ITTO INTERNATIONAL CONFERENCE ON

PROMOTION OF INTRA-AFRICAN TRADE IN

TIMBER AND TIMBER PRODUCTS Accra, 30 June – 2 July 2009

Key Issues for Development of

the Intra-African Trade in

Tropical Timber and Timber

Products

Markku Simula

Outline of the PresentationOutline of the Presentation

• Market characteristics

• Competitiveness

• Trade barriers

• Main constraints

• Recommendations

Market CharacteristicsMarket Characteristics Import patterns depend on the structure of local processing industry: overall

trend in trade is towards further processed products

Importers are mainly specialized traders, few buyers large enough to justify direct purchasing

High mark-ups of intermediaries (up to 100%, average 30-50%)

Importance of informal trade: no level playing field

Markets are generally highly price sensitive, quality comes after; in primary products inferior grades dominate

Limited knowledge on African timbers and suppliers with few exceptions; no preference; importer perceptions suggest African products are of lower quality than alternatives

Competitiveness of African Suppliers

Suppliers’ perception: “we are competitive enough”

Small trade volumes suggest otherwise

Main competition coming from South-East Asia but also competition from US/European temperate hardwoods is important (mainly in Northern Africa)

In further processed products the quality of African products is inferior not meeting international standards

Limited information on species, products, potential uses, suppliers

Logistics and high cost of transportation by sea and road

Import Tariffs

Product ECOWAS

Nigeria

SADC

South Africa

Logs 5 0

Sawnwood 20 0

Plywood 20 10 – 0

Builders’ woodwork

20 15 – 0

Wooden furniture 20 20 - 13

Other Trade Barriers and Challenges

Export regulation

Import regulation

Quality standards and grading rules

Certification and legality

Main Constraints for Intra-regional Trade Development

• Lack of knowledge on regional markets• Poor transportation links – high delivery costs• Weak trade-supporting infrastructure (communication, other

services• Bureaucracy in documentation – high transaction costs• Limited access to trade finance• Competition from illegal/informal sector – uneven playing field• Limited secondary processing capacity• Low quality and design competitiveness• Image and reputation of African suppliers• Intense competition from outside the region (Asia, in the future

Brazil)

Recommendations - ITTO

1. Support detailed market studies1. Support detailed market studies

2. Support research and publication of the properties of African 2. Support research and publication of the properties of African timberstimbers

3. Promotion of LUS3. Promotion of LUS

4. Promote trade from legal and sustainable sources4. Promote trade from legal and sustainable sources

5. Support specialized fairs and exhibitions and other trade 5. Support specialized fairs and exhibitions and other trade promotionpromotion

6. Support skills development and technology transfer6. Support skills development and technology transfer

7.7. Specific market monitoring and other market intelligenceSpecific market monitoring and other market intelligence

8.8. Strengthen statistical data on production, consumption and Strengthen statistical data on production, consumption and tradetrade

Recommendations - Governments

1. Reduce trade barriers (incl. import duties, check points)1. Reduce trade barriers (incl. import duties, check points)

2. Strengthen customs cooperation 2. Strengthen customs cooperation

3. Support organization of trade promotion3. Support organization of trade promotion

4. Provide incentives for further processing4. Provide incentives for further processing

5. Reconsider forest sector taxes5. Reconsider forest sector taxes

6. Strengthen forest governance6. Strengthen forest governance

7. Support private sector skills development7. Support private sector skills development

8. Improve communication and physical infrastructure8. Improve communication and physical infrastructure

9. Improve currency systems9. Improve currency systems

Recommendations – Forest Industry and Trade Organizations

1. Participate in fairs and exhibitions1. Participate in fairs and exhibitions

2. Promotion of LUS2. Promotion of LUS

3. Promote domestic markets as testing ground for trade3. Promote domestic markets as testing ground for trade

4. Invest in retooling and value added production4. Invest in retooling and value added production

5. Consider investment in imported raw materials production5. Consider investment in imported raw materials production

6. Engage in production of legal and sustainable TTPs and 6. Engage in production of legal and sustainable TTPs and certificationcertification

7. Develop networks and strengthen own national organizations7. Develop networks and strengthen own national organizations

8. Build capacity in market intelligence8. Build capacity in market intelligence

9. Improve quality control (sawing, kiln-drying, finishing, grading)9. Improve quality control (sawing, kiln-drying, finishing, grading)

10. Improve reliability of deliveries and customer communication10. Improve reliability of deliveries and customer communication

Recommendations – Regional Organizations

1. Promote removal of trade barriers1. Promote removal of trade barriers

2. Promote cooperation of customs authorities2. Promote cooperation of customs authorities

3. Promote timber trade fairs and exhibitions3. Promote timber trade fairs and exhibitions

4. Organize meetings on strategies for intra-African trade 4. Organize meetings on strategies for intra-African trade developmentdevelopment

5. Promote harmonization of national legislations5. Promote harmonization of national legislations

6. Promote trade in legal timber 6. Promote trade in legal timber

7. Consider establishment of West African Forest Commission7. Consider establishment of West African Forest Commission

8. Engage ECOWAS and WAMU in forest sector cooperation 8. Engage ECOWAS and WAMU in forest sector cooperation issuesissues

Intra-African Trade in TTPsIntra-African Trade in TTPs

A largely lost opportunity in the pastA largely lost opportunity in the past

Stepping stone for the world marketsStepping stone for the world markets

Needs a concerted Needs a concerted effort by the private sector, the effort by the private sector, the governments, regional organizations, ITTO and other governments, regional organizations, ITTO and other international bodies international bodies

””Accra Action Plan for the Development of Intra- Accra Action Plan for the Development of Intra- AAfrican Trade in Tropical Timbe and Timber frican Trade in Tropical Timbe and Timber Products”Products”

13

Thank YouThank You

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