regional industrial project presentation for djibouti & ethiopia (horn of africa)
DESCRIPTION
Regional Industrial Project Presentation for Djibouti & Ethiopia (Horn of Africa) by A.ELMI.AHME & DJ.ALEMAYEHU SEPTEMBER 2012TRANSCRIPT
By A.ELMI.AHMED
&DJ.ALEMAYEHU
East Africa Regional Border Industrial Zone
Economic Development in Djibouti
East Africa Regional Border Industrial Zone
Economic Development in Djibouti
Introduction to the Opportunity Introduction to the Opportunity
• Grow cross-border trade and increase the demand for trade services supported by both the public and private sector;
• Develop the human capital to design, guide and operate a 21st Century global supply chain hub by providing education and training to build a world class workforce;
• Advocate for policy changes at the local, federal and state levels to provide business incentives, improve the region’s transportation infrastructure, and support smooth operation while assuring border security;
• Develop a research agenda and clearinghouse for related research to assist companies and policy makers; and
• Increase the number of jobs in the sector.
Opportunity Assessment Key ActivitiesOpportunity Assessment Key Activities
• Identification and design of forward thinking innovative features of the industrial supply chain hub to become differentiated as a world class hub;
• Economic analysis to assess the economic multiplier impact for job creation;
• Rationalization of opportunity of the supply chain management hub concept; and
• Documentation of the appropriate products and industries and critical success factors for the regional supply chain hub.
Industrial Supply Chain Strategy
Building on the unique characteristics, identify the industries that we can focus infrastructure, regulation, policy, and communication resources to attract firms that can use a industrial supply chain hub or interchange for East Africa.
The industrial supply chain hub is, in reality, a collection of industrial supply chain facilities or mini-hubs:Air freight to motor freight Rail freight to motor freightValue added services
Industrial Supply Chain Strategy
The Strategy involves multiple areas:Build differentiated industrial supply chain
hub(s) which will stimulate economic growth and job creation
Attract industries to the supply chain hubIndustries with a heavy manufacturing focusIndustries with a light manufacturing focusIndustries with a distribution and value added services
focusFacilitate development of hub with private/public
sector partnershipThe Strategy Elements (design dimensions)
outline the necessary and the differentiated capabilities of the Strategy
Strategy ElementsAbility to serve global marketsInfrastructure and support capabilitiesGovernment regulationsCompetitive tax climateAvailability of human, land, supplier, and
financial capitalEconomic competitiveness and lowest total
cost to serveSupply chain sustainabilityCollaboration and partnership
SCM Strategy ElementsAbility to serve global markets
Djibouti – Ethiopia – S. Sudan trade corridorInternational transport linksAccess to portsCustoms house, forwarding, and related
servicesForeign trade zone facilities
Strategy ElementsAbility to serve regional and global marketsInfrastructure and support capabilities in
DjiboutiAirport capabilitiesInterstate highwaysRailroad networkIntermodal transportation capacityDistribution facilities
Infrastructure and support capabilities
Attribute Current State Implications Future State
Airport capabilities
Djibouti and Addis Ababa airport
capacity; frequent Direct flights;available capacityfor dedicated andbelly cargo freight
Less congested; draw for global fulfillment operations;dedicated air freighter and belly cargo to accommodate 100% screening rules
Utilize Regional airports and other local airports
Highways Current and new planned roadsoffer less congested alternatives
Good connectivity from Djibouti, to Ethiopia, to Sout Sudan
Exploit current capacity and expand network
1 of 21 of 2
Infrastructure and support capabilities
Attribute Current State Implications Future State
Railroad network No functioning railroads.
Results in congestion on other capabilities
Railroad infrastructure is being planned by Ethiopia to connect Southern Sudan to Djibouti
Intermodal transportation capacity
Several dispersed facilities with excess capacity
Djibouti less congested; good connection to regional cargo
Potential for more centralized intermodal facility
Distribution facilities
Good private, leased, and public warehouse capacity
Physical capacity and labor available for newbusiness activity
Extend competitive advantage; Build consol/deconsol, cross-dock centers
2 of 22 of 2
Strategy ElementsAbility to serve regional and global marketsInfrastructure and support capabilitiesGovernment regulations
Higher weight limitsCarrier permitting process
Government regulations
Attribute Current State Implications Future State
Higher weight limits
Favorable to some shippers and industries
Lower transportation costs; favorable for intermodal particularly in transition from rail intermodal
Extend competitive advantage
Carrier permitting process
Multi-agency system
Cumbersome process; not favorable for carriers and shippers
Need “one stop shop” permit process; need reciprocal, bi-national permitting
Availability of human, land, supplier, and financial capital
Attribute Current State Implications Future State
Land and facility availability
Competitive real estate prices
Advantage over other states
Land is cheap; good place for DC’s
Financial Capital Lack of venture capitalists and angel funding
Problem for start-up firms
Invest in hub; need long-term capital and policy commitment from users to occupy land
Supplier and support capabilities
Strong supply base Nearby supplier locations
Extend competitive advantage
2 of 22 of 2
Economic competitiveness and lowest total cost to serve
Attribute Current State Implications Future State
Hub operations cost
Higher cost to operate
Are there offsetting productivity advantages?
Lowest cost to serve; lowest weather risk during transportation
Hub service levels
Managerial and skilled labor may create advantages;northern fringe location may inhibit access to entire U.S.
Service advantages could offset cost disadvantages
Better service potential for combined Djibouti/Ethiopiamarket for intermodal imports
Outbound empty trucks
Trade imbalance;excess empty containers
Low outbound rates
Fill outbound trucks
Supply chain sustainability
Attribute Current State Implications Future State
Customer service and reliability
Increased uncertainty due to congestion
Increased cost and reduced service
Customers requiring more reliability and closer suppliers to lower cost and improve service
Security Consumers and regulators expecting increased security
Increased freight monitoring
Need technology and facilities to monitor freight
Green/ environmental aspects
Firms strongly focus on low cost suppliers
Firms looking for suppliers who can minimize environmental impact
Firms looking for closer suppliers or transporters that have less environmental impact
Attribute Current State Implications Future State
One integrated regional plan
Regional support from all stakeholders of the integrated plan
Champion Need a “champion” or major player to act as an anchor; early investment and commitment
Collaboration and partnershipCollaboration and partnership
Synthesis of Strengths and Weaknesses of Strategy Elements Strengths
Good potential for cross-border distribution hub away from congestion of Djibouti – Ethiopia – S. Sudan
Good potential for trans-loading heavy imports
Good airport and highway infrastructure with limited congestion
While wage rates are high, skilled management and labor talent is readily available
Land and facilities readily available
Relatively inexpensive outbound motor carrier capacity
Weaknesses Infrastructure barriers
and custom processes, particularly at border
Current industry sectors in recession
Poor perception of current capabilities
Lack of public/private partnership authority
Absence of regional government authority to coordinate and promote supply chain initiatives
Supply Chain Hub Strategy Creation
Strategy Elements
Industries offering
Value Add Potential
Economic Model: Industry Sectors
1 Crop and animal production 2 Forestry, fishing, and related activities 3 Oil and gas extraction 4 Mining, except oil and gas 5 Support activities for mining6 Utilities* 7 Construction 8 Wood product mfg. 9 Nonmetallic mineral product mfg. 10 Primary metal mfg. 11 Fabricated metal product mfg. 12 Machinery mfg. 13 Computer and electronic product mfg. 14 Electrical equipment and appliance mfg. 15 Motor vehicle, body, trailer, and parts mfg. 16 Other transportation equipment mfg. 17 Furniture and related product mfg. 18 Miscellaneous mfg. 19 Food, beverage, and tobacco product mfg. 20 Textile and textile product mills 21 Apparel, leather, and allied product mfg. 22 Paper mfg. 23 Printing and related support activities 24 Petroleum and coal products mfg. 25 Chemical mfg. 26 Plastics and rubber products mfg. 27 Wholesale trade 28 Retail trade 29 Air transportation 30 Rail transportation
31 Water transportation 32 Truck transportation 33 Transit and ground passenger transportation* 34 Pipeline transportation 35 Other transportation and support activities* 36 Warehousing and storage 37 Publishing including software 38 Motion picture and sound recording industries 39 Broadcasting and telecommunications 40 Information and data processing services 41 Fed. Reserve banks, credit intermed. & related svcs 42 Securities, commodity contracts, investments 43 Insurance carriers and related activities 44 Funds, trusts, and other financial vehicles 45 Real estate 46 Rental, leasing svcs. & lessors of intangible assets 47 Professional, scientific, and technical services 48 Management of companies and enterprises 49 Administrative and support services 50 Waste management and remediation services 51 Educational services 52 Ambulatory health care services 53 Hospitals and nursing and residential care facilities 54 Social assistance 55 Performing arts, museums, and related activities 56 Amusements, gambling, and recreation 57 Accommodation 58 Food services and drinking places 59 Other services* 60 Households
Target Industries
Transportation & logistics Alternative energy Aerospace Medical devices Regional Security and DefenseAdvanced Manufacturing
Target Industries
Alternative Energy Automotive Engineering Life Sciences Security and Defense Advanced Manufacturing Agro Industry
Target Industries: Synthesized from Workshop Two
Automotive Renewal Alternative energy
Battery technologyBio fuelsWindSolar panels
Beverage and alcohol distribution Carbon fiber manufacturing Chemical processing Defense Electronics - industrial Food processing Medical technologies Retail importing and value add Water technologies Waste Management
Target Industries: Cluster Descriptors
HEAVY: Heavy Manufacturing and industrial cluster attracted to hub for resource efficiency and differentiationAutomotive renewalAlternative energyCarbon fiber manufacturingChemical processingDefenseElectronics – industrial
LIGHT: Light Manufacturing and industrial cluster attracted to hub for resource efficiency and differentiationFood processingMedical technologiesWater technologies
DISTRIBUTION: Warehousing and consumer based industry attracted to hub market location for distribution and value added servicesBeverage and alcohol distributionRetail importing and value addWaste management
Industrial Supply Chain Hub Strategy Creation
Strategy Elements
Industries offering
Value Add Potential
Economic and Job Creation Impact
Economic Activity Activities involve multiple areas:
Build differentiated supply chain hub (s) which will stimulate economic growth and job creation
Attract industries to the supply chain hubIndustries with a heavy manufacturing focusIndustries with a light manufacturing focusIndustries with a distribution and value added
services focusFacilitate development of hub with
private/public sector partnershipAir freight to motor freight Rail freight to motor freightValue added services
Supply Chain Hub Strategy Creation
Strategy Elements
Industries offering
Value Add Potential
Economic and Job Creation Impact
Economic Development
Presentation Outline
Project Background Project Objectives and Workshop DeliverablesSCM Strategy, Targeted Industries, and
Economic ImpactEconomic Development Policies and
Collaboration and CommunicationsRecommendations and Next Steps
Enabling Economic Development Global markets Infrastructure Regulations Tax climate Capital availability Economic competitiveness Supply chain sustainability Collaboration
strategy elements
Targeted industries
Industry Value
Proposition
Economic development
Job creation
•Heavy manufacturing
•Light manufacturing
•Distribution
Enabling Economic Development
strategy elements
Targeted industries
Industry Value
Proposition
Economic development
Job creation
Policy refinements
Enabling Economic Development
strategy elements
Targeted industries
Industry Value
Proposition
Economic development
Job creation
Policy refinements
Collaboration and
communications
Enabling Economic Development: Policy Refinements
SCM strategy elements
Targeted industries
Industry Value
Proposition
Economic development
Job creation
Policy refinements
Policies to Enable Economic Development Ability to serve regional and global
markets Infrastructure and support capabilities Streamlined government environment Competitive tax climate Availability of human, land, supplier, and
financial capital Economic competitiveness and lowest
total cost to serve Supply chain sustainability
Policies to Enable Economic Development
Ability to serve global markets Infrastructure and support capabilities
Create development incentives associated with transportation assets
Tie economic development and site location to transportation assets
Allow private investment in transport infrastructure
Coordinate between all modes of transportation
Policies to Enable Economic Development
Ability to serve regional and global markets Infrastructure and support capabilities Streamlined government environment
Incentivize use of brownfield properties for transportation and distribution
“One stop permitting” Neutral entity to implement and drive logistics
Enabling Economic Development:Collaboration and Communications
strategy elements
Targeted industries
Industry Value
Proposition
Economic development
Job creation
Policy refinements
Collaboration and
communications