China-DAC Study Group

Report

Economic Transformation and Poverty Reduction (Volume 1) 
 

Economic Transformation and Poverty Reduction (Volume 2)

 Promoting learning between

China, African countries and OECD DAC Members on

Enterprise Development and Economic Transformation: Creating the Enabling Environment

 Event organised by the China-DAC Study Group

Co-Chaired by
The International Poverty Reduction Centre in China (IPRCC) and OECD DAC

in association with the Commission of the African Union and
the United Nations Economic Commission for Africa


16-17 February 2011


African Union Conference Centre and Hilton Hotel, Addis Ababa, Ethiopia

 


BACKGROUND AND OBJECTIVES


To facilitate the sharing of experiences and promote learning on economic growth and poverty reduction, the China DAC Study Group was established by the International Poverty Reduction Centre in China (IPRCC) and the Organisation for Economic Co operation and Development’s Development Assistance Committee (OECD DAC) in January 2009.
The Study Group is focusing its work on two themes:

• China’s experience of economic growth and poverty reduction, including the contribution of international assistance, and its relevance for other developing countries, particularly in Africa.
• China’s economic co operation with Africa and the lessons that China and DAC Members can share with each other to increase the collective impact of foreign aid on reducing poverty in Africa.

These themes are being addressed during a series of evidence based policy dialogue events, which enables a larger number of stakeholders to be involved in the Study Group’s activities. Reflecting the needs in many African countries today, the Study Group organised three events during 2009-2010 on topics which influence both the pace of economic growth as well as the extent to which economic growth contributes to reducing poverty:

• Development partnerships.
• Agriculture, food security and rural development.
• Infrastructure.

The Study Group’s first event on “Development Partnerships for Growth and Poverty Reduction” took place in Beijing, China in October 2009. The second event on "Agriculture, Food Security and Rural Development for Growth and Poverty Reduction" took place in Bamako, Mali in April 2010. The third event on “Infrastructure” took place in Beijing, China in September 2010.

This fourth event will focus on the enabling environment for enterprise development. More specifically, the event will:

• Highlight the significant role that enterprise development, trade and investment play in the creation of local, regional and global value chains and the dynamic impact on economic growth, employment and poverty reduction in China and African countries.
• Map out the course, strategies, achievements and challenges of China and African countries in creating enabling environments for enterprise development and explore the relevance and implications of the lessons from each.
The main findings and emerging lessons from the Study Group’s series of events will be presented and discussed at a policy symposium in Beijing planned for April 2011.
 

Day 1

Venue: African Union Conference Centre

Opening Ceremony


08:30-10:00 Chair: Jon Lomoy, Director for Development Co operation, OECD

08:30-9:00 Welcoming Remarks

Jean Ping, Chairman, Commission of the African Union
Remarks in the International Conference on Enterprise Development and Economic Transformation: Creating the Enabling Environment by  Li Chunguang, Director General, Department of International Cooperation and Social Mobilization, The State Council Leading Group Office of Poverty Alleviation and Development (LGOP)
Michael Battle, United States Ambassador to the African Union

09:00-10:00 Keynote Speeches: Chinese and African Perspectives on the Environment for Enterprise Development : An overview

1. Enabling Environment for Enterprises Development in China: Key strategies and polices over last 30 years: Xu Hui, Director General, International Poverty Reduction Centre in China (IPRCC)
2. Creating an Enabling Environment for Enterprise Development in Africa: Key challenges in African region: Tadesse Haile, State Minister of Industry, Ethiopia

Questions and answers

10:00 – Group photo

10:10-10:30 - Tea & Coffee

Session 1

Creating wealth through transforming poor rural economies: public policies and private initiative in China and Africa

 

China’s steadily high economic growth has been largely due to rapid expansion of the enterprise economy, which made China the world’s production plant. Rapid enterprise development, stimulated by schemes such as the Township and Village Enterprises (TVE) and the Special Economic Zones (SEZs) has attracted over 200 million peasants out of farming. This labour transformation made a great contribution to China’s poverty reduction record. Favourable conditions created by an enabling environment both in terms of “hardware” (e.g. infrastructure) and “software” (e.g. policies and institutions) were the basis for all kinds of rural and urban enterprise development. It is therefore natural to ask how this was done. What kinds of actions and measures created this enabling environment for enterprise development over last 30 years?

Across the African continent, many countries have entered a positive growth stage over last 10 years. The acceleration of enterprise development, especially private enterprise has been a key strategy to promote growth and poverty reduction in Africa. After two lost decades, major improvements have been made in economic governance and conflict resolution in a range of countries, and progress is also being made on human development, and the Millennium Development Goals remain attainable if human capital investments and policies receive sustained effort. Continuing efforts are needed to keep up this progress and address remaining problem areas as a basis for Africa’s catch up process.

China is now a highly visible economic actor in Africa. Trade between the two regions is reaching USD 100 billion; accumulated investment by Chinese firms is well over USD 12 billion and China has offered attractive, and sometimes quite large, tied packages of loans to finance trade, investment and development. Major new targets were announced at the recent 4th FOCAC. China is engaged in many sectors and its influence on development in Africa is increasing. Africa clearly welcomes China as a new and important partner, especially when it comes to infrastructure and investments helping to build longer term growth. Investments in trade capacity and China’s opening of its market to goods and services from Africa are also very important.

Therefore, it is of particular interest to understand what the creation of an enabling environment involves in China and in Africa, how enabling policies accelerate private enterprise development and direct foreign investment and how capacities are created though this dynamic process.

Creating an enabling environment has been the core element of China’s incremental development learning experiences. The enabling strategy and policies include those to develop Special Economic Zones (SEZs), and support for SMEs by micro finance and linking them with markets. In particular, Special Economic Zones played a key role as a testing ground for economic reforms, for attracting foreign direct investment, for catalysing industrial clusters, and for learning new technologies and incubating new management practices. In fact, SEZs were used to reduce resistance and opposition to critical reforms and build broad support for reforms through demonstration and controlled experimentation. Trade led growth fuelled the development of many coastal areas, created more job opportunities. A recent World Bank study estimated that as of 2007, SEZs still accounted for about 22% of national GDP, about 46% of FDI, about 60% of exports, and generated in excess of 30 million jobs.

It is also of particular interest to understand a broader range of issues and experience related to the Chinese enabling environment for enterprise development: creating jobs through rural and micro enterprises; labour and wage policies; training and capacity building through joint ventures and aid programmes; local autonomy and decision making; competition between regions and cities; bureaucracy and regulation; access to financing; creation of appropriate technology and infrastructure. The discussions should not only highlight experiences, but also the lessons learnt from the rapid transformation process in China.

The event will cover all of the above under two key themes on succeeding days:

• What role did enterprise development play in China’s economic transformation and what are the general lessons? What strategies and policies have made China successful in utilising direct foreign investment and encouraging transfers of technology and technical skills over the last 30 years, so that it could enter into the value chains of the global economy?
• What are the strategies emerging in Africa for enterprise development?
Based on the discussions under these two themes, what then are the key issues and lessons regarding: i) rural enterprise development, ii) Special Economic Zones and iii) foreign direct investment.
 

Day One: The Strategic Role of Enterprise Development in the Transformation Process


10:30-10:35 Introduction: Fantu Cheru, Research Director, Nordic Africa Institute (Moderator)

10:35-11:35 Keynote Presentations

Structural Transformation and Economic Development
Speaker: Ma Xiaohe, Vice President of Development Research Academy of National Development and Reform Commission of P. R. China
Taking the African Growth Process Forward: Avoiding policy syndromes
Speaker: Augustin Fosu, Deputy Director, UN-WIDER

Discussants:

Industrial Strategies and Enterprise Development: Views from East Asia
Speaker: Izumi Ohno – National Graduate Institute for Policy Studies, Japan; and Advisor to the Government of Ethiopia
African Business Models and Enterprise Development
Speaker: Philip Odera, Managing Director for Uganda, Standard Bank
 

11:35-12:30 Open Discussion 55 min

12:30 Bus from the African Union Conference Centre to the Hilton Hotel

13:00-14:00 Lunch

14:00-16:00 Parallel Workshops

14:00-14:10 Introduction (in plenary)
Jennifer Adams, USAID, Beijing

14:15-16:00 Workshop 1: Policies to Encourage Entrepreneurship, Support Rural Enterprises, Micro-SMEs and Create Job Opportunities
Moderator: Josue Dione, UNECA
Rapporteur: Roger Cornforth, DAC Delegate for New Zealand and DAC Vice Chair

14:15-14:35 Presentations
1. Experiences of Developing Rural Enterprises in China: The role of government
Speaker:Wang Haimin, College of Humanities and Development Studies, China Agricultural University
2. China’s Policies of Supporting Outwards Investment
Speaker: Xue Hong, Director, Development Assistance, CAITEC, MOFCOM

3. Increasing the Incomes and Employment of Poorer Business Women
Speaker: Victoria Kisyombe, Sero Lease and Finance Limited, Tanzania
 

14:35-16:00 Open Discussion 85 min

14:15-16:00 Workshop 2: Enabling Environment for Special Economic Zones (SEZs) and Clusters in China and Africa
Moderator: Douglas Zhihua Zeng, Senior Economist, World Bank
Rapporteur: Deborah Brautigam, American University

14:15-14:45 Presentation

1. China-Africa Development Fund’s Strategy and Approach in Supporting Economic Co operation Zones
Speaker: Liu Hanxiong, Project Manager, East Africa Department, China-Africa Development Fund
2. Experiences of Special Economic Zones and Cluster Development in China: The case of Shenzhen
Speaker: Yuan Yimin, Deputy Director, SEZ Centre, Shenzhen University
3. Special Economic Zones in Africa
Speaker: Seewraj Nundlall, Director of Manufacturing Cluster, Mauritius Board of Investment (BOI), Mauritius

14:45-16:00 Open Discussion

14:15-16:00 Workshop 3: Transformative FDI and Portfolio Investment in China and in Africa
Moderator: He Wenping, Chinese Academy of Social Sciences
Rapporteur: Michael Stirnweiss, BMZ/GIZ

14:15-14:45 Presentations
1. China’s FDI and its Relevance to Africa
Speaker: Lv Bo, Chinese Academy of International Trade and Economic Cooperation (CAITEC), Ministry of Commerce, P.R. China
2. China’s Investment in Africa: Key challenges
Speaker: Wu Fang, China-Africa Center, CAITEC, MOFCOM
3. Emerging Patterns of Sino-African Trade and Potentials for Enterprise Development in Africa
Speaker: Jean-Claude Maswana, JICA Research Institute
 

14:45-16:00 Open Discussion 75 min

16:00–16:20 Tea & Coffee

16:20–17:30 Workshop Summary (Plenary)
Moderator: Fantu Cheru, Research Director, Nordic Africa Institute

16:20–16:50 Report from each parallel workshop
Workshop 1
Rapporteur: Roger Cornforth, DAC Delegate for New Zealand and DAC Vice Chair
Workshop 2:
Rapporteur: Deborah Brautigam, American University
Workshop 3:
Rapporteur: Michael Stirnweiss, BMZ/GIZ

16:50–17:30 Open Discussion 40 min

17:30-19:00 Business Roundtable

Why does your company want to do business in Africa? What are the biggest constraints you face? If you could change one policy in your operating environment, what would you change?
Moderator: Richard Carey, Co-Chair, China-DAC Study Group
1. Martin Kasekende – Chairman, Federation of Uganda Employers
2. Liu Hailin, Representative in Ethiopia, Sinohydro
3. Dai Zhikang – Chairman of Board of Directors, Zen Dai Group
4. Zemedeneh Negatu, Managing Partner, Ethiopia and Head, Transaction Advisory Services (TAS) Eastern Africa, Ernst & Young
5. Ermyas Amelga, CEO, Access Capital/Access Real Estate, Zemen Bank
6. Meaza Ashenafi, Enat Bank 90 min

19:00–20:30 Reception and Dinner hosted by the Norwegian Embassy and USAID

 

Session 2 - Day 2

Shaping basic capacity for enterprise development: human resources, institutions and regulations in China and Africa

Enterprise development has been a major avenue for China to promote the capacities of its human resources and institutions, via learning by doing processes and pragmatic adaptation. Rural enterprise development, SEZs and clusters and, finally, opening up to FDI have all contributed to the creation of capacities that did not exist at the outset of the reform and growth process at the end of the 1970s. The capacity building has included human development, institutional capacity development and as well, technology innovation. Rural enterprise development programmes, such as the “Spark Program”, greatly encouraged rural enterprises which developed into a competent sector. The institutional capacity for managing SEZs and clusters accumulated over time

There is now a great opportunity for China to share its experiences and lessons in this capacity creation with Africa. It is also important to share how China’s engagement in Africa can accelerate local value creation, transfer of technology, capacity building and sustainable development in Africa as its investment role in Africa increases.

Day Two of the program shall facilitate discussion on:

• What are the key experiences and lessons from China for developing a strong human and institutional capacity to promote enterprise development? What can Africa learn from the process?
• How can the expanding numbers of young people entering the labour force in Africa be appropriately skilled to match the needs of an expanding enterprise based-economy in both rural and urban areas?
• What technological catch-up processes and knowledge platforms are emerging in Africa and how can development assistance providers help?
• How to enhance the understanding of both domestic and foreign enterprises in Africa on the importance of corporate social responsibility, supporting labour and environmental standards and anti corruption efforts. How can the image of Chinese firms be improved in these areas?
• How can Africa make the most of new green growth opportunities? How can development assistance help?


Day 2: Developing Basic Capacities: People, Institutions and Regulations


09:00-09:10 Reflection on Day 1 and Objectives for Day 2

Moderator: Fantu Cheru, Research Director, Nordic Africa Institute

9:10–10:10 Keynote Presentations

1. Effective Measures to Build Capacity for Enterprise Development: The Chinese experience
Speaker: Chen Xiaohong, Director, Enterprise Research Institute, Development Research Center of the State Council
2. Major Constraints and Opportunities in Africa to Develop a Strong Capacity for Enterprise Development
Speaker: Djamel Chrib, Office of Economic Affairs, African Union Commission
3. Chinese Enterprises in African Development: Business models and development impact
Speaker: Jing Gu, Research Fellow, Institute for Development Studies
4. OECD Enterprises in African Development
Speaker: Andrea Goldstein, Senior Economist, OECD
 

10:10-10:30 Tea and Coffee 
 

10:30-10:50 Discussions


Commentators:
• Sunil Sinha, Managing Director, Nathan EME
Feedback from the Global Development Learning Network Consultation: Edward Brown, Director, ACET

10:50-12:00 Open Discussion

12:00-13:30 Lunch

13:30-15:30 Parallel Workshops
13:30- 13:40 Introduction (in plenary)
Li Anshan, Institute of Afro-Asian Studies, Peking University 10 min

13:45-15:30 Workshop 1: Human Resources Development for Enterprises Development and Technology Transfer

Moderator: Emmanuel Nnadozie, UNECA
Rapporteur: Mao Xiaojing, CAITEC, MOFCOM

 13:45-14:15 Presentations
1. China’s “Attracting Intellectual Resources from Abroad” Programme
Speaker: Yu Xin, Assistant Research Fellow, Chinese Academy of Personnel Science
2. Challenges of Africa Human Resources Development
Speaker: Dr. William Lyakurwa, African Economic Research Consortium
3. Technology Transfer and Knowledge Platforms in Africa
Speaker: Aida Opoku-Mensah, Director of ICT, Science and Technology Division, UN Economic Commission for Africa

14:15-15:30 Open Discussion 75 min

13:45-15:30 Workshop 2: Sustainable Corporate Practices

Moderator: Tori Tveit, Confederation of Norwegian Enterprise
Rapporteur: Okey Onyejekwe, Centre for Sustainable Governance

 13:45-14:15 Presentations
1. Improving Working Conditions in Supply Chains: Lessons and experience
Speaker: Wei Dong Zhou, Director, China, Business for Social Responsibility
2. Sustainable Corporate Practices of Chinese Companies in Africa: Policy and experience
Speaker: Yu Wu, Deputy Director General, China Enterprises Confederation
3. Social Dialogue in Uganda
Speaker: Martin Kasekende, Chairman, Federation of Uganda Employers


14:15-15:30 Open Discussion

13:45-15:30 Workshop 3: Environmental Policies and Regulations

Moderator: Roger Cornforth, DAC Delegate for New Zealand and DAC Vice Chair
Rapporteur: Peter Craig-McQuaide, European Commission


13:45-14:15 Presentations
1. Environmental Consequences and Regulations in China’s Enterprise Development
Speaker; Liu Minquan, Director, Center for Human and Economic Development Studies, Peking University
2. Environmental Issues and FDI in Africa
Speaker: Serge Bounda, Head of the UNEP Liaison Office to the AUC, to the UNECA, and to Ethiopia
3. Green Growth: Challenges and Opportunities for African Enterprise Development
Speaker: Dessalegn Mesfin, Deputy Director-General, Ethiopian Environmental Protection Authority

14:15-15:30 Open Discussion 75 min

15:30–15:50 Tea & Coffee

15:50-17:15 Workshop Summary (Plenary)
Moderator: Fantu Cheru, Research Director, Nordic Africa Institute

15:50-16:20 Report from each parallel workshop

Workshop 1
Rapporteur: Mao Xiaojing, CAITEC, MOFCOM
Workshop 2
Rapporteur: Okey Onyejekwe, Center for Sustainable Governance
Workshop 3
Rapporteur: Peter Craig-McQuaide, European Commission
 

16:20-17:00 Open discussion 40 min

Closing Ceremony

Moderator Fantu Cheru
17:00-18:30 Summary of the Event:
Summary Record by Richard Carey, Co Chair, China DAC Study Group
Summary Record Li Xiaoyun, Director, China DAC Study Group


Closing Remarks:
Xu Hui, Director General, IPRCC
Commissioner Maxwell Mkwezalamba, African Union Commission
Roger Cornforth, DAC Delegate for New Zealand and Vice Chair of Development Assistance Committee, OECD

Day 3 (18 February)

Field visit