Impact case study: Establishing the SET programme as a ‘centre for global knowledge’ on economic transformation

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Summary

One core objective of the Supporting Economic Transformation (SET) programme has been to establish the programme as a ‘centre for global knowledge’ on economic transformation and make a significant contribution to academic and policy debates on the best ways to achieve it in practice.

This impact case study explores how SET has achieved these aims through:

  • Producing high-quality, in-depth, comparative and thematic analyses on topics related to economic transformation, including on gender, digitalisation, manufacturing, services, trade and macroeconomics, which has generated uptake by key audiences
  • forging sustainable partnerships with in-country organisations, such as the African Center for Economic Transformation (ACET), Kenya Association of Manufacturers (KAM), Peking University, the Economic and Social Research Foundation (ESRF) and REPOA in Tanzania
  • convening globally renowned economists and policy experts such as Dani Rodrik, Helen Hai, Louise Fox, John Page, and Adair Turner at public events and high-level workshops in London and in developing countries
  • engaging ministers from Ethiopia, Ghana, Kenya, Liberia, Mozambique, Nepal, Nigeria, Rwanda and Tanzania with SET analysis and policy advice
  • disseminating research findings and policy recommendations effectively, achieving over 200 mentions in national and international media outlets (TV, print and online) including the Financial Times, the Economist, Africa Business Magazine and local media
  • influencing the analysis of international organisations (e.g. AfDB, World Bank, UNECA, UNIDO, IGC) other research outlets and prominent economists, evidenced by direct citations of SET data, findings and recommendations
  • Inspiring donors to take up and engage with the findings for their own programmes of analysis (e.g. DFID’s Invest Africa programme, Mastercard, SIDA)
  • growing the SET programme’s website into a centre for data and other information on economic transformation, evidenced by the figure of just under 150,000 tracked downloads.

In-depth analysis: contributing to global thinking on economic transformation

Producing quality, in-depth, thematic and comparative analysis on topics relevant to contemporary debates on economic transformation is a core element of the SET programme. Topics covered by SET analysis include gender, foreign direct investment, trade policy, manufacturing, services sectors, financing, macroeconomics and climate and environmental change. In many cases, SET analysis has contributed to shaping global debate, and the work of other institutions and economists, such as in the case of the programme’s flagship approach paper (see Box 1), and research on digitalisation in African manufacturing (see Box 2). Additionally, a firm-level survey of 640 Chinese manufacturing firms exploring responses to rising costs and appetite for investing abroad has challenged the prevailing narrative around the scale of Chinese manufacturing jobs likely to relocate to Africa in the coming decades, and was cited both in a recent piece from the Financial Times and on multiple occasions by renowned economist Justin Lin.


Box 1: Supporting economic transformation: an approach paper

SET’s central anchor paper, laying out the programme’s definition of economic transformation and approach to promoting it in developing countries, was developed over the course of the programme’s inception phase, and launched at a high-profile public event hosted at ODI in March 2017. Panel speakers included Louise Fox, now Chief Economist at USAID and globally-renowned economist (and report co-author) Maggie McMillan.

The paper, and its unique approach to the study of the what, why and how of economic transformation (see diagram below) that brings together political economy analysis with sound diagnostic analysis and provides practical policy advice, has been cited in academic publications from the African Development Bank, Centre for Development Alternatives, Sheffield Political Economy Research Institute and others.

The programme’s approach has also contributed to the work of organisations in the wider development community. The Tony Blair Institute, for instance, informed SET the approach paper was regularly referred to in their work. The paper also sparked engagement between SET and the Mastercard Foundation, who reached out to suggest a webinar for their staff based on SET’s approach; SIDA, too, sought training from the SET team on their methodology and approach to in-country working. The approach has also been presented to international development partners UNIDO, UNCTAD, SOAS, the World Bank and the ILO. SET’s approach additionally built connections between the programme and Gatsby Africa which led to a research partnership being developed (outside SET).

Finally, the paper also influenced DFID; it was cited in the recently published Invest Africa business case and was used by country offices in the development of inclusive growth diagnostics.


The SET approach.

 


 


SET’s ways of undertaking comparative and thematic analyses encompass many of the elements of the way the programme has established itself as a centre for global knowledge, that is, working with partners and disseminating effectively to achieve pickup in the media and uptake by other research outlets and prominent economists. A number of papers were produced in collaboration with international or local development partners, including the African Center for Economic Transformation (ACET) and New Climate Economy (NCE). SET’s research (and other outputs) achieved over 200 hits in online and print media since 2014.

Working with partners to embed SET analysis and policy advice

As part of striving for long-term sustainable impact, SET has worked from the beginning to forge strong partnerships with other international development think tanks, research bodies and in-country think-tanks, private associations and senior policymakers, firstly to strengthen analysis by encompassing different perspectives and secondly to encourage uptake of analysis and policy advice that will last beyond the end of the programme.

A select number of examples (by no means an exhaustive list) of SET’s collaborative working with partners and high-level stakeholder engagement to share knowledge and influence are explored here. Additional examples not covered here include in-depth work with private associations the Kenya Association of Manufacturers to promote manufacturing on the political agenda and the Nigerian Economic Summit Group to produce analysis on local integration and backward integration in Nigeria.

Local think tanks

African Center for Economic Transformation (ACET)

SET and ACET have been collaborating since October 2015 to support economic transformation efforts across African countries. This was done through a two-pronged approach – (i) producing high-quality, policy-focussed papers and comparative analysis, and (ii) convening meetings that bring together stakeholders to discuss how to promote manufacturing in Africa. ACET is known for its instrumental impact across the continent thanks to its excellent government and senior stakeholder links, and has seen significant capacity building gains, reflected by winning an award in 2018 for best (international) economic think tank.

SET support of the ACET-led African Transformation Forum (ATF), which took place in 2016 and 2018 and was attended by ministers and leaders from several African governments, placed the programme at the centre of policy debate on the continent. In 2018, SET was invited to lead a breakout session on the role of manufacturing in industrial policy, offering a platform for the dissemination of the programme’s analysis and policy advice to senior policymakers in sub-Saharan African governments.

President of Rwanda Paul Kagame and SET Director Dirk Willem te Velde speaking at the African Transformation Forum Manufacturing Chapter session in Accra, Ghana, June 2018.

Tanzania: Economic and Social Research Foundation (ESRF) and REPOA

SET has been working with Tanzanian think tanks REPOA and ESRF since 2015 as part of work to support the industrialisation process in the country. SET worked initially with REPOA to support the government’s process of producing the second Five-Year Development Plan (FYDP II) 2016/17–2021/22, including to host a consultative workshop with the private sector in Dar es Salaam. SET later worked with ESRF in the process of analysis and monitoring the government’s progress against the ambitious industrialisation goals laid out in the FYDP II, leading to the production of a paper, ‘Recent progress towards industrialisation in Tanzania’, exploring what has been achieved and challenges to further progress, which was published on both SET’s and ESRF’s websites. ESRF and SET also worked together to put together an implementation workshop for government and private sector actors following the launch of the FYDP II.

Development partners

World Bank

Through support to DFID, SET has influenced the work of the World Bank, improving the prioritisation of economic transformation in their country strategies. SET’s work on this was heavily drawn upon by the World Bank, who agreed as a result to add a portfolio-level indicator in IDA18 discussions around economic transformation. Through his work, SET succeeded in influencing a key part of the international aid system. SET later took on another piece of work for the World Bank (also through DFID), evaluating their investments in infrastructure.

SET has also worked with World Bank offices in-country and has been cited in the World Bank’s jobs diagnostics for Mozambique. SET hosted the launch event for the World Banks’s research into the future of manufacturing-led development.

United Nations Economic Commission for Africa (UNECA)

SET worked with UNECA to support two of their regional offices in preparing pilot diagnostics and country profiles. SET’s guidance left a lasting impact on UNECA’s work, and subsequent reports cite SET analysis extensively, showing how UNECA is using SET findings in its work moving forward.

CDC Group

SET engaged with the UK Government’s development finance institution (DFI) CDC throughout the programme in various ways, seeking to support them in their investment decision-making by encouraging them to be more transformational.

SET invited CDC to an investment event with the Government of Liberia and the Liberian National Investment Commission in September 2017, which resulted in meaningful connections being forged between CDC and the Liberian government. CDC later attended and presented at a workshop held jointly in Nairobi by SET and the Kenyan Ministry of Industry on financing Kenya’s textile, cotton and garment manufacturing firms. CDC were able to make new connections with garment firms, and put forward the challenges faced by DFIs when seeking sound investments in manufacturing. Five members of CDC staff also attended a meeting SET hosted in the House of Commons on the role of the City of London in Africa’s development in February 2017.

As well as facilitating their participation in key events, SET produced a report targeted at DFIs such as CDC, providing guidance on how to evaluate the economic transformation potential of DFI investments., CDC colleagues reviewed and provided comments on the report.

Government policymakers

Nigeria

SET worked with DFID Nigeria to undertake analysis that would re-open the debate in the country as to Nigeria’s industrialisation progress. The resulting report, ‘Supporting economic transformation in Nigeria’ was shared by DFID with figures in the ministries of both agriculture and industry, and later launched at a high-profile event in Abuja, at which the keynote speech was delivered by the federal Minister for State for the Ministry of Trade and Industry. The Minister confirmed that the report would provide great opportunity to consider reforms for creating jobs and improving prosperity in the country. The event also received positive, widespread coverage in the media, including on CNBC Africa.

Mozambique

SET engaged with senior Mozambique government officials through the launch of its study on economic transformation and job creation, produced in partnership with DFID Mozambique. The study was discussed in Maputo at targeted, high-level roundtable events that brought together the UK High Commissioner in Mozambique with the Minister of Economy and Finance, the Deputy Minister of Industry and Commerce, and other figures from across the government.

Left: Aisha Abubakar, Hon. Minister for State, Nigerian Ministry for Trade and Industry, delivering the keynote speech at the launch of SET’s analysis on economic transformation in Nigeria, Abuja, May 2016. Right: Dirk Willem te Velde discussing job creation and economic transformation with Mozambique’s Deputy Minister for Industry, Maputo, August 2017.

Nepal

SET analysis on promising sectors for inclusive job creation in Nepal achieved engagement at a high level through attendance and participation of Swarnim Wagle, Vice-Chair of the National Planning Commission at the launch event in Kathmandu. Wagle expressed his appreciation for the analysis and event, and interest in future work with the SET programme.

East Africa: Tanzania, Rwanda and Kenya

In Tanzania, engagement with the Minister for Finance and Planning on the country’s Five-Year Development Plan has been ongoing since 2015, and more recently discussions have been had with the Vice President to drive action forward on key industrial projects. In Rwanda, the Ministry of Industry, Trade and Commerce has benefited from analysis on the manufacturing sector and guidance on investment appraisals, work culminating in a SET and Rwandan government jointly-hosted roundtable on next steps for Rwanda’s transformation in September 2018. In Kenya, the government has engaged with SET work on numerous occasions and at different levels; officials from the Ministry of Industry have engaged with SET on the topic of services and financing manufacturing, senior advisors in the Office of the Presidency have worked closely with the programme to utilise analysis on MSMEs in manufacturing, and SET met the Cabinet Secretary for Trade (now for the East African Community) on the fringe of the Commonwealth Heads of Government Meetings in London in 2018.

Left: Dirk Willem te Velde discussing SET’s work with the Kenya Association of Manufacturers to develop a 10-point plan for manufacturing with the then-Cabinet Secretary for Trade, in London, April 2018. Right: SET team meeting with the Vice President of Tanzania, Minister for Finance and other trade and industry officials in Dar es Salaam, July 2018.

Convening experts

Convening world-leading experts, academics and senior policymakers to discuss developments and debates and new findings from SET analysis has helped establish the programme as a centre for knowledge and excellence in economic transformation. A number of public events, convening academic and policy experts, have been held at ODI’s offices in London:

  • June 2015 – SET hosted Harvard professor Dani Rodrik for a keynote speech on the future of economic transformation in developing countries (the video of which has been viewed over 2250 times on YouTube)
  • November 2015 – SET hosted Lord Adair Turner, former chairman of the Financial Services Authority, for a keynote speech on finance and inclusive economic transformation
  • March 2017 – SET convened speakers including Louise Fox (Chief Economist, USAID) and Margaret McMillan (Associate Professor, Tufts University) to launch flagship approach paper
  • August 2017 – SET hosted Justin Lin, Director of Peking University’s Institute for New Structural Economics, to deliver a keynote to launch his books on development cooperation and jump-starting economic transformation.
Dani Rodrik delivering the keynote at an ODI public panel event, London, June 2015.

Additionally, SET has convened senior policymakers, private sector actors and in-country experts for targeted, private workshops in developing countries:

  • October 2015 (Dar es Salaam) – SET and Tanzanian think tank REPOA hosted policymakers from the Ministry of Finance and Planning, private associations including the CEO’s Roundtable and the Tanzanian Private Sector Foundation (TPSF) and others for a consultation workshop on the government’s drafted Five-Year Development Plan for 2016/17-2021/22
  • October 2017 (Kathmandu) – SET and Nepalese think tank South Asia Watch on Trade, Economics and Environment (SAWTEE) hosted private manufacturing, ICT, tourism and agro-processing firms and associations and Nepalese Planning Commission Chair Swarmin Wagle at the launch of SET analysis on sectors for inclusive job creation
  • July 2018 (Nairobi) – SET hosted senior figures from the Office of the Presidency, the Kenyan Ministry of Trade and Industry, MSMEs in manufacturing and development partners to discuss initial findings of SET analysis on MSMEs in value chains and SEZ plans.

Media engagement and citations

Media hits

Over the course of the programme, SET analysis, commentary and events have received coverage from international and national media outlets across five continents, and across TV, radio, print and online platforms. Over 200 hits have been tracked (a selection listed online) in print and online including in the Financial Times, the Economist, African Business Weekly, the East Africa, the Star (Kenya), the New Straits Times (Malaysia), the Kathmandu Post (Nepal), the Guardian (Tanzania), the Reporter (Ethiopia) and Rwanda Today, and TV including BBC, CNBC Africa, Channel S (Nigeria) and Karobar News (Nepal).  The papers that achieved significant pickup in the media are:

  1. ‘Digitalisation and the future of African manufacturing’ (2018, 98 hits)
  2. ‘Economic transformation in Nigeria’ and the launch event (2016, 21 hits)
  3. ‘Rising costs in Chinese light manufacturing: what opportunity for developing countries?’ (2017, 18 hits).

Box 2: Digitalisation and the future of manufacturing in Africa

As part of a drive to explore beyond traditional manufacturing, SET undertook an analysis of indicators of digitalisation in sub-Saharan Africa and the likely impact of further digitalisation on African manufacturing. The report was launched at a panel session at the Global Development Network’s conference in New Delhi, ‘Science, Technology and Innovation for Development’ in March 2018.

The launch was picked up by the global media, with over 95 hits in print and online media including BBC Africa, East African Business Week, Business Ghana, La Vanguardia (Spain) and the New Straits Times (Malaysia), as well as radio segments on two BBC World Service programmes and a TV segment on Voice of America. The report, briefing and infographics were also republished in their entirety on the ILO’s ‘Technology@Work’ website, a platform for its initiative on the future of work.

Harvard scholar Dani Rodrik cited the paper in a recently study, ‘New technologies, global value chains and developing economies’ for Oxford University’s Pathways Commission, as did a study from the African Development Bank, and the paper also influenced a Mastercard Foundation (as yet unpublished) scoping paper on a new programme on the future of work.

Since publication, report lead author Karishma Banga has been invited to and presented the findings of the work at:

  • UNCTAD’s e-commerce week in Geneva (April 2018)
  • UNECA, FES and OHCHR workshop on digital trade and human rights in Addis Ababa (May 2018) (following which, the report authors were commissioned for a chapter on the right to work for a joint publication with UNECA, due 2019)
  • African Union e-commerce conference in Nairobi (June 2018)
  • the WTO Public Forum in Geneva (October 2018).

Citations

The programme has also tracked a number of citations of SET analysis in research papers from prominent economists, academic institutions and think tanks, as well as ‘roundups’ of recent research from organisations such as the DCED. Tracked citations total over 70 and include those in papers from the African Development Bank, the World Bank, Brookings, Oxford University, the Journal of Economic Integration, and Cambridge University’s Journal of Demographic Economics.

As well as showing the reach and quality of SET analysis, citations such as those in programme proposals or business cases (for DFID’s Invest Africa) also indicate the influence of analysis on the direction of future research.

SET’s website as a centre for knowledge

The SET programme’s website was launched in 2015 with the aim of creating a dedicated space for research, comment, data and events on economic transformation for the programme’s key audiences. Since its inception, the website’s audience has grown exponentially, and downloads[1] of research, event reports and other documents from the site have also increased (see Figure 1).  Downloads over the course of 2018 reached 88,087, more than twice 2017’s total.

The website has also been established as a source for authoritative commentary on economic transformation topics and developments in UK or developing-country policy, in the form of blogs. Expert economists including Morten Jerven and Gaaizen de Vries, former Permanent Secretary for Transport in Kenya Gerrishon Ikiara, and Made in Africa founder Helen Hai are amongst those who have produced SET blogs.

Downloads from the SET programme website, September 2015-December 2018
Note: Lack of data from pre-September 2015, as well as missing data between May and July 2016, means that the downloads presented here will be lower than the real total.

 

 

 

 

 

 

 

[1] By downloads we mean those of PDF documents hosted on the SET website, including research reports, briefings, event reports, and other event materials such as PowerPoint slides or agendas. This is not the same as website visitors.

 

Impact case study: Influencing government industrial policy and supporting improvements to DFID programming in Rwanda

The Supporting Economic Transformation (SET) programme has been working in Rwanda since 2016. The primary focus of the work has been supporting the evolution of government policy towards a coherent approach to economic transformation. Policy research and engagement carried out with this aim has contributed to a gradual but perceptible improvement in the quality of policy thinking despite some notable counter-currents. This work has spun off secondary benefits in terms of stimulation and guidance to DFID governance and growth advisers, DFID partners and the local private sector.

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Introduction

The Supporting Economic Transformation (SET) programme has been working in Rwanda since 2016. The primary focus of the work has been supporting the evolution of government policy towards a coherent approach to economic transformation. Policy research and engagement carried out with this aim has contributed to a gradual but perceptible improvement in the quality of policy thinking despite some notable counter-currents. This work has spun off secondary benefits in terms of stimulation and guidance to DFID governance and growth advisers, DFID partners and the local private sector. The programme’s key contributions were:

  • A cumulative series of research papers and conversations with high-level Rwandan stakeholders around international experiences of economic transformation and implications for Rwanda, starting with the SET/ACET background papers discussed in Kigali with Rwandan ministers at the 2016 African Transformation Forum and continuing with outputs on public-private sector coordination, financing manufacturing and the evolution of the local business community.
  • A major influencing effort culminating in September 2018 in a briefing and roundtable: ‘Kickstarting Rwanda’s economic transformation: what needs to be done, when and by whom?’. Attended by over 30 senior policymakers, including the Minister of Trade, two Permanent Secretaries, several Director-Generals and the government’s Chief Economist, this produced a consensus on priorities around employment-intensive manufacturing that is now influencing implementation of the 2017-24 government programme, now called the National Strategy for Transformation (NST).
  • A staff training initiative and guidance note on analytical techniques to support decision-making on investment priorities, carried out as part of the Ministry of Trade and Industry (MINICOM)’s Economic Diplomacy programme. The training built the capacity of the Economic Diplomacy focal points in key ministries to assess and prioritise industry, trade and investment options, and fed into the programme’s assessment.
  • Regular exchanges of information and ideas with DFID growth, governance and private sector development leads, including on the design of Invest Africa, around DFID-Rwanda’s Governance for Growth (G4G) initiative, and on synergies and operational methods across the country portfolio.

The policy challenge

The Rwandan economy has experienced moderate growth, of around 7% per annum, in recent years. Improvements in agricultural productivity have helped income inequality and poverty to fall. This is set to continue but needs to be complemented with new sources of growth providing productive employment outside of agriculture on a substantial scale, while increasing the resilience of the national economy by diversifying its export earnings. The Government of Rwanda (GoR) has taken important initial steps towards a coherent industrial policy framework, including establishing a special economic zone (SEZ) in Kigali and planning for a further eight industrial parks in other parts of the country. However, it is only recently that its overall policy approach has been framed as economic transformation, with manufacturing growth and suitably ambitious job-creation goal at its centre. There continue to be significant counter-influences on policy, including beliefs around economic self-reliance and the feasibility of skipping developmental stages.

Rwanda has needed tailored advice and research support to help in getting closer to the targets set in its Economic Development and Poverty Reduction Strategy II (EDPRS2), its revised Vision 2020 and, most recently, its National Strategy for Transformation (NST1). Based on an initial scoping exercise, the SET Rwanda project was tasked with supporting the GoR and its partners to design and implement policies that could put the country on a more transformational path, with work in four priority areas:

  1. The selection and design of policies and instruments for the development of an employment-intensive, export-oriented manufacturing sector with robust linkages to the domestic, regional and global economies.
  2. The identification of new sources of foreign and domestic private investment for the sector and related services, taking into account the importance of generating knowledge spill-overs on business models and marketing strategies.
  3. Arrangements for dialogue, consultation, feedback and lesson learning among the different government and private sector actors with interests in the sector, including the adequacy of current forms of coordination and interest-representation.
  4. The ability of GoR to provide intellectual and experience-based leadership on economic transformation to regional bodies, including the East African Community and the manufacturing and regional integration chapters of the Coalition for Transformation launched at the African Transformation Forum 2016.
The SET team and GoR officials meet for high-level roundtable on kickstarting Rwanda’s transformation, 10 September 2018.

What SET did

Leading political economist and Principal Research Fellow at ODI, David Booth, and Research Fellow Linda Calabrese worked closed with locally-based consultant Frederick Golooba-Mutebi on a cumulative series of research papers and linked conversations with high-level Rwandan stakeholders. The core aim was to influence and support government policy, with benefits to DFID and the local private sector as an additional goal. The common focus of the work was international (especially Asian) experience in economic transformation and its implications for Rwanda. The principal steps were:

  1. Contributions, with the African Centre for Economic Transformation (ACET), to the design and proceedings of the first African Transformation Forum, co-hosted in Kigali by ACET and GoR in March 2016. This process was important for kicking-off the Rwanda project’s high-level conversations with GoR as well as for stimulating GoR’s reformulation of its strategic goals towards economic transformation.
  2. A policy paper comparing Rwanda’s current institutional arrangements for coordinated action and dialogue on foreign direct investment and private sector development with a range of Asian and African models. This included a range of relevant examples of effective practice in public-private collaboration and the steering of industrial policy. It was well received by then Minister of Trade and Industry Francois Kanimba, was circulated widely among the senior stakeholders interviewed during the research, and was frequently referenced in the follow-up conversations in the country by locally resident team member and East African thought-leader Golooba-Mutebi. This paper was also uploaded by the Government of Rwanda in the newly created Rwanda Trade Portal (only accessible to government staff).
  3. Two complementary research papers. One, on financing manufacturing in Rwanda was widely circulated in 2017, and it was uploaded by the GoR in its newly created Rwanda Trade Portal (only accessible to government staff). This paper was presented in a new form at the International Growth Centre (IGC)-supported conference on ‘Industrial Policy for the Next Decade’ in September 2018. The other, the product of field research on ‘The local business community in Rwanda: prospects for an expanded role in economic transformation’ has been shared with DFID and submitted to a scholarly journal.
  4. A major influencing effort on the principal policy lessons highlighted by the SET research. High-level conversations around a synthesis briefing culminated in September 2018 with an invitation-only, high-level roundtable: ‘Kickstarting Rwanda’s economic transformation: what needs to be done, when and by whom?’. Attended by over 30 senior policy makers, including the Minister of Trade, two Permanent Secretaries, several Director-Generals and the government’s Chief Economist, this produced a consensus on priorities around employment-intensive manufacturing that is now influencing implementation of the NST1. The main takeaways of the roundtable are presented in the document ‘Kickstarting economic transformation in Rwanda: key takeaways’, jointly produced by the SET team and the Ministry of Trade and Industry (MINICOM). This was brought to a wider audience through a second SET presentation at the above-mentioned MINICOM/IGC conference. The material has also been used by the Ministry in their own presentations and strategic thinking.
  5. A guidance note on appraising export-growth and import-substituting options was written and shared with the MINICOM with the support of the embedded trade specialist of the Tony Blair Institute. This was included in MINICOM’s Economic Diplomacy Strategy as part of the programme documentation. Following this, a series of staff training workshops on analytical techniques to support decision-making on investment priorities were held by ODI/SET experts in July-August 2018. The training activities built the capacity of the Economic Diplomacy focal points in key ministries to assess and prioritise industry, trade and investment options.
  6. Regular exchanges of information and ideas with DFID growth, governance and private sector development leads, drawing on the GoR-facing research and other ODI work. Contributions included a written input to the design of the Invest Africa programme, and several conversations about the form to be assumed by DFID-Rwanda’s Governance for Growth (G4G) initiative. This work culminated in a workshop in August 2018 with DFID implementing partners, on ‘Tools for Transformation’, explored synergies and operational methods across the country portfolio, drawing on SET/ODI thinking.

ODI Principal Research Fellow David Booth (far right) discussing SET analysis with government representatives at IGC and GoR conference on industrial policy, 17-18 September 2018.

Impact

The SET Rwanda project has had demonstrable success in respect of two of the core aims of the SET programme: (i) supporting the planning and implementation of policies that drive economic transformation at government level, and (ii) supporting improvements in DFID programming at country-office level. In particular, SET has contributed with others to put economic transformation at the centre of GoR’s strategic agenda (as in NST1) and to appreciate better what this commitment means, in terms of choice of industrial priorities, modalities of policy steering and private-public collaboration that work best in export-oriented, employment intensive manufacturing, and capacity limitations to be addressed in appraising investment options.

We consider the impact of the SET programme’s work in Rwanda across four broad types as outlined by DFID-ESRC Growth Research Programme (DEGRP): conceptual impacts (changing perceptions, knowledge or approaches/attitude), instrumental impacts (tangible changes in either policy or practice), capacity building impacts, and improvements to connectivity between different actors.

Conceptual impacts

While Rwandan policies have famously taken inspiration from certain Asian countries (notably Singapore), the most relevant experiences of economic transformation from Asia and the Africa region (e.g. Mauritius) have not been taken as seriously as they should have been. The most relevant lessons are about the early priority given to raising agricultural productivity and the subsequent turn to employment-intensive, export-oriented manufacturing. Specialisation according to latent comparative advantage and concentrated effort around industrial clusters are among the key concepts.

The work speaks to the core of our priorities at RDB, and topic is very interesting for us at this very time” – Chief Operations Officer, Rwanda Development Board (RDB)

The SET programme has contributed to the communication of these highly relevant concepts to the highest policy circles in the country. It did not do this single-handedly but, by exploring and discussing with stakeholders the specific application to Rwanda of the policy principles advocated globally by policy organisations such as ACET and economists such as Joe Studwell, Justin Yifu Lin, Celestin Monga and others, it has brought the implications closer to home than they otherwise would have been. Evidence of the reach of the SET-supported concepts includes the tabling of the programme’s first Rwanda-specific paper, on public-private collaboration, a meeting of the Presidential Advisory Council (PAC) by ex-Trade and Industry Minister Francois Kanimba, and the calibre of the attendance and quality of the discussion at the high-level roundtable in September 2018, which included the Minister of Trade and Industry Hon. Vincent Munyeshyaka, two Permanent Secretaries, several Director-Generals and the Chief Economist.

Instrumental impacts

The GoR’s soon-to-be-published seven-year programme for 2017-24 is called a strategy for transformation, with the first chapter dedicated to economic transformation. The February 2018 draft of the NST1 also put an ambitious job target at its centre and recognised a key role will be played by manufacturing. The change in policy language is partly the reflection of a trend across the Africa region, but SET’s collaboration with ACET in 2016 made a significant contribution to this reframing among others.

SET’s recommended policy priorities reflected in Rwandan government policy action ‘takeaways’ at high-level roundtable, 10 September 2018.

Of course, it is the implementation of the NST1 that will matter, not the document on its own. The most important tests in this respect lie ahead. However, the strength of the high-level consensus at the September 2018 roundtable gives grounds for hope around the four commitments discussed there:

  • Giving greater effective priority to employment intensive manufacturing
  • Accelerating the SEZ programme with closer attention to industrial clustering
  • Mobilising the domestic private sector behind the manufacturing effort
  • Strengthening the framework for government-wide coordination of industrial policy

These four commitments were already owned and presented by MINICOM in policy fora, such as the industry and exports sub-sector working group held in October 2018.

“I was at the industry and exports sub-sector working group this morning at MINICOM, where they presented the slides from your high level roundtable and focused on these 4 lessons! So it already seems to have made a mark on them in the short term.” – Anna Gibson, DFID Rwanda

Capacity building impacts

Government of Rwanda

The guidance note on appraising export-growth and import-substituting options led to a collaboration with MINICOM embedded advisors (from the Tony Blair Institute (TBI)) that was designed to fit closely the work and objectives of the Ministry’s Economic Diplomacy programme and the government-wide NST1. Buy-in was secured from the Permanent Secretary to MINICOM, and a training programme in Kigali in July 2018 was attended by 14 government representatives. The follow-up activity in August had similar levels of participation and focussed on the practical applications of the concepts discussed in the first training.

The notes and presentations of the training will be uploaded in the government’s Economic Diplomacy intranet to be accessible also to those who were not primarily selected for the training but are keen to deepen their understanding of these topics.

I’ve heard from MINICOM that Linda and Max’s training was really relevant and well received, which is great” – Anna Gibson, DFID Rwanda

This training helped me to take/undertake an analysis on how we could improve our economic transformation through developed industry, trade and investment” – Economist, MINECOFIN

DFID Rwanda

SET worked with DFID Rwanda to inform their programming and policies by conducting research into one of its key focus areas, manufacturing. The papers were influential in the development of their manufacturing interventions under the Invest Africa programme and the G4G initiative.

SET also helped DFID achieve lasting improvements in the way DFID programmes and implementing partners work together to help transform Rwanda by hosting meetings with new G4G leads, discussing the business community study and its implications for working on business voice and representation.

Tony Blair Institute

The guidance note on appraising export-growth and import-substituting options is being used by the TBI’s representative in the GoR as training background documentation, and it will have direct influence on the direction of the GoR’s new Economic Diplomacy Programme by informing the action plan for its development. SET’s outputs, including the synthesis briefing paper, have been shared with and presented to the TBI Rwanda team as a whole.

Connectivity impacts

The project has strengthened networks of stakeholders both in the development and utilisation of the research. Training workshops which secured the attendance of representatives from multiple government departments reflected SET’s ability to convene across government and share knowledge with a common objective.

SET has also provided DFID Rwanda with invaluable support in being able to access, and independently work with, Rwandan government in ways not directly open to it as a donor.

SET has also been able to promote a frank discussion about export-led manufacturing within the GoR and to bring the main points of this discussion to the public forum at the MINICOM/IGC industrial policy conference.

SET has also linked Rwanda’s development path to the work of Celestin Monga, Vice-President and Chief Economist of the African Development Bank, whose work was used to inform the policy lessons on kick-starting economic transformation in Rwanda. The SET team has connected Dr Monga to Hon. Min. Munyeshyaka (MINICOM) and his team.

What SET learned

One of the main lessons the SET programme has learned is about the importance of working with the institutional players in Rwanda. MINICOM has a mandate in the areas of trade and industry, and plays a strong role in these areas. The SET programme worked closely with MINICOM to organise the high-level roundtable in September 2018. The Ministry played an active role in the organisation and dissemination of the work. The Ministry were also keen to develop specific action points from the conference, which they have already taken forward as part of their own work. This has ensured strong buy-in and sustainability of the SET messages.

On another level, the Rwanda experience has generated some fresh insights about the relationship between political economy and policy work, nuancing the framework described in SET’s 2017 approach paper. The political economy context for economic transformation is clearly different, and on balance more favourable, in Rwanda than in, say, Tanzania or Kenya. Less clearly favourable elements in the country’s political economy include incentives to engage in voluntaristic policymaking, where goals are set without sufficient reference to the country’s current resource endowments. Consistent commitment to supporting employment-intensive manufacturing would have been achieved sooner in the absence of this factor.

Useful links

Impact case study: Supporting Tanzania’s Five-Year Development Plan (FYDP II) 2016/17-2021/22

The Supporting Economic Transformation (SET) programme helped to inform and design Tanzania’s Second Five-Year Development Plan (FYDP II) 2016/17-2020/21 and continues to guide prioritisation and strategic thinking around the country’s economic transformation. The programme also directly supported the preparation of an Implementation Strategy (IS) for the FYDP II, ensuring it was underpinned by relevant principles and factors to achieve successful implementation. SET was also influential in motivating the formation of a monitoring and evaluation (M&E) framework to track progress and demonstrate results.

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Introduction

The Supporting Economic Transformation (SET) programme helped to inform and design Tanzania’s Second Five-Year Development Plan (FYDP II) 2016/17-2020/21 and continues to guide prioritisation and strategic thinking around the country’s economic transformation. The programme also directly supported the preparation of an Implementation Strategy (IS) for the FYDP II, ensuring it was underpinned by relevant principles and factors to achieve successful implementation. SET was also influential in motivating the formation of a monitoring and evaluation (M&E) framework to track progress and demonstrate results.

SET helped Tanzania’s Planning Commission to prioritise the sectors most relevant for economic transformation, identify policy options and ways of working to address binding constraints to transformation, and devise ways to mobilise finance and engage development partners and enlist their support for interventions, as witnessed in the FYDP II. SET also supported the Government of Tanzania (GoT) to adopt a more inclusive and consultative approach to the preparation of the FYDP II and its implementation. To help speed up implementation of the FYDP II, the SET programme supported Tanzania’s Ministry of Finance and Planning to prioritise key projects and identify financing mechanisms and appropriate ways to involve the private sector and other financing actors in implementation.

SET helped to build networks spanning government, businesses and donors in Tanzania. This included direct support for better engagement between the government and the private sector and the facilitation of dialogue between the GoT and Tanzania’s development partners.

The policy challenge

Tanzania has ambitious targets to become a semi-industrialised nation by 2025. Tanzania’s past attempts at industrialisation have not always been successful. Implementation in Tanzania is a very complex issue; a major challenge has been to develop a comprehensive national strategy, and effective national development plans, to guide the economic transformation process, and to generate broad consensus across different stakeholders around an industrialisation agenda. The GoT has also struggled to prioritise interventions to support industrialisation and economic transformation and to implement (and monitor) much-needed interventions effectively. The challenge the SET programme faced was to support the design and implementation of a FYDP II 2016/17-2020/21 that emphasises the importance of industrialisation to generate both sustained economic transformation and human development.

What SET did

SET supported Tanzania’s Planning Commission (located within the Ministry of Finance and Planning) with in-depth analytical work to inform the preparation of the FYDP II and policy advice to guide prioritisation and strategic thinking around the country’s economic transformation. The SET programme also provided direct support to the Planning Commission in the preparation of an IS for the FYDP II.

Following this, SET continued to engage with the GoT and local partners to support the industrialisation agenda in Tanzania, including through: high-level engagement with Tanzania’s Vice-President, Minister of Finance and Planning and key government officials to discuss speeding up the implementation of the FYDP II and financing industrialisation in Tanzania; support to relevant agencies around financing and operationalising special economic zones (SEZs); and support to local partners and private sector organisations to monitor the country’s industrialisation progress.

The SET team meet with Dr Philip Mpango (Minister for Finance and Planning), the Hon. Vice President of Tanzania, Samia Suluhu Hassan and other members of the government, Dar es Salaam, July 2018.

Impact

We consider the impact of the SET programme’s work in Tanzania across four broad types as outlined by DFID-ESRC Growth Research Programme (DEGRP)conceptual impacts (changing perceptions or approaches), instrumental impacts (tangible changes in either policy or practice), capacity-building impacts, and improvements to connectivity across different actors.

Conceptual impacts

SET was influential in shaping the content, thrust and direction of the FYDP II. This included support to key actors in the Planning Commission to identify and prioritise the sectors most relevant for economic transformation in Tanzania. SET also helped the Planning Commission to identify policy options – both horizontal and sector-specific interventions – to address binding constraints to economic transformation. Moreover, SET influenced the GoT’s thinking on ways to engage development partners and mobilise their support for interventions that aid the achievement of the FYDP II objectives in a more coordinated and efficient manner.

SET was also instrumental in helping the GoT to adopt a more inclusive and consultative approach to the preparation of the FYDP II and its implementation. In collaboration with REPOA, SET organised the first ever consultation on the FYDP II in Dar es Salaam in October 2015. The Honourable Dr. Philip Mpango, the then Executive Secretary of the Planning Commission and now Tanzania’s Minister of Finance and Planning, attended the consultation, extending a long-running working relationship with SET that began with discussions in February 2015. The consultation provided an opportunity for Tanzania’s Planning Commission to engage with around 100 stakeholders from both the public and private sectors in Tanzania and facilitated discussion on emerging priority areas and potential implementation mechanisms. This represented a marked improvement over the first five-year development plan, for which little public consultation took place.

“The Government of Tanzania will look to move forward with the same passion that ODI-SET has for the transformation of Tanzania.” – Paul Maduka Kessy, Planning Commission, Ministry of Finance and Planning

The SET programme helped devise key principles for Tanzania to follow for successful implementation of the FYDP II and highlighted relevant lessons from successful experiences in implementing economic transformation policies in other countries. These insights helped the Planning Commission to prioritise issues and activities for successful implementation to nurture an industrial economy.

SET also supported Tanzania’s Ministry of Finance and Planning to speed up the implementation of the FYDP II and think through the respective roles of the public and private sectors, and public-private partnerships (PPPs), in financing industrialisation in Tanzania. This included analytical support to categorise and evaluate priority projects for financing through PPPs and other financing modalities, and to identify appropriate ways to involve the private sector and other financing actors in the implementation of the FYDP II.

Instrumental impacts

SET’s work and its core findings were instrumental in supporting the drafting of the FYDP II and a number of insights fed directly into the Plan published in 2016. For instance, SET’s analytical work on manufacturing exports, labour productivity change, FYDP I progress against targets, and financial flows in Tanzania was cited directly in the FYDP II. SET was also responsible for the Plan’s emphasis on political economy factors and effective ways of working – including the importance of experimentation and problem-driven and flexible approaches to implementation – to make industrialisation and economic transformation a reality.

SET also helped the Planning Commission to devise an implementation strategy and financing plans to guide the implementation of the FYDP II, via direct input in shaping the content of the FYDP II IS. Together with the Economic and Social Research Foundation (ESRF), SET provided backstopping support to assist the Planning Commission to devise action plans for three sectors (cotton-to-textiles, leather and leather products, and pharmaceuticals) and two cross-cutting themes (special economic zones and urbanisation) which will be prioritised in the initial phase of implementation. With this support, the Planning Commission prepared and published a detailed IS comprising four components: (i) an action plan; (ii) a financing strategy; (iii) a communication strategy; and (iv) a M&E framework. SET advocated for the inclusion of the M&E framework to track progress and demonstrate results. This represents an important step towards ensuring effective implementation.

SET also contributed to the establishment of an institutional mechanism to support implementation of the FYDP II. A technical committee comprising officials from different ministries, departments and agencies was established by the Ministry of Finance and Planning as a result of a meeting between the SET team and Tanzania’s Vice President, Minister of Finance and Planning and other high-ranking GoT officials on speeding up FYDP II implementation and making the next steps towards industrialisation. This technical committee subsequently identified and prepared briefs for priority projects boasting potential to attract private sector financing, either directly or via PPPs. The committee now meets regularly to discuss financing and implementation of priority projects and identify ways forward.

“On the 12th July, 2018 H.E. Samia Suluhu Hassan, the Vice President of the United Republic of Tanzania (URT) met with a delegation from the Overseas Development Institute (ODI) led by Dr. Dirk Willem te Velde, the Programme Director for Supporting Economic Transformation (SET)… The Government, in acknowledgement of ODI’s proposal agreed to take the necessary initiatives to ensure that the high-level meeting takes place… the Ministry of Finance and Planning formed a technical committee which constituted officials from different government Ministries, Departments and Agencies. The Committee was tasked to identify development projects [with] potential for implementation under the Public-Private Partnership (PPP) and other financing arrangements.” – United Republic of Tanzania (URT) (2018) Ministry of Finance:  Proposed projects for high-level workshop on development financing.

SET’s influence in shaping key policy documents in Tanzania goes beyond the FYDP II and its accompanying IS. Suggestions stemming from SET’s research – including those emphasising the need to combat tax evasion and minimise tax exemptions, introduce more effective taxation of the informal sector, strengthen the collection of property taxes and effectively facilitate electronic payment of taxes – were also reflected in the GoT’s budget priorities and policies for the 2016/17 financial year. In particular, the work helped to influence policies around domestic resource mobilisation and budget structuring, and in relation to supporting priority industries and improving the enabling environment for private sector participation. SET also provided peer review and guidance to the authors (Ali Mufuruki, a renowned Tanzanian business leader, along with Rahim Mawji, Gilman Kasiga and Moremi Marwa) of a recently published book on Tanzania’s Industrialisation Journey, 2016-2056: From and Agrarian to a Modern Industrialised State in Forty Years. The book contains several excellent proposals to drive future industrialisation in Tanzania and makes an important contribution to fostering a debate on the efficacy of different industrialisation models in the country.

Dr Philip Mpango, Minister for Finance and Planning and SET programme Director Dr Dirk Willem te Velde in Dodoma, October 2018.

Capacity building impacts

SET supported a number of Tanzanian institutions and organisations. In addition to the direct support provided to the Planning Commission, SET supported the FYDP II drafting team and worked together with two local research partners, REPOA and the ESRF, to aid the preparation of the FYDP II and accompanying FYDP II IS, respectively. SET also provided a platform for the CEO Roundtable in Tanzania to discuss issues related to the FYDP II in a public setting.

SET also worked with the ESRF and other local research partners to introduce more sustainable monitoring of industrialisation in Tanzania, including through the publication of a SET-ESRF briefing on recent progress towards industrialisation in Tanzania and additional briefings on policies to support industrialisation in Tanzania and progress in the development of SEZs in the country.

Workshop on the implementation of the FYDP II and the role of the private sector, October 2016.

The SET programme held direct discussions on capacity needs with Tanzania’s Export Progressing Zones Authority, which led to SET facilitating a two-day workshop with SEZ-related agencies, potential financiers (including national development banks) and other relevant stakeholders on Financing the development of SEZs in Tanzania. A subsequent SET publication on different models of financing and public policy support for SEZs provides guidance to Tanzanian policy makers looking to finance and operationalise these zones.

“The private sector appreciates the fact that the FYDP II is being conceived through consultation. This is a clear positive in comparison to the previous FYDP.” – Tanzania Private Sector Foundation

Connectivity impacts

SET helped to build networks across the government, businesses and donors in Tanzania. SET supported better engagement between the government and the private sector in the strategic implementation of the FYDP II by organising a private sector consultative workshop in collaboration with the ESRF in October 2016. This played a crucial role in facilitating private sector engagement with the FYDP II for the first time, and raised awareness of the role that the private sector can play in its implementation. The workshop, which was attended by a range of different private sector actors as well as government officials, development partners, civil society organisations, research institutions, think tanks and non-governmental organisations, helped to build consensus around how to approach implementation of the FYDP II and on the core elements that should constitute a strategy and framework to guide the effective implementation of the Plan. In addition, the workshop contributed to developing a shared understanding of the practical roles that different stakeholders – both in the public and private sectors – should play in implementing the FYDP II.

In addition, SET directly facilitated dialogue between the GoT and Tanzania’s development partners (DFID and the European Union) on ways in which donors can support the implementation of the Plan.

SET also helped Tanzania’s Planning Commission to communicate the goals, objectives and priorities of the FYDP II and its plans for implementation to different stakeholders by preparing and publishing a set of three briefings: (i) summarising the FYDP II and its key action points; (ii) summarising proposed actions and financing plans for implementation; and (iii) and outlining options to link government plans with donors and businesses. In relation to the latter, SET also linked donors (including DFID and the European Union) with the GoT after a period in which donors had suspended budget support for Tanzania. These donors are now looking for new ways to support Tanzania. Members of the SET team also published commentary in the Tanzanian media on the GoT’s 2017/18 budget, the country’s remaining economic transformation challenges and the need for Tanzania to form a consensus on how to achieve industrialisation. This has helped to raise awareness of Tanzania’s industrialisation and economic transformation challenges and priorities.

Finally, SET worked with the Ministry of Finance and Planning to hold a high-level workshop in Dodoma, bringing together government officials and other relevant actors to discuss financing implementation of the FYDP II and, specifically, of key FYDP II projects. The workshop, which was facilitated as a technical working session, helped delineate possible next steps to promote effective participation of the private sector in priority projects and ways in which PPPs and other financing modalities can support the realisation of Tanzania’s industrialisation vision.

What SET learned

SET’s work in Tanzania has highlighted the power of coordinating support from the public and private sector and local research institutions around an agreed set of principles, priority areas and interventions to drive industrialisation, economic transformation and human development.

Useful links

This impact study has been prepared by Neil Balchin, ODI Research Fellow. For further information contact details are available here.

 

Impact case study: Promoting industrialisation, manufacturing and job creation in Kenya

The Supporting Economic Transformation (SET) programme has worked in Kenya since 2016. SET work in Kenya has spanned government departments and agencies, DFID Kenya and other donors, private sector actors and civil society, and successfully contributed to the promotion of the manufacturing agenda both ahead of and after the 2017 Kenyan presidential elections. SET has additionally succeeded in influencing the plans and priorities of both government and the private sector.

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Introduction

The Supporting Economic Transformation (SET) programme has worked in Kenya since 2016. SET work in Kenya has spanned government departments and agencies, DFID Kenya and other donors, private sector actors and civil society, and successfully contributed to the promotion of the manufacturing agenda both ahead of and after the 2017 Kenyan presidential elections. SET has additionally succeeded in influencing the plans and priorities of both government and the private sector. The programme’s key activities and contributions are summarised as follows:

  • Convening over 30 senior figures from the Ministry of Industry, Trade and Co-operatives (MITC), DFID Kenya, private associations including the Kenya Association of Manufacturers (KAM), TradeMark East Africa and others, to discuss constraints to and opportunities for manufacturing in Kenya and build a consensus on the role of the sector in the country’s industrialisation plans.
  • Partnering with KAM to develop a comprehensive 10-point policy plan to promote manufacturing and create jobs during the election period, influencing the manifesto development process within political parties and, at the high-profile launch event, securing a ceremonial commitment from politicians to implement the plan if elected as well as significant media coverage.
  • Supporting the Export Promotion Council (EPC) during the review of Kenya’s exports strategy with analysis of Kenya-UK trade and investment trends and offering recommendations to reverse the decline and increase Kenya’s share of the UK market. A high-profile launch hosted by the EPC resulted in widespread media coverage and pick-up of the key messages at the highest levels.
  • Working closely with the MITC to facilitate discussion and relationship-building between small garment, leather and textile firms and Kenyan banks, to ease financing constraints on growth of the manufacturing sector.
  • Supporting the MITC and Executive Office of the Presidency (EOP) with the implementation of the manufacturing ‘pillar’ of President Kenyatta’s flagship ‘Big Four’ agenda by analysing the role of MSMEs in value chains, helping to build a credible framework for reform.

From l-r: Neil Balchin, ODI; Oduor Ong’wen, Executive Director, ODM, National Super Alliance (NASA), Phyllis Wakiaga, KAM; Flora Mutahi, KAM; Ekuru Aukot,  Thirdway Alliance.

The policy challenge

Industrialisation is a crucial factor for job creation and successful economic transformation, but the share of manufacturing in Kenya’s GDP has been in decline for over a decade. There is currently an open window of opportunity for African manufacturing; rising wages in much of Asia, rebalancing in China, strong regional growth and steadily improving policies and institutions across Africa are creating positive conditions for growth in the sector. However, Africa’s window of opportunity is closing fast, and may only last the next 20 to 30 years, due to increasing digitalisation in global manufacturing. Intense competition from Asian countries (such as Vietnam, Cambodia, Bangladesh) which have lower wages, higher productivity, better infrastructure, more skilled labour forces, and higher levels of integration into global value chains than African countries is also a major challenge. In order to take advantage of the current opportunity, Kenya needs to act fast to develop its manufacturing sector, as other African countries will be looking to do the same.

Over the period of SET’s work in Kenya, and in part due to SET (for more on which see section on impact below), manufacturing has moved to the top of the policy agenda. It featured prominently in the presidential election campaign in 2017, and now constitutes one of the ‘pillars’ of President Kenyatta’s flagship ‘Big Four’ agenda. However, much remains to be done to ensure the successful implementation of this agenda; problems remain in securing the involvement of micro-, small- and medium-sized enterprises (MSMEs) (which employ up to 90% of the Kenyan workforce), improving skills and increasing firms’ access to finance.

What SET did

In-country work on the manufacturing agenda commenced in August 2016 with the organisation of a roundtable event in Nairobi, for which three scoping studies were commissioned from Kenyan economist Anzetse Were, John Page from the Brookings Institute and ODI’s macroeconomics lead Phyllis Papadavid.

From the roundtable, attended by policymakers from the Ministry of Industry, the office of the UK Department of International Development (DFID) in Kenya and the Kenya Association of Manufacturers (KAM) amongst others, came a partnership between ODI and KAM to promote manufacturing further up the policy agenda. Leading SET programme researchers, KAM consultant Gituro Wainaina and Anzetse Were worked closely to develop a 10-point policy plan booklet for Kenyan manufacturing, with a foreword from the CEO and Chairperson of KAM. The policy plan covered issues including land accessibility and ownership, energy, value chains, public-private sector collaboration and labour market skills, and for each, tailored policy solutions were offered. In order to be as comprehensive as possible, the content was developed with active inputs from the Office of the President of Kenya, the State Department for the Environment, the State Department for Trade, Kenya Industrial Estates, IDB Capital Kenya, Kenyan Private Sector Association (KEPSA), the Micro and Small Enterprise Authority (MSEA), TradeMark East Africa (TMEA), ICDC and the KAM Board.

The booklet was launched in July 2017 during the presidential election campaign period, firstly at an invite-only event for KAM member organisations, and secondly at a high-profile public event attended by representatives from two major political parties and range of media outlets. At the event, the Executive Director of ODM (NASA party) and the leader (and presidential candidate) of Thirdway Alliance signed a ceremonial commitment to the ODI-KAM policy plan.

“We remain greatly indebted to you for the support. We now have a document that has clearly and concisely elaborated the manufacturing priorities, and which has so far been very well-received by the main political parties we have engaged” – Dalmas Okendo, Head of Operations, KAM

After the election and the announcement of the Big Four policy agenda, SET worked with senior figures in the Executive Office of the Presidency (EOP) to support the implementation of the manufacturing pillar, and specifically work on the MSME agenda within it. This work centred around a piece of in-depth analysis, based on interviews with textile, leather and garment MSMEs and accompanying desk research, on the role of MSMEs in value chains and their place within Kenya’s policymaking for industrialisation, and also involved organising and contributing to meetings and workshops that brought together small firms with senior policymakers in the EOP and Ministry of Industry, Trade and Co-operatives. Alongside this, SET hosted a workshop on the financing of garment manufacturing, with facilitated discussion and relationship-building between Kenyan manufacturing firms and domestic financers such as Barclays and Co-operative Bank.

Over this period, SET also worked with the Export Promotion Council (EPC) on a study of Kenya-UK trade and investment relations, which was launched at a breakfast meeting ahead of Kenya Trade Week in July 2018, with speakers including the Permanent Secretary for Trade, Dr Chris Kiptoo and Peter Biwott, CEO of EPC.

Impact

SET’s activities had demonstrable success towards two of the core aims of the programme: supporting the policies and plans of (i) private sector actors and (ii) the government to become more transformational.

We consider the impact of the SET programme’s work in Kenya across four broad types as outlined by DFID-ESRC Growth Research Programme (DEGRP): conceptual impacts (changing perceptions or approaches), instrumental impacts (tangible changes in either policy or practice), capacity-building impacts, and improvements to connectivity across different actors.

Conceptual impacts

Broadly, SET’s work in Kenya had conceptual impact by increasing the understanding of the importance of and factors for success in manufacturing for the country’s industrialisation and job creation objectives. Firstly, SET contributed to the knowledge base on Kenyan manufacturing through the publication and discussion of its three detailed scoping studies at a closed roundtable  with representatives from African Development Bank, World Bank, TMEA, JICA, DFID Kenya, Government of Kenya, KAM, ACET, private sector and others. The meeting secured a consensus amongst those in attendance that manufacturing and industry needed to be the focus of the next administration, signalling a shift away from a focus on services.

Evidence of further conceptual impact can be taken from the extensive media coverage (including in Business Daily Africa, the Star, KBC Channel and the East African) of the launch of the ODI-KAM 10-point policy plan for Kenyan manufacturing, which gave high visibility and prominence to both the SET programme and the plan’s suggested policy priorities. The work also had an impact on the policy debate space through engagement with political parties ahead of the launch, and the attendance of those politicians at the launch itself.

Finally, further tangible conceptual impact was secured through the Kenya-UK trade analysis undertaken for the EPC. The central picture painted by the analysis, of Kenya’s exports to the UK in decline and facing growing competition from regional rivals in some of its key export products, was seen within the EPC and wider trade and industry policy environment to be a significant wakeup call. The core messaging and recommendations in the report also received widespread media coverage in Kenyan media, and articles were also published in Rwandan and Tanzanian outlets. That the message successfully reached the highest levels was shown when the UK’s Deputy High Commissioner referred to the research in a key speech shortly after launch (see quote below).

“Recent analysis shows that Kenya’s share of the UK market has been declining since 2008… it is mainly due to competition from Kenya’s peers” – Susie Kitchens, UK Deputy High Commissioner to Kenya

Instrumental impacts

Firstly, KAM’s engagement with political parties on the topic of the ODI-KAM 10-point plan for manufacturing, as well as the subsequent high-profile launch, had a significant impact on the policy development process during the election campaign. A comparative analysis of election manifesto commitments on industrialisation and manufacturing showed that a number of ODI-KAM policy recommendations were taken on board and incorporated in parties’ policy promises. Recommendations that achieved pickup in manifestos included those on public fiscal management, the role of special economic zones (SEZs) and the importance of improved access to reliable and sustainable energy.

Evidence of instrumental impact from the 10-point plan was strongest at the launch event, where representatives from two political parties signed a ceremonial commitment to the policy priority agenda, pledging to incorporate them into a potential future administration. The politicians specified the industrial agenda as central to Kenya’s economic transformation in general terms; NASA emphasised innovative initiatives, MSMEs and the informal sector, and Jubilee and the Third Way Alliance were more specific about industry-related policies. The work was also influential on KAM’s policy advocacy work, as it was presented to KAM’s member organisations at their Annual General Meeting, which ensured the exposure of a wide range of private sector firms to research and policy analysis on the manufacturing sector.

SET’s later work with the EOP also achieved instrumental impact on the policy-forming process within government by providing a thorough analysis of the status of MSMEs in value chains from which policymakers could work and facilitating direct engagement between them and small firms. This analysis and engagement has been instrumental for the ongoing reform process. President Kenyatta’s ongoing interest in this agenda continues to be evident, for example in his involvement in the high-profile small and medium enterprise (SME) roundtables initiative.

“You have advanced the SME discourse in a significant way by inter alia providing a credible framework for a reform process and theory of change as well as a baseline from which to take off” – Ruth Kagia, Deputy Chief of Staff, Executive Office of the Presidency

Finally, SET’s Kenya-UK trade work had an instrumental impact on the EPC’s export promotion strategy, currently under review. The in-depth analysis of the potential of various export products to increase Kenya’s exports to and market share in the UK sparked interest in the EPC to commission a series of such studies for Kenya’s other important trade partners, such as the United States.

Signing a commitment to the ODI-KAM 10-point policy plan in July 2017 (from l-r): Flora Mutahi, KAM; Oduor Ong’wen, Executive Director, ODM, National Super Alliance (NASA); Phyllis Wakiaga, KAM.

 

 

 

 

 

 

 

 

“What an impactful study that has really reawaken critical thoughts in the trade relations between Kenya and UK. The study raised the profile of EPC and has triggered interests to undertake such studies for other key economies such as the USA” – Peter Biwott, CEO, Export Promotion Council

Capacity building impacts

SET’s work in Kenya has provided KAM with a significant amount of support to think through and prioritise policies to advocate for in its engagement with government actors. The work on the 10-point policy plan booklet also gave KAM a base from which to develop its own policy briefings with which to engage policymakers and other stakeholder groups at the county level. Digital copies of reports and briefings produced as part of the ODI-KAM partnership are both hosted on the SET programme’s website and the KAM website, demonstrating genuine joint ownership of the project’s outputs and key messages.

This demonstrates the sustainability of the work SET has done in Kenya; strong local actors, such as KAM, but also economist Anzetse Were and Professor Gituro Wainaina, will take forward this work and continue to build on the transformation agenda as government policy processes continue. One example of this in action is Anzetse Were’s article in Business Daily Africa, covering a major investment by East Africa Breweries Limited, which aligns with the core messages of SET’s work (namely that investment in manufacturing is crucial for Kenya’s economic transformation objectives).

Connectivity impacts

This work has strengthened networks of stakeholders and facilitated relationship- and trust-building between different stakeholder groups both in the development and dissemination of SET’s research. Initial evidence of this was in the convening of a range of over 30 senior figures from donor organisations such as DFID, government, civil society/research organisations such as TMEA and ACET, and the private sector at the scoping roundtable event in August 2016, at which a consensus was reached regarding the crucial importance of manufacturing for the achievement of Kenya’s industrialisation goals.

The production of, and subsequent public launch event for the ODI-KAM collaborative 10-point policy plan was another example of successful convening of different actors. The development process for the plan facilitated the engagement of KAM with key policy actors during the political manifesto development process, and the launch event strengthened links between these senior political figures and KAM’s leaders and Board. Finally, this project also strengthened links between KAM and DFID Kenya as they engaged over the relative weight that should be given to different policy options.

The last stage of SET’s work in Kenya was successful in facilitating new engagement between both small firms and the government, and small firms and Kenyan banks. The workshop on financing for garment manufacturing not only facilitated dialogue on constraints for both firms and banks, but resulted in a meaningful connection being forged between garment manufacturing firm Hela Clothing and the Co-operative Bank, which was taken forward after the event. The workshop hosted by SET in partnership with the EOP, where MSMEs were invited to speak and put forward their perspectives on past government policy and proposed reforms, marked the first time that small firms had connected with the government on the plans under the Big Four agenda in a meaningful way (a trend which is now continuing in the form of President Kenyatta’s SME Forum initiative).

What SET learned

SET’s engagement on the manufacturing agenda in Kenya highlights the successes of working collaboratively with local partners, private and analytical, to translate research into actionable, concise policy recommendations, and then communicating these to government through influential local (private sector) organisations with strong, established networks.

The importance of timing is also a positive lesson learned; by targeting and meeting with political parties ahead of national elections, there was a strong incentive for politicians to engage with the core messages and policy recommendations in the 10-point policy plan. The positive result of a well-thought communications plan was evident in this project – a 10-point easy-to-digest booklet and a high-profile public launch helped to communicate the messages to both government and media, attracting attention and influencing the thinking of a wide audience.

The ability to be flexible and respond to needs of government departments and actors is also important. SET was able to respond quickly to a request for support from the EOP on the MSMEs agenda, which has resulted in some tangible instrumental and connectivity impacts.

Useful links