programme for IDDA have not materialized and the existing industrial capital assets are run at very low level of utilization of installed capacities. Africa now has a serious debt burden which has deepened her dependency ratio. Economic indicators show that Africa today is poorer than it was at the beginning of the Decade.
In order to deal with the crisis, African policy-makers undertook midway through the Decade three significant actions which had a bearing on the implementation of the programme for the decade:
(a) adoption of the Africa Priority Programme for Economic Recovery 1986-1990 (APPER), which laid particular emphasis on agricultural development and debt reduction;
7
(b) adoption of the United Nations Programme of Action for African Economic Recovery and Develop- ment 1986-1990 (UNPAAERD)
~hich endorsed APPER and high- lighted the areas of international support to Africa;
(c) adoption by a large number of African countries of stabilization and Structural Adjustment Pro- grammes sponsored by the IMF an~ World Bank respectively, which advocate disengagement of the public sector from the economy and increased privatiz- ation, currency devaluation, trade liberalization and other short term measures, without paying due attention to the long term objectives of the Lagos Plan of Action and IDDA.
3. Other factors which hampered the implementation of the IDDA programme
Apart from few countries, most countries have set up no focal point or coordinating committee for the purpose of promoting the IDDA strategy. No country has drawn an investment portfolio of core or priority industries or mobilized or allocated funds specifically for industrial development. In addition, the IDDA programme itself paid inadequate attention to the investment requirements and lacked an overall cost estimate.
Other major shortcomings of the IDDA programme are the lack of adequate indigenous entrepreneurial capabilities (industrial entrepreneurs, industrial managers, high level professionals, middle level specialists and supervisors etc.), inadequate domestic savings and the absence of capital markets. This situation explains why the public sector has increasingly become the dominant instrument of industrialization in the absence of a truly private indigenous industrial sector. Therefore, in preparing and launching a second IDDA, a major 8
focus should be the creation and strengthening of African entrepreneurial and managerial capabilities.
4. Thrust of IDDA II
In terms of achieving its objectives, IDDA I was not successful. Some of the main reasons and constraints have been referred to above. The problems encountered by IDDA I should be a guide in the preparation of the programme for IDDA II. It should be underlined that if IDDA II is to succeed and not to be a mere replica of the first IDDA
~ts programme should, inter alia, addres~
itself to the following critical issues.
(a) Entrepreneurship development:- As indicated earlier, this has been a major shortcoming in African eocnomic development policies since independence.
It was and is still an issue which has not received the required attention. Under IDDA II the objectives shall be (a) to promote the development of entrepreneur- ship in both public and the private sectors, in small- and medium- scale industries, and with special regard to core industries and strategic sectors, (b) to promote self-employment opportunity;
(b) Market integration and development:- African countries should take measures to expand and consolidate domestic markets and to integrate national into subregional/regional markets more effectively;
(e) Reorienting Development Banks:-
(d)
It is necessary to redefine the roie of existing Development Banks with a view to orienting them in financing mostly industrial projects and productive invest- ments.
Regional and subregional cooperation:- The objective
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,,are to enlarge national and regional markets, pool investment resources, promote and implement joint projects in core industries and strategic sectors etc.
(e) Development of human resources and technological capabilities:-
A new approach requires the restructuring of educational and training systems with a view to improving the relevance of subjects offered; teaching and learning processes, access to new technologies and other resources in the business sector to encourage entrepreneurship, managerial and professional
skills, etc. This programme should relate human resource development to the needs of existing and planned industrial projects and programmes, to the needs of projects in mineral exploitation and development and other raw materials. It should also address itself to the experience of newly industri- alized countries (NlC 's) in the development of technological capabilities related to investment, operation and maintenance, with a view to deriving for national and multination11-l plans and pro- grammes in the African Region.
9
INDIA IN THE FOREFRONT OF RURAL INNOVATION INTEGRATED RURAL DEVELOPMENT PROGRAMMES AND ALLIBD PROGRAMMES OF TRAINING OF RURAL YOUTH FOR SELF-EMPLOYMENT (TRYSEM) AND DEVELOPMENT OF WOMEN
AND CHil,DREN IN RURAL AREAS (DWCRA) Introduction
The Fifth International Workshop on Planning and Management of Small Scale Rural and Cottage Industries was held in Cairo, Egypt, in December 1988, under the auspices of the Afro-Asian Rural Reconstruction Organization (AARRO), an interregional organization established in 1962 between Asian and African countries with a view to:
(a) developing co-operation between the countries of Africa and Asia in order to rebuild their economies and to raise the living standard of the rural people socially and economically; and
(b) developing central policies for rural industrialization and promot- ing international co-operation with regional organizations working in the field of rural development in particular with governmental and non-governmental organiz- ations in the developed and advanced countries.
The Fifth International Workshop on Planning and Management of Small Scale Industries provided the opportunity to representatives of the governments of the Afro-Asian member States of AARRO to exchange views and experiences on the problems, programmes and projects in the field of rural develop- ment in the countries concerned with regard to raising the living standards of rural communities in Asia and Africa.
Among the experiences that were reported, the attention of participants were drawn on the Integrated Rural Development Programme (IRDP) of India initiated in 1978 and extended to the whole country in 1980. IRDP included two major subprogrammes: Training
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of Rural Youth for Self-Employment (TRYSEM) and Development of Women and Children in Rural Areas (DWCRA).
Basic concepts of the Integrated Rural Development Programme
The Integrated Rural Development Programme (IRDP) is a centrally sponsored scheme funded by the Central Government of India (India is a Union) and the Govern- ments of States on 50:50 basis.
The objective of the programme is to assist selected families of target groups in rural areas to cross the poverty line by taking up self-employment activities. Poverty line is defined in terms of annual income of a family.
A family having an annual income of Rs 6400/.Y or less is considered to be a family below poverty line. Under the IRDP, the family will be assisted to re·ach an annual income level of over Rs 6400/.-. The "cut-off" line for identification of the families for assistance would be Rs 4800 annual income per family. However, in order to ensure that the poorest of the poor get the assistance first, it would be ensured that families with an annual income level up to Rs 3500 are assisted first.
After it has been administratively ascertained and publicly notified that all families with that annual income level are assisted, the next step would be to assist the families in 3501 - 4800 income bracket.
The strategy devised to achieve the stated objective is to provide income generating assets including working capital, where necessary to the target group families through a package of assistance including subsidy and institutional credit.
li/ 1 US$
=
15 Rupees---·"
.
'
The target group of the progra~me consists of small farmers, marginal farmers, agricultural labourers, rural artisans and others whose annual family income is below the cut-off line. Small farmer is defined as cultivator with a land holding of 2 hectares or below.
A farmer with a class I irrigated land of 1 hectar or less is also considered a small farmer. A marginal farmer is a person with a land holding of l hectar or below. In the case of class I irrigated land, the ceiling will be 0.5 hectar. An agricultural labourer is a person without any land other than homestead and deriving more than 50% of his income from agricul- tural wages.
The IRDP makes special safeguards for certain sections of the target group, namely:
(i) Scheduled Caste and Scheduled Tribe Families
The family belonging to Scheduled Castes and Scheduled Tribes constitute the bulk of the poverty group. The pro- gram me ascertains that at least 30%
of the assisted families should be drawn from Scheduled Castes and Scheduled Tribes. This mm1mum percentage of 30% should operate in macro terms at the district and state levels.
(ii) Women
At least 30% of the total beneficiaries should be women. Priority is to be given to women headed households.
The flow of financial investments to the categories described under (i)
and (ii) above should be commensurate
with the percentage of their physical coverage.
Procedures for Implementation of the Programme
The Programme perspective is to bring the percentage of the families below the poverty line in rural areas to less than 10 by the year 1995. Bearing
in mind that although about 24 million families live below the cut-off point of Rs 4,800, about 20 million families will be covered in the Seventh Plan by the end of 1995. Survey for identification of beneficiary families under IRDP should be confined to families with an income up to Rs 3,500.
The selection procedure is as follows:
(i) the priority list of the poorest of poor families should be prepared by the village level workers/block staff;
(ii) the said list should then be placed for approval in the meeting of the Village Assembly. This meeting should be called by the Block Development Officer;
(iii) the Village Assembly should be attended by local people, non-officials block officers and bank officers. Prominent voluntary action groups should also be associated in these meetings;
(iv) the list of beneficiaries finally selected in this Village Assembly should be displayed on the notice board of the Village and block office. Ex.tracts of the list of identified families should be provided to concerned institu- tions by the District Rural Development Agency (DRDA).
The forum of the Village Assembly should be utilized for ascertaining the choice, willingness and ability of the identified beneficiaries for economic activities and the need for upgradation of skills and entrepreneurship. The survey identification of new beneficiaries needs to oe completed before February every year so that cases of identified families can be sponsored right from the com- mencement of financial year.
(i) the choice of the selected family for the scheme(s) to the extent possible;
11
(ii) the existing aptitude and technical skills or the scope of acqmrmg other skills by the family;
(iii) backward and forward linkages available or proposed to be made available for the successful operation of the scheme;
For the purpose of giving assets to identified and selected beneficiaries, family is treated as a unit. This implies that more than one member can be given assistance taking into consideration the income gap of the family required to be bridged and the absorption capacity of its members. The subsidy ceilings will apply to a family as a unit.
In terms of investment (assets to be given), the size of the number of schemes should be determined in relation to the income gap required to be covered to bring the family above the poverty line. Where this objective can be achieved through different alternative scheme(s) then the less costly alternative should be preferred so that optimum use of the available resources can be made.
The schemes chosen for each target group family should mat~h with the need and aptitude of the fa~1ly_ and the lo?al resource profile. The prmc1ples governing this selection should be in line with:
Under the Programme, eligible activities are economically viable schemes having favourable incremental capital output ratio (ICOR). These schemes can be taken up under the programme in primary, secondary and tertiary sectors.
With a view to off-loading the farm sector, attempts should be made to divers- ify into secondary an~ tertiar~ sector activities, i.e. industries service and business activities in harmony with the local situation.
In selecting scheme(s) the nature of infrastructural support, backward and forward linkages available in the 12
area should be kept in view as scheme(s) launched-in disregard of these have less chances of success. Provision of infra- structure support and administrative supervision is easier if a cluster approach is adopted in the selection of beneficiaries and activities. Similarly, group activities stand a better chance of success because it is easier to provide back-up support and marketing linkages for group activities.
Cluster approach and group activities should therefore be encouraged.
Planning and Project formulation under IRDP
In order to implement the IRDP, five types of plans or District and Block levels are required to be formulated.
These are perspective or indicative plans and the annual plans. A perspective plan is to give indications about the local resource profile for preparation of Annual Action Plans.
Perspective Plans should ordinarily contain the following information:
(i) an inventory of local resources with requisite analytical notes on:
(ii)
(a) demographic trends and human resources;
(b) area and location of specific resource data;
(c) economic activities with details of institutions engaged in these activities;
(d) social and infrastructure the status action groups;
institutional including of voluntary information about the ongoing programmes both under plan and non-plan schemes. This should contain an analysis of the potential of these programmes in terms of offering opportunities
- - - · ·
,,for economically viable activities either through creation of direct employment opportunities or through provision of backward- forwaPd linkages and infrastruc- tural support;
(iii) ai!Sessment of the likely activities under the programmes of the development departments in the next five years, etc.
Information collected on the above should be analysed to give broad indications of the sectors of the economy which are capable of creating employment opportunities. Information collected should also be used to identify gaps in infrastructures and the departments and programmes which can fill up these gaps.
After the approval of the perspective plans by the governing body of the District Rural Development Agency, the prepar- ation of annual plans starts. This exercise consists in identifying beneficiaries because the plan has to match the resource profile and the needs of the beneficiar~es to provide them with income generatmg activities.
The Annual Plans contain the follow- ing details:
(i)
(ii)
(iii)
the economic profile of the block/district spelling out the sectors proposed to be adopted giving reasons for such sectoral choice;
the profile of the beneficiary families broadly categorizing them according to their aptitudes and choices for the remuneration scheme actually prepared for them giving reasons for g1vmg them schemes different from their choices, if any;
the spatial distribution and the time-scheduling of benefic- iaries over the year assigning reasons for such distribution;
(iv) the areas of coordination with the other departments and the extent of the involve- ment of the other agencies and departments;
(v) sources and mechanism for procurement of raw materials and disposal of finished goods;
(vi) an overall assessment .of the impact of the proposed activities on the incomes of the assisted families and the economy of the area;
(vii) a list of· the beneficiaries proposed to benefit in the year, etc.
Institutional Finance for IRDP
Financial assistance to beneficiaries under IRDP come from two sources:
loans and subsidy. The major part of the investment comprising the loan portion has to come from institutional credit.
The target group being the economically weaker sections of the society, special arrangements and provisions are made for the IRDP. beneficiaries.
):,ending to the beneficiaries should be on a project basis on phases according to the nature of the project. The loan is sanctioned for the project as a whole.
The size of the loan to beneficiaries should be determined by the project requirement. National Bank for Rural Development (NABARD), participating banks and the State agencies are involved in the preparation of the projects.
Credit to IRDP ben!lficiaries is available on 10% concessional rate of interest. The participating credit institu- tions can get automatic refinance from
NABARD for the activities under IRDP.
Collateral security for investment loans up to Rs 10,000 in the agriculture and allied sector is not required. IRDP borrow- ers are only required to hypothec.ate the assets created by the loan. In the Industry/Services/Business (!SB) sector,
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the limit for security free loan is Rs 25,000.
Subsidy is provided for economic activities along with the pattern below
1. Individual/Family:
(a) Small Farmers (b) Marginal Farmers
Agricultural Labourers, Non-Agricultural labourers, Rural artisans.
(c) Of these, Tribal families 2. Community Minor Irrigation
3, Cooperative/registered Society of beneficiaries
4. Rearing of Heifer
Small and Marginal farmer Agricultural labourers Tribal Families
25%
33-1/3%
50%
50%
66-2/3%
50%
and it applies to the group of women from families below poverty line formed under the Development of Women and Children in Rural Areas (DWCRA) Pro- gramme.!/
Subject to a ceiling of Rs. 3000/- per family in non-DPAP area and Rs. 4000/- in OPAP Areas.•
Rs. 5000/- per family in all rural areas*
More than 50% landholders in the ayacut should be IRDP small and marginal farmers and they should own not less than 25% of the land.•
Cost apportionment for each group member will be in proportion to their lands as a percentage of total land in ayacut. Of this cost, each IRDP family will get 50% subsidy without the absolute ceiling limit referred toat Sr. No. 1 above.
50% of the capital cost subject to individual ceiling at 1 above. All members of the cooperatives/registered society should be IRDP beneficiaries.
Subject to a ceiling of Rs. 3000/- per family.
Subject to a ceiling of Rs. 5000/- per family.
4/ Integrated Ruml Devei.p-nt ~ and Allied ProgM,m,es of Training of Ruml Youth for Stllf-Emp~t ('l'R¥SENJ o:fit1 Development of flamen and ChildPen in I'W'al Al"eas (DJICRA), a Manual Depa1'tment of Ruml Development, Ministry of Agz,,i,cultunzl, Goveffllflent
of
India, Nm,J Delhi, November, 1988. .*In case of minor irrigation projects both individual and community, only percentage ceilings are applicable to IRDP beneficiaries and monetary ceilings are not applicable.
The monetary ceiling has been withdrawn for all minor irrigation IRDP beneficiaries whether they are being assisted for the first time or have been provided assistance earlier in the Sixth Plan.
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'
.The element of cost provided under this item pertain to concentrated feed for a maximum of two heifers, from 4th to 32nc1 month of age for a female cross bred calf, from 4th to 20th month for a male cross bred calf and from 6th to 45th month for a female buffalo calf respectively. In no case the beneficiary should be paid subsidy in cash. At an indicative normal requirement of 19 quintals for a female cross bred calf, 11.85 quintals for a male cross bred calf, and 17.30 quintals for a female buffalo calf for the entire period for which subsidy is admissible, the beneficiary would be entitled to subsidised cattlefeed to the extend of his entitlement i.e. 50%/66-2/3% subject to individual monetary ceiling above. The balance would be required to be met by the beneficiary from his own sources.
The Project Director, DRDA would identify the Agency for providing concentrated feed to IRDP beneficiaries, e.g. District Animal Husbandry Office, Project Officer, Special Livestock Breeding Programme (SLBP), Dairy Cooperative Union etc. The designated Agency would arrange for purchase and supply of cattlefeed from sources such as Cooperative Dairy Federations/State Agro Inc'ustries Cooperations and other institutional Agencies. Advance of 90% of subsidy may be made to the designated agency. The remaining 10% may be paid on report and presentation of final accounts. The final accounts should be supported by receipts statement(s) of the beneficiaries.
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PULP AND PAPER INDUSTRY IN DEVELOPING AFRICA A NEED FOR CHANGE IN STRATEGY
Introduction
Paper is a vital commodity for socio- economic and cultural activities. In spite of the availability in sizeable quantities of fibre raw material base for paper-making, the consumption of paper is restricted in developing Africa and self-sufficiency of the region with respect to paper is a long distance away. Presently, production only meets 40 per cent of the demand. It is evident that attaining the self-sufficiency and narrowing the demand/supply gap cannot be envisaged without substantial regional/subregional co-operation.
Paper
Paper consumption in developing Africa in 1987 was estimated at about 2.0 million metric tonnes, which represented a mere one per cent of the total world consumption against a population accounting for about 10 per cent. Only in six countries did the consumption .of paper exceed 100,000 metric tonnes per annum, namely in Algeria (180,000 t/a), Cote d'Ivoire (120,000 t/a), Egypt {555,000 t/a), Kenya (120,000 t/a), Morocco (180,000 t/a), and Nigeria (400,000 t/a). Consumption is heavily concentrated in the North African subregion as table I indicates.
The average 1987 per capita consumption of paper in the world was 42 kg in contrast to 4 kg in developing Africa. There were only seven countries where the per capita consumption was over 5 kg, namely Algeria (8 kg), Cote d'Ivoire (12 kg), Egypt (II kg), Mauritius (6 kg), Morocco (7 kg), Tunisia (12 kg) and Zimbabwe (IO kg). Twenty countries had per capita consumption of less than I kg.
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The consumption pattern (see table 2) in developing Africa differs from that of the world average in two respects:
(I) the share of cultural grades (i.e.
newsprint and other printing and writing paper) is somewhat lower in Africa and (2) the share of household and sanitary paper in Africa is particularly low.
When the present consumption pattern is compared with that of the mid 1970's, the only significant change over the years has been the increased share of cultural papers, due to the growing emphasis given to educational programmes in the countries. During the same time the quantity of paper consumed in developing Africa has doubled to 2.0 million metric tonnes per annum.
Estimates of the existing paper production capacity in developing Africa vary from I.I to 1.4 million metric tonnes per annum. There are some 70 paper mills in about 20 countries. The total number of paper machines in these mills is estimated to be 120, which gives an average production capacity per machine of about 10,000 metric tonnes per annum.
Only in five countries did the production capacity exceed 100,000 metric tonnes per annum, namely in Algeria, Egypt, Kenya, Morocco and Nigeria. As is the case in the consumption of paper, production capacity is heavily concentrated in the North Africa subregion (see table I).
The production of paper in 1987 in developing Africa was about 800,000 metric tonnes which represents an average capacity utilization level of 57 - 73 per cent. The share of production
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II
among the different grades is given in table 2. Production exceeded 100,000 metric tonnes per annum in only four countries, namely Algeria, Egypt, kenya and Morocco; table I shows the share among the different subregions.
Imports, which totalled 1.2 million metric tonnes in 1987, covered the gap between consumption and production.
In terms of categories of paper imported, developill(f-Africa was most dependaAt on the import of newsprint which accounted for 85 per cent of the total newsprint consumption. Newsprint is produced only in Kenya, Nigeria, Tanzania and Zimbabwe.
The consumption of pulp for paper- making in developing Africa in 1987 was about 600,000 metric tonnes, i.e.
less than 0.5 per cent of the total world consumption. It is primarily wood pulp (80%), although in the North African subregion non-wood fibre contributes significantly to paper furnish. in this connection it should be noted that non- wood fibre accounts for only 5 - 6 per cent of the global virgin fibre furnish.
The distribution of pulp consumption amongst the subregions coincides closely with that of paper production (see table I).
Estimates of existing pulp production capacity vary from 850,000 to 1,100,000 metric tonnes per annum. There are 30 production lines in operation in ten countries, (in Algeria, Egypt, Kenya, Madagascar, Morocco, Nigeria, Swazila11d, Tanzania, Tunisia and Zimbabwe). There are significant non-operating installed capacities in Angola and Cameroon.
The average production capacity per pulping line is about 30,000 metric tonnes per annum. Out of the 17 non- wood p.ulping lines, nine are semi-chemical and the remaining chemical. Out of the 13 wood base<f pulping lines, two are semi-chemical,
five stone groundwood, on CTMP and fn,., chemical. The largest units (50,000 - 180,000 t/a) fall under the last category, i.e. chemical wood pulping. The wood used as raw material is obtained from plantations; the main non-wood fibre raw materials are straw, bagasse, and esparto, Sisal is used in one mill.
The present distribution of pulping capacity among the subregion shows more even shares between the North, and East and Southern African subregions (see table l). The share of West Africa is likely to increase with the commissioning of all the projects in Nigeria.
The production of pulp in 1987 was a little over 600,000 metric tonnes per annum, which represents capacity utilization level of 54-70 per cent.
A large portion of the production, about 230,000 metric tonnes per annum is exported, the largest exporter being Swaziland (180,000 t/a). Import of pulp to developing Africa is estimated to be almost equal to that of export.
Although the extent of the intra-regional trade in pulp is not known, only a small portion of Swaziland's export goes to developing Africa. As indicated in table 1 the East and Southern African subregion is presently the major producer of pulp amongst the different subregions.
Waste paper is the third fibre furnish component. Detailed information of its use in paper-making in developing Africa is not available but calculations, based on production of paper and consumption of pulp, show that, at least, 150,000 metric tonnes per annum of waste paper is used presently. Several small non-integrated paper mills depend on waste paper as well as imported pulp. In a number of cases, mills use waste paper as a major furnish component because it can be purchased with local currency and therefore the shortage of foreign exchange does not hamper its acquisition.
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Future gap between demand and supply The consumption of paper grew at the average annual rate of 5 per cent from 197 4 to 1987. Two determinants for forecasting demand and consumption of paper in developing Africa are: (I) the rapid growth of population and (2) large unsatisfied demand. While there are relatively accurate forecasts for the first one, information on the second is pr.actically non-existent.
In addition to the two determinants, demand for paper depends on the general economic situation in the countries, e.g. whether national budgets will continue to emphasize educational programmes and start allocating required resources for their execution; whether foreign currency deficit situations will ease and thus allow larger sums to be spent on imports of pulp and paper;
whether domestic production of paper will increase and be, thus, able to cover a larger portion of demand; and whether the industrial and agricultural sectors will develop favourably and continue to up-grade their packaging standards.
It is assumed that growth of demand will be fastest for cultural paper grades in consonnance with the expanding primary educational programmes and mass literacy campaigns. The growth of industrial paper grades (i.e. wrapping and packaging paper and board, and other paper and paper-board n.e.s.) is likely to be slow, in the short-term, due to the generally sluggish economic conditions in the region.
If the growth rate of demand for paper is 2 - 5 per cent per annum for the remaining part of this century, this will imply that demand will be at the level of 2.3 - 3.0 million metric tonnes per annum by 1995 and 2.6 - 3.8 million metric tonnes per annum by 2000.
It will be difficult to improve the level of self-sufficiency in the supply of paper in developing Africa during this century which is only 40 per cent 18
at present. Presently only Kenya, Madagascar and Zimbabwe come close to producing domestically significant portions (90-100%) of the paper used in their respective countries; even in these three countries the total demand is not satisfied.
Project proposals to establish/ expand the pulp/paper production have recently been initiated in about half of the developing African countries. The objectives which are common to most of the projects are: (1) to ensure a steady supply of the vital commodity, (2) to conserve scarce foreign exchange by reducing imports, (3) to utilize local raw materials (forests and agricultural residues), (4) to create employment, and (5) in some cases, to earn foreign exchange by exporting. According to detailed feasibility studies undertaken, a number of the projects were not found viable.
The pulp and paper industry is very capital intensive and a major portion of the investment need to be paid for in foreign currency. Besides machinery large investments are required for laying out the necessary infrastructure (high energy, water and transportation requirements and environmental problems etc.). Lack of financial resources therefore constitutes one of the main obstacles for implementing the projects.
The smallness of national markets coupled with inadequate knowledge of realistic export opportunities as well as the numerous barriers to intra-African trade are among the other obstacles faced by new investors in this industrial branch.
Under optimistic conditions, the production capacity of paper can be expected to increase by 500,000 metric tonnes per annum by 1995 and that of pulp by 400,000 metric tonnes per annul by the same year. Thus, by the middle of the next decade, the total production capacities of paper and pulp in developing Africa could increase to 1.8 and 1.3 million metric tonnes per annum
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!Irespectively. This would still leave a supply/demand gap of 0.5 - 1.2 million metric tonnes per annual in paper in 1995, depending on the growth of the consumption. This gap, estimated as it is assuming full capacity utilization, is grossly underestimated.
Observations
In all developing African countries consumption of paper is limited. The very low per capita consumption arise mainly from low capita income low literacy, absence ol' inadequate domestic production and restricted imports due to scarcity of foreign exchange. It should also be noted that a large part of the population in each country does not use paper at all. In some countries, like Mozambique and Zambia, during recent years consumption of paper has even declined drastically due to internal unrest and/or economic slump.
The limited supply of paper leads to lower capacity utilization in the converting indutsries and printing hous~s.
The shortage of paper (textbooks and exercise books) is particularly felt in
·schools. Inadequate availability of paper for packaging results in damages to th~
goods during transportation, handling and storing.
Generally, paper production units do not have adequate pulping units based on local raw materials integrated to their opertion and capacity utilization of non- integrated paper mills is particularly low. They depend on the import of pulp to a smaller or larger extent. The if!!port of pulp like that of paper is restricted by lack of foreign exchange. In addition, due to fluctuations inherent in the world trade of pulp, acquiring it can be a problem particularly if a company buys pulp on spot market. Companies could try to minimize their vulnerability during high pulp price cycles by long-term arrangements with suppliers. Companies attempt to meet their fibre raw material requirements by 'intensifying the collection of waste paper. Waste paper has, in the meantime,
become also a scarce resource. This is partly due to increasing re-use of paper in the countries.
There are cases where a mill exports part of its products before satisfying domestic demand to earn foreign exchange needed to import vital inputs, e.g. pulp, ch_emicals and spare parts. This tendency may also endanger the growth of paper trade within the framework of _subregional economic groupings such as the Prefer!clntial Trade Area of Eastern and Southern African States.
Old machinery and shortage of spare parts are the main technical constraints in the operations of ·mills. Major machinery is imported and the proportion of second- hand equipment is substantial. Although the purchase · of second-hand machines may be justified in terms of price and technology, it may lead to less efficient operations, inavailability of spare parts and inferior quality of products.
In a number of mills, poorly designed processes and/or condition of equipment results in major fibre losses as well as high energy and water consumption per ton of product. Some mills lack adequate maintenance (lack of skilled crew and preventive maintenance programmes) which result in inefficient operation, poor quality products and premature deterioration of machinery.
The underdeveloped infrastructure in the countries is an obstacle to the development of pulp and paper industry.
As this industry typically requires transportation of large volumes of raw materials and finished goods the poor state and management of ports, railway systems and roads add to the score of daily operational problems. Unrelia.ble electricity and water supplies have been found to exacerbate such problems in some mills.
There are two factors that strain the mills financially. The first is that most of the credits are in foreign currency which coupled with continuing devaluation 19
