rr.- , () > - ~~~~26335 > - > ~May 2003 4AL STANDARDS AND GLOBAL TRADE: A VOICE FOR AFRICA THE WORLD BANK Washington, D.C. © 2003 The International Bank for Reconstruction and Development / The World Bank 1818 H Street, NW Washington, DC 20433 Telephone 202-473-1000 Internet www.worldbank.org E-mail feedback@worldbank.org All rights reserved. 1 2 3 4 05 04 03 The findings, interpretations, and conclusions expressed herein are those of the author(s) and do not necessarily reflect the views of the Board of Executive Directors of the World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of the World Bank concerning the legal status of any territory or the endorsement or accept- ance of such boundaries. Rights and Permissions The material in this work is copyrighted. Copying and/or transmitting portions or all of this work with- out permission may be a violation of applicable law. The World Bank encourages dissemination of its work and will normally grant permission promptly. For permission to photocopy or reprint any part of this work, please send a request with complete in- formation to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, USA, tele- phone 978-750-8400, fax 978-750-4470, www.copyright.com. All other queries on rights and licenses, including subsidiary rights, should be addressed to the Office of the Publisher, World Bank, 1818 H Street NW, Washington, DC 20433, USA, fax 202-522-2422, e-mail pubrights@worldbank.org. This book was made possible through support provided by the Office of Sustainable Development, Bureau for Africa, U.S. Agency for International Development, under the terms of Grant No. AFR-G-00-00-00016-00. The opinions expressed herein are those of the author(s) and do not necessarily reflect the views of the U.S. Agency for International Development. Library of Congress Cataloging-in-Publication Data Standards and global trade: a voice for Africa / John S. Wilson, Victor 0. Abiola (editors). p. cm. Includes bibliographical references. ISBN 0-8213-5473-6 1. Africa-Foreign economic relations. 2. Exports-Africa. 3. Quality control-Africa. 4. Export marketing-Africa. I. Wilson, John S., 1956- II. Abiola, Victor O., 1975- III. World Bank. HF1611.S73 2003 328'3'096-dc21 2003045032 Cover Photo Credit: World Bank Photo Library / Illuminating Development Collection / Eric Miller Foreword v Acknowledgments vii Contributors ix Abbreviations xi Executive Summary xix Introduction xxv John S. Wilson Victor 0. Abiola 1 Improving Market Access Through Standards Compliance: A Diagnostic and Road Map for Kenya 1 Hezron Omare Nyangito Tom Olielo David Magwaro 2 Bridging the Standards Divide: A Case Study and Action Plan for Mozambique 65 Gabriela Rebello da Silva Lara da Silva Carrilho 3 Standards, Technical Regulations, and Product Quality: Institutional Evidence from Nigeria 165 J. Adeboye Adeyemo Abiodun S. Bankole 4 Standards and Trade In South Africa: Paving Pathways for Increased Market Access and Competitiveness 235 Andre Jooste Erik Kruger Flip Kotze S Enhancing Uganda's Access to International Markets: A Focus on Quality 371 N. Rudaheranwa F. Matovu W Musinguzi Index 427 D RADE IS A CRUCIAL DRIVER OF GROWTH, foreign markets. As this volume documents, YET AFRICA WITH 10% OF WORLD this process will include; (1) enhancing pro- population, represents less than 2% of world duction practices, (2) improving quality assur- trade. Most African economies are small and ance and management systems by firms, and provide limited national markets for local (3) better monitoring, evaluation, product trade that can spur faster growth rates for de- testing and packaging methods, to respond to velopment. As a result, the pursuit of better ac- changing technical requirements of trading cess to foreign markets is, therefore, a crucial partners. Institutional reforms, investment in component of Africa's development strategy. human capital and infrastructure improve- Yet, the erosion in the region's share of world ments in laboratories and facilities are also trade between 1970s and 1990s represents ap- necessary. proximately $70 billion, or about one-fifth of However, Africa's investment in promoting its gross domestic product (GDP). exports in compliance with international Africa includes many of the world's poorest norms will be more beneficial if its trading countries, with 300 million of its people living partners (particularly in Europe and the United on less than 1$ a day. Simply halving the num- States) advance complementary trade policies. ber of the continent's poor by 2015 will require These include reduction in agriculture subsi- an approximate annual growth of about 7% as dies that depress international product prices, well as more equitable distribution of income. reduction in high tariffs that restrict higher-end Increasing its engagement in international value imports, and elimination of non-tariff trade and improving penetration of global measures that limit trade, including restrictive markets can help achieve this pace of growth. standards and technical regulation, duplicative While there are many complementary actions testing and certification procedures, rules of that are needed to improve the investment cli- origin, and antidumping duties. mate so as to allow a higher growth rate to be Non-compliance with international stan- achieved, addressing the effect of product stan- dards deprives African farmers access to key in- dards both as barriers to trade and opportuni- ternational markets, and may lead to a further ties to expand market access is likely to be one reduction in global market share-especially area where action will have a high rate of in agricultural products like horticulture and return. fisheries, and light manufactures like textiles. In expanding trade, the link between stan- Without addressing market access and inter- dards, access to foreign markets, and develop- national standards compliance issues, African ment is at the forefront of policy debate. This firms and farmers will be unable to take full is particularly true with regard to Africa. advantage of recent market opening initiatives African countries face critical challenges in such as the US African Growth and Opportu- improving domestic capacity to meet produc- nity Act and the EU's Everything But Arms tion and quality standards that are required in initiative. v Standards and Global Trade: A Voice for Africa There is a strong need to support and level. The analysis includes a review of existing strengthen effective programs and initiatives laws and regulations and the extent to which they designed to improve the ability to comply with are consistent with current international norms. international standards and to support the har- It examines each country's physical infrastruc- monization of technical regulations regionally. ture and organizational capacities to design and The assessment and analyses contained in this implement standards and technical regulations. book directly compliment related work on these The authors also discuss and analyze the imple- issues. For example, the findings will serve to mentation processes and some estimated impact inform specific projects or programs that can of various standards, technical regulations, and be implemented through the new Standards related production/marketing practices in about and Trade Development Facility (STDF) es- thirty specific industry segments. tablished by the World Bank and partner agen- Perhaps most important, the volume sug- cies to strengthen international coordination gests concrete action plans on how African in technical assistance on product standards. firms and farms can improve product quality The Facility offers the opportunity to translate and reach international markets in key the results of the case studies contained in this commodity sectors. These recommendations book into concrete actions that can help African directly complement Africa's market access firms and farmers implement international development objectives, as outlined by the standards to increase exports that will boost New Partnership for Africa's Development incomes of the poor. (NEPAD). By identifying concrete projects- The book provides in-depth case-by-case including those that can be championed by analysis of five African countries-Kenya, development institutions and NGOs-to help Mozambique, Nigeria, South Africa, and African countries improve their trade capac- Uganda. It is intended to be a resource for in- ity, the action plans can serve as a useful re- formation and guidance for policymakers, the source to inform decisions on practical ways development community, and others in a criti- to fulfill the commitment contained in the cal new "behind the border" barrier to trade. WTO's Doha Development Agenda to meet Each chapter discusses the economic context in development and trade needs in the region. which standards apply to each country and ex- amines the mechanisms with which the country Nicholas Stern and its representatives have participated in the Senior Vice President and process of setting/revising standards and techni- Chief Economist cal regulations at the local and international The World Bank vi * OMPLETION OF THIS BOOK WOULD its completion was also drawn from work un- NOT HAVE BEEN POSSIBLE WITHOUT THE derway on trade and standards at the World participation, support, advice, and encourage- Bank, supported by the United Kingdom, ment of many individuals who contributed di- Department for International Development rectly to its publication. (DFID). Moreover, the content in this volume Indeed the chapters included in this book re- draws upon diagnostic work and country flect collaborative work among research teams studies underway elsewhere, including work on- consisting of trade specialists, economists, going in international agencies including the standards experts, and practitioners across sev- World Trade Organization (WTO), Food and eral countries. The content in the volume also Agriculture Organization (FAG), and United reflects input from colleagues at the World Nations Conference on Trade and Development Bank, other institutions, research networks, (UNCTAD), among others. universities, and private sector groups. In par- In particular, we wish to thank the World ticular, we would like to acknowledge the Cen- Bank country directors, country economists, ter for International Agricultural Marketing and sector specialists for their valuable input and Development (CIAMD), South Africa; as reviewers of each chapter, including The Development Policy Center, Department Makhtar Diop, Fayez S. Omar, Robert R. Blake, of Economics, University of Ibadan (DPC), Darius G. Mans, Delfin Sia Go, Peter G. Moll, Nigeria; Instituto Nacional de Normaliza~5o e Alberto D.K. Agbonyitor, and Dipac Jaiantilal. Qualidade (INNOQ), Mozambique; Universi- The encouragement and advice of Paul Collier dade Eduardo Mondlane (UEM), Mozambique; and Bernard Hoekman throughout this proj- Kenya Institute for Public Policy Research and ect is especially acknowledged and very much Analysis (KIPPRA); Institute of Economics, appreciated. In addition, we would like to Makerere University, Uganda; Kenya Bureau of thank Steve Jaffee, who played an important Standards (KEBS); Uganda National Bureau of role in providing assistance in the early stages Standards (UNBS); and other groups in Africa. of the project. We would also like to thank The views and recommendations expressed in Lawrence Hinkle, Philip English, Keiko this volume, however, are of course entirely Kubota, Cornelis de Haan, Cornelis Van Der those of the authors. They do not necessarily Meer, Victoria Kwakwa, Francis Ng, and espe- reflect views of the World Bank Group, its Ex- cially Lolette Kritzinger-van Niekerk and staff ecutive Directors, shareholder governments, or in the Bank's country office in South Africa, any other institution, among others. Special thanks also to Tsunehiro The book was produced as part of a project Otsuki and Baishali Majumdar in compiling funded by the U.S. Agency for International De- the preliminary results of the World Bank TBT velopment, under the Africa Trade and Invest- survey on standards referenced in several chap- ment Policy Program (ATRIP). This financial ters of this book. We would also like to thank support is gratefully acknowledged. Support for Rob Simms Jason Victor, and Michelle Chester, vii Standards and Global Trade: A Voice for Africa Maria Kasilag, Rebecca Martin, and Maribel International Development; as well as staff Flewitt for their support throughout the pro- from the U.K. Department for International duction of this book. Development for their encouragement, guid- We would also like to acknowledge the par- ance, and support. Staff of the World Bank ticipants in a seminar and videoconference in office of the publisher and others in the July 2001, as part of the work leading to this production of the book is also gratefully book. The U.S. Trade Representative Robert acknowledged. Zoellick, Trade Minister Biwott of Kenya, Finally, the chapters included in this book Director General Mike Moore of the World also benefited from feedback and comments Trade Organization (WTO), Nicholas Stern, from numerous organizations, associations, Senior Vice President of the World Bank, and and private sector representatives and partici- members of the Africa Economic Research pants in one-on-one interviews, focused group Consortium (AERC) were instrumental in sessions, workshops, and seminars. We ac- launching this work. In particular we would knowledge the considerable time, effort, and like to thank Dominique Njinkeu and T. Ade- valuable information these participants have mola Oyeyide we would for their advice and devoted to the content of these chapters and assistance during the seminar. Furthermore, hope readers will benefit from the collective ef- we are particularly grateful to Rosa Whitaker, forts of many who contributed to the book's William Jackson, Susan Troje, Lisa Ortiz, and completion. other staff from the USTR and U.S. Agency for viii Hezron Omare Nyangito Kenya Institute for Public Policy Research and Analysis (KIPPRA) Tom Olielo Kenya Bureau of Standards (KEBS) David Magwaro Ministry of Trade and Industry Dr. J. C. Kegode Kenya Plant Health Inspectorate Service (KEPHIS) Dr. W. Songa KEPHIS Esther Kimani KEPHIS Ann N. Kingori KEPHIS E. B. Manyara Ministry of Trade and Industry (MTI), Kenya Francis M. Warui MTI Janet Abilla MTI George Gachoka MTI J. Ombwori Ministry of Agriculture and Rural Development (MA&RD), Kenya Andama Mosoti MA&RD Caroline Outa Kenya Bureau of Standards (KEBS) J Mokaya KEBS Stephen J. Muli Kenya Chamber of Commerce and Industry (KCCI) Patrick Okoth Attorney General Chambers Rod Evans Home Grown Ltd. L.K. Mwona MCFU Ltd. John Njenga Kenya Flower Council Peter Gatonye Kenya Flower Council Dr. J.P. Nthuli Department of Veterinary Services (DVS) Cosmas Kyengo Fresh Produce Export Association of Kenya (FPEAK) Dr. Stephen Mwika Association of Fish Processors and Exporters of Kenya J. M. Nzuma Kenya Institute for Public Policy Research and Analysis J. Kamau Kenya Association of Manufacturers (KAM) Lydia Ndirangu Kenya Institute for Public Policy Research and Analysis Sunripe Exporters of Vegetables and Fruits, Nairobi Suera Flowers, Nairobi Waridi Flowers, Nairobi Makindu Exporters, Nairobi Tea Board of Kenya, Nairobi Department of Fisheries, MA&RD Homegrown Ltd., Nairobi Cirio Del Monte Ltd., Nairobi ix Standards and Global Trade: A Voice for Africa Kenya Association of Manufacturers (KAM) Association of Fish Processors and Exporters of Kenya (AFIPEK) Fresh Produce Export Association of Kenya (FPEAK) Kenya Flower Council (KFC) Gabriela Rebello da Silva Instituto Nacional de Normalizac,o e Qualidade- INNOQ Lara da Silva Carrilho Universidade Eduardo Mondlane (UEM) J. Adeboye Adeyemo University of Ibadan, Nigeria Abiodun S. Bankole University of Ibadan, Nigeria Andre Jooste The Centre for International Agricultural Marketing and Development (CIAMD) Erik Kruger InfoHarvest Flip Kotze CIAMD Hans Balyamujura CIAMD Ernst Idsardi CIAMD John le Roux CIAMD Stephan Hosking UPE Chris Ettmayer UPE N. Rudaheranwa Makerere University Institute of Economics, Uganda F. Matovu Makerere University Institute of Economics, Uganda W. Musinguzi Uganda National Bureau of Standards x AAM Mozambique Cotton Association ABT Administrative Barrier to Trade ABIODES Association for Organic Agriculture, Biodiversity and Sustainable Development in Mozambique ACE Audit Control and Expertise ACM Mozambique Trade Association AERC African Economic Research Consortium AGOA African Growth and Opportunity Act AGRARIUS Association of Mozambican Farmers AICAJU Association of Cashew Producers AIMO Mozambican Industrial Association AIOPA Association of Edible Oil and Related Products Producers AJAM Young Farmers Association AMAPIC Mozambican Association of Industrial Prawn Fisheries APAMO Mozambican Association of Sugar Producers APC-EC Africa Caribbean, Pacific-European Union APEC Asia Pacific Economic Co-operation APCER Portuguese Association of Certification APHIS USDA Animal and Plant Health Inspection Service APSSS South of Save Salt Producers Association ARC Agricultural Research Council ARSO African Regional Organization for Standardization ATRIP Africa Trade and Investment Policy Project BIPM International Bureau for Weights and Measures BM Bank of Mozambique BOP Balance of Payment BRC British Retail Consortium BSTM Bank Standard Totta of Mo,ambique BUDS/SSE Business Uganda Development Scheme Support for Small Scale Enterprises BVQI Bureau Veritas Quality International CAC Codex Alimentarius Commission CADI Business Advisory Centre CAIM Manica Agro Industrial Company CASCO Committee on Conformity Assessment at ISO CBI Circuit Breakers Industry CBS Citrus Black Spot CCA Codex Coordinating Committee for Africa xi Standards and Global Trade: A Voice for Africa CCP Codex Contact Point CCFFP Codex Committee on Fish and Fishery Products CCM Mozambique Chamber of Commerce CENELEC European Committee for Electro technical Standardization CEO Chief Executive Officer CFC Common Fund for Commodities CGA Citrus Grower Association CHAEM Centre for Environmental Health and Medical Examinations CIB Coffee Industry Board CIF Cost Insurance and Freight CKS Coordinating Specifications CLUSA Cooperative League of the United States of America CM Council of Ministers CM Check Mate International Pty CMB Coffee Marketing Board CMT Committee of Ministers Responsible for Trade at SADC CNPML Mozambican National Cleaner Production Centre Codex Codex Alimentarius COMESA Common Market for Eastern and Southern Africa COMPETE The Competitive Private Enterprise and Trade Expansion COPOLCO Committee on Consumer Policy at ISO CPAP Comissao Permanente da Assembleia Popular CPI Investment Promotion Centre CPLP Community of Countries with Portuguese as the Official Language CRI Citrus Research International CSIR Council for Scientific and Industrial Research CSTA Customs Technical Council CTA Confederation of Mozambican Economic Associations CTN Technical Committees on Standardisation CTNS Sector Technical Committees on Standardisation DANIDA Danish International Development Agency DDA Dairy Development Authority DECOM Consumers Protection Association DEVCO Committee on Developing Country Matters at ISO DF Forestry Department-FAEF DFID Department for International Development UK DFPT Deciduous Fruit Producers Trust DFR Department of Fisheries Resources DGR Directorate of Genetic Resources DHA Department of Environmental Health at the Ministry of Health DINA National Directorate of Agriculture at Ministry of Agriculture and Rural Development DINAP National Directorate of Livestock at Ministry of Agriculture and Rural Development DIP Department of Fisheries Inspection at Ministry of Fisheries DNCI National Directorate of Domestic Market at Ministry of Industry and Commerce DNE National Directorate of Statistics DNER National Directorate for Rural Extension at Ministry of Agriculture and Rural Development DNFFB National Directorate of Forestry and Wildlife at Ministry of Agriculture and Rural Development DNI National Directorate of Industry at Ministry of Industry and Commerce DNP National Directorate of Fisheries at Ministry of Agriculture and Fisheries XiI Abbreviations DOH Department Of Health DPHQ Department of Plant Health and Quality DPIC Provincial Directorate of Industry and Trade DS (SNS) Seed Department at Ministry of Agriculture and Rural Development DSV Department of Plant Protection at Ministry of Agriculture and Rural Development DTI Department of Trade and Industry EAC East African Community EAP Economically Active Population EAN Electronic Article Number EBAS Enterprise Business Assistance Scheme EC European Commission EEC European Directive Technical Regulation EIA Environment Impact Assessment EMIA Export Marketing Incentive Assistance EPOPA Export Promotion of Organic Products from Africa ERP Economic Recovery Program ESLC Electrical Supplies Liaison Committee EU European Union EUREPGAP Euro Retailers Produce Working Group Good Agricultural Practise EVDLU Essential Veterinary Drug List of Uganda FAEF Faculty of Agronomy and Forestry Engineering FANR SDU SADC Food Agriculture and Natural Resources Sector Development Unit FAO United Nations Food and Agriculture Organization FDI Foreign Direct Investments FEMA Business Forum for the Environment FEWS Famine Early Warning System FLAG Food Legislation Advisory Group FPT Fresh Produce Traceability FRUTISUL Southern Mozambique Fruit Growers Association FSC Forest Stewardship Council FTA Free Trade Area GAP Good Agricultural Practice GATT General Agreement on Tariffs and Trade GDP Gross Domestic Product GLP Good Laboratory Practice GMO Genetically Modified Organisms GMP Good Manufacturing Practice GOM Government of Mozambique GPSCA Office for the Promotion off Commercial Farming, Ministry of Agriculture and Rural Development GSP General System of Preference GTM Metrology Working Group at INNOQ HACCP Hazard Analysis of Critical Control Point HAG Hygiene Assessment System IAF International Accreditation Forum IAFI Iriternational Association of Fish Inspectors HDI Human Development Index HORTEXA Horticultural Exporters Association HPI Human Poverty Index IAF International Accreditation Forum IAM Mozambican Cotton Institute-Ministry of Agriculture and Rural Development xiii Standards and Global Trade: A Voice for Africa ICC International Capital Corporation (Mozambique) ICCIDD International Council for the Control of Iodine Deficiency Disorders ICM Mozambique Cereals Institute at Ministry of Industry and Trade IDD Iodine Deficiency Disorders IDEA The Investment In Developing Export Agriculture IDIL Institute for the Development of Small-Scale Industry at Ministry of Industry and Trade IDPPE Institute for the Development of Small-Scale Fisheries at Ministry of Fisheries IEC International Electrotechnical Commission IFIR International Forestry Industry Round Table IFOAM International Federation of Organic Agriculture Movements ILAC International Laboratory Accreditation Co-operation ILO International Labour Organisation IMF International Monetary Fund INA National Sugar Institute-Ministry of Agriculture and Rural Development INCAJU Institute for the Promotion of Cashew at Ministry of Agriculture and Rural Development INE National Institute of Statistics INFCO Committee on Information Systems and Services at ISO INIA National Institute of Agronomic Research at Ministry of Agriculture and Rural Development INIVE National Institute of Veterinary Research at Ministry of Agriculture and Rural Development INNOQ National Institute of Standardisation and Quality at Ministry of Industry and Trade IOLMF Indian Ocean Legal Metrology Forum IOR-ARC Indian Ocean Rim Association for Regional Co-operation IP Integrated Programme for Industrial Development in Mozambique IPA Livestock Production Institute at Ministry of Agriculture and Rural Development IPEX Mozambican Institute of Export Promotion at Ministry of Industry and Trade IPP Fisheries Research Institute at Ministry of Fisher IPPC International Plant Protection Convention IPQ Portuguese Institute for Quality IRLCO-CSA International Red Locust Control Organisation ISO International Organisation for Standardisation ISO 1400 Environmental Management Standard ISO 17025 General requirements for the competence of test and calibration laboratories ISO 9000 Management system standard ISO 9001 Quality management system ITC International Trade Centre ITS Intertek Testing Services International Limited ITU International Telecommunications Union JITAP The Joint Integrated Assistance Program KARI Kawanda Research Institune LBSC Local Business Service Centre Agency LDC Least Developed Country LINK Forum of National and International NGOs in Mozambique LMO Living Modified Organisms LNHAA National Laboratory for Water and Food Hygiene MA Ministry of Agriculture MAAIF Ministry of Agriculture, Animal Industry and Fisheries MADER Ministry of Agriculture and Rural Development MAC Manufacturing Advisory Centre MAP Ministry of Agriculture and Fisheries MD Ministerial Diploma MEC Member of the Executive Council (Province) xiv Abbreviations MFPED Ministry Of Finance, Planning and Economic Development MIC Ministry of Industry and Trade MICOA Ministry for the Co-ordination of Environmental Affairs MICT Ministry of Industry, Trade and Tourism MISAU Ministry of Health MOA Memorandum of Understanding MOH Ministry of Health MOU Memorandum of Understanding MP Ministry of Fisheries MPF Ministry of Planning and Finance MRA Mutual Recognition Agreement MRL Maximum Residue Level MSC Marine Stewardship Council MSF-CIS Doctors Without Borders MTTI Ministry of Tourism, Trade and Industry NAFTA North American Free Trade Agreement NCC National Codex Committee NCD New Castle Disease NCS National Calibration Service NDA National Department of Agriculture NEDLAC National Economic Development and Labour Council NEMA National Environment Management Authority NEP National Inquiry Point NGO Non-Governmental Organization NMI National Metrology Institute NML National Metrology Laboratory of South Africa NOGAMU National Organic Agricultural Movement of Uganda NOSA National Occupational Safety Association NPPO National Plant Protection Organisation NSB National Standards Body NSC National Standards Council NSTIKA Enterprise Promotion NTB Non-tariff Barrier NTE Non-traditional Exports NYTIL Nyanza Textile Limited OAU Organisation of African Unity OECD Organisation for Economic Development and Cooperation OGL Open General License OIC Orange International Certificate OIE International Office of Epizootics OIE World Organisation for Animal Health (Organisation International des Epizooties) OIML International Organisation of Legal-Metrology PAMM. Programme Against Micronutrient Malnutrition PARPA Plan of Action for the Reduction of Absolute Poverty PDI Previous Disadvantaged Individuals PHA Plant Health Auditing PHC Primary Health Care PHP Plant Health Promotion PMB Produce Marketing Board PODE Enterprise Development Project PPECB Perishable Products Export Board xv Standards and Global Trade: A Voice for Africa PRA Pest Risk Analyses PROAGRI Project for Agricultyure and Rural Development PSI Pre-Shipment Inspection PSF Private Sector Foundation PTB German National Institute for Metrology PWP Protocols and Work Programmes R&D Research and Development RDA Recommended Dietary Allowance RSPM Regional Meeting of Salt Producers and Traders SABS South African Bureau of Standards SACU Southern African Customs Union SADC Southern African Development Community SADCA SADC Co-operation in Accreditation SADCMEL SADC Co-operation in Legal Metrology SADCMET SADC Co-operation in Measurement Traceability SADCSTAN SADC Co-operation in Standardisation SAFTA Southern African Free Trade Agreement SALMA South African Lumber Miller's Association SAMIC South African Meat Industry Company SANAS South African National Accreditation System SAP Structural Adjustment Program SAPO South African Plant improvement Organisation SEILA Secretary of State for Light and Food Industries SEMOC Mozambican Seed Company SGS Societe Generale de Surveillance (Verification, testing and certification) SI International System for Units SIDA Swedish International Development Agency SIMA Agricultural Markets Information Systems SIP Special Import Program SITCD Industrial and Trade Sector Coordinating Division at SADC SME Small and Medium Enterprises SMME Small Medium and Micro Enterprises SNS National Seed Service SOE State Owned Enterprises SPEED Support for the Private Enterprise Expansion and Development SPF Sector Partnership Fund SPIS The Sanitary and Phytosanitary Inspection Services SPS Sanitary and Phytosanitary Measures SQAM Standardisation, Quality Assurance, Accreditation and Metrology SQAMEG Standardisation, Quality Assurance, Accreditation and Metrology Expert Group SQMT Standardization, Quality Assurance, Metrology and Testing SSASI World Bank Sub-Saharan Africa Seed Initiative TAC Tender Advice Centre Programme TBT Technical Barriers to Trade-WTO Agreement TIPS Trade and Investment Policy Secretariat TC Technical Committee TCP Technical Cooperation Programme TDCA SA-EU Trade, Development and Co-operation Agreement TE Traditional Exports TEPU Tropical Ecological Foods Uganda TIDP Trade and Investment Development Programme xvi Abbreviations TNF Trade Negotiation Forum (SADC) TQM Total Quality Management UCC Uniform Code Council UCDA Uganda Coffee Development Authority UCTF Uganda Coffee Trade Federation UEM University Eduardo Mondlane UEPB Uganda Export Promotion Board UFEA Uganda Flower Exporters Association UFPEA Uganda Fish Processors and Exporters Association UGIL Uganda Garment Industries Limited UIA Uganda Investment Authority UMA Uganda Manufacturers Association UN United Nations UNBS Uganda National Bureau of Standards UNCTAD United Nation Conference on Trade and Development UNDP United Nations Development Programme UNIDO United Nations Industrial Development Organization UNECE United Nations Economic Commission for Europe UNEP United Nation Environmental Programme UNICEF United Nations Children's Fund UTNIDO United Nations Industrial Development Organisation URA Uganda Revenue Authority US $ United States Dollars USA United States of America USAID United States Agency for International Development USFDA United States Food and Drug Administration USI Universal Salt Iodisation UTRA Technical Unit for Customs Restructuring UTRE Technical Unit for Enterprises Restructuring VAT Value Added Tax VAM Vulnerability Assessment and Mapping VC SABS Compulsory Specification WFP United Nations World Food Programme WHO World Health Organisation WTO World Trade Organisation WTO/SPS World Trade Organisation, Sanitary and Phytosanitary Agreement WTO/TBT World Trade Organisation, Technical Barriers to Trade Agreement xvii E NDERSTANDING THE LINK BETWEEN TRADE, as a result of health-related product scares that STANDARDS, AND EXPORT COMPETITIVENESS have emerged in recent years (for example, foot- is at the forefront of trade policy analysis and and-mouth disease and Bovine Spongiform En- debate. This is particularly true in regard to en- cephalopathy). Consumers are demanding more hancing pro-poor growth and employment oppor- information about products, chemical content in tunities in Africa. Global competition has become foods, and production processes. For example, more intensified in terms of quality, price, supply while many African countries, such as Kenya and chain management, and dependability of delivery Uganda, struggle with the challenge of restructur- systems. Consumer preferences (influenced by in- ing the fishing industry after several product bans creased incomes, as well as, health and other social by Europe, some buyers in developed countries are concerns) and demand for quality products are also insistmg on eco-friendly fish harvesting and pro- changing the way suppliers and producers respond cessing by suppliers. to market signals. Consumer demand in developed Addressing these changes in international de- countries is also starting to reflect preferences for mand patterns, market structure, and enforcement cultural values such as concern over child labor laws requirements poses a real challenge to firms and and environmentally friendly practices in product farmers and their supporting organizations (par- purchases. ticularly smallholders) in developing countries. This broadening of consumer demand (especially This is particularly true in Africa. In this volume, in the area of food safety) has intensified the de- we seek to identify the specific capacity con- velopment of new industry codes of practice and straints, opportunities, and institutional reform enforcement mechanisms. The development of needed for market-access success in five African standards is also becoming increasingly driven by countries-Nigeria, Uganda, Mozambique, South the private sector as enforcement is moving toward Africa, and Kenya. We also seek to place trade fa- primary production levels. Likewise, the burden of cilitation measures and standards (both voluntary standards compliance appears to be shifting to pro- and mandatory technical standards) within a ducers. And, in concert with national regulatory broader developmental context. Table 1 outlines agencies, monitoring compliance is increasingly be- the list of countries and commodity sectors in- coming the function of retailers and other groups cluded in our analysis. higher up in the distribution chain. The case studies in this volume reveal the exis- Changing consumer demand is not only influ- tence of gaps in standards formulation, compliance, encing national and international market struc- and enforcement capacity in Africa as compared tures. It is also putting pressure on national and to international norms. Such gaps appear to be international standards development and regula- even broader when a comparison is made between tory agencies to become more effective in support- standards and industry codes of practice that are ing the private sector and ensuring compliance. prevalent in specific industry sectors (in African Consumer confidence in the regulatory capacity of countries and those of their trading partners in national and international agencies is diminishing Europe and the United States). XiX Standards and Global Trade: A Voice for Africa Table 1: Specific Country and Sector Studies under the Africa Trade Standards Project Country]| Product Sector(s) Kenya: Coffee; Fruits & Vegetables; Flowers; Fish & Fishery Products; Cotton & Textiles Mozambique: Cashew; Sugar; Cotton; Peanuts; Seeds; Salt; Fruits & Vegetables; Flowers; Fish & Fishery Products Nigeria: Horticulture; Food & Beverages; Cocoa & Cocoa Products; Textiles and Clothing; Fish & Fishery Products South Africa: Electro-technical Products; Forestry; Textiles; Fisheries; Fruit Industries; Meat & Livestock Uganda: Flowers; Honey; Fish; Textiles; Horticulture (Flowers and Vegetables); Organic Coffee Specifically, this analysis highlights the following cases, supplying the local market is less com- common challenges facing the private sector in plicated and requires fewer middlemen (or Africa: none at all). Consumers rarely demand the use of traceability systems, relying more on (i) Differences in consumer preferences and de- local brand names and the reputations of mand for quality among consumers in product peddlers (which is not the case for African countries and those of their trading non-local consumers). African firms (espe- partners in developed countries (Europe, cially Small and Medium Enterprises [SMEs]) United States, etc.). Demand for product seeking to export have found the require- quality appears to be generally lower in ments of markets in developed countries (e.g., African countries, and firms and farmers do CE marking, Forestry Stewardship Council, not perceive quality issues as critical to do- United States Underwriters Laboratories mestic sales. There are a number of reasons Mark, EUREGAP, and packaging require- for this. (a) The case study on Nigeria ments) to be difficult to meet. Because local suggests, for example, that poverty forces consumer expectations for product quality local consumers to tolerate lower-quality are much lower than international norms, na- products; (b) There appears to be a lack of tional regulations are considerably "softer" consumer awareness about food safety and than international ones. Therefore, local pro- quality. Consumers are not aware of the im- ducers develop production systems that only pact of standards like Maximum Residue meet these lower standards, thereby making Levels (MRLs), animal diseases control pro- it difficult for producers to "ramp up" to meet cedures, etc.; (c) Unlike Europe, many the stricter international standards should African countries lack strong consumer or- they choose to export. This leaves the bulk of ganizations that pressure retailers and pro- the exporting market to the largest local firms ducer groups to provide higher quality goods; and multinational companies who can afford and (d) Differences in cultural preferences to adjust their production systems to meet between consumer groups in many African international regulations. countries and their counterparts abroad. For (iii) Most of the countries examined here have example, labor and environmental standards not replaced the quality functions of defunct are not priorities for local consumer groups commodity boards with appropriate quality in Africa. To summarize, in meeting local de- control and enforcement mechanisms that mand, it appears that local business practices will support more liberal access to markets. in many African countries tend to substitute The Uganda study suggests, for example, that quality for price-sometimes even in the the depression in international prices of some procurement of intermediate goods. commodities (e.g., coffee) is putting pressure (ii) Differences in the complexity of market struc- on local coffee producers, in the absence of tures, industry size, supply chain, and distri- effective regulatory agencies, to substitute bution systems facmg local suppliers. In many quality for price. executive Summary (iv) Participation in the formation of global groups. African SMEs do not to have the standards, codes of practice, or regulations resources to invest in modern information appears not to have been very effective in systems. Government agencies and other some African countries. National channels organizations that provide extension serv- through which local private sector inputs are ices and assistance in standards often reflected in international standards debates lack the necessary qualified staff, financial appear to be ineffective because of low po- resources, and equipment to assist on a litical priority inadequate government par- regular basis. ticipation, and private sector representation. (vii) Compliance to international standards is also As a result, domestic codes of practice de- demanding a shift from manual and low- veloped in these countries are neither recog- skilled labor practices in agriculture and light nized nor merged with similar codes in their manufacturing to more sophisticated best export markets. practices comparable to those found in de- Moreover, standards development agen- veloped countries. For example, African cies and organizations offer few mecha- farmers are now required to invest in Inte- nisms to collect input from local African grated Crop Management (ICM) practices producers in the development of codes of and Euro Retailers Produce Working Group practice. As a result, many domestic pro- Good Agricultural Practise (EUREGAP) ducers surveyed in this volume are stan- principles, Hazard Analysis of Critical Con- dards-takers (forced to accept and try to trol Point (HACCP) protocols, and standards meet international standards), reacting to that require better enterprise-wide supply ever-changing standards that do not ac- management techniques, record systems, commodate unique constraints pre-existing and equipment, including detailed labeling in the local environments. Sometimes, as and traceability systems. In implementing standards-takers, these domestic producers and managing these systems, private sector face harsh penalties (such as blanket indus- investment in human capital resources try bans) for non-compliance. This also af- development is crucial. fects their level of awareness and under- Small- and medium-sized enterprises and standing of these standards, and their farmer groups are particularly challenged preparedness for compliance. Many firms by these requirements because (a) they have to rely on minimal interactions with lack the financial and human resources importer agents, or on national standards needed to upgrade their products and pro- development organizations in making such duction/farming practices and processes to information available. meet international norms, (b) industry play- (v) Many of the industry sectors assessed here ers do not appear to be well organized in a have directly benefited from foreign direct manner that will facilitate cost-effective investment (FDI) in compliance with for- traceability of products, and (c) certification eign standards. Multinational companies schemes and testing are mainly provided by dominate most exports from these sectors. foreign firms, and the costs of testing and However, recent decline in FDI in the regoin, certification for some industries (e.g., coupled with low technological capacity, and forestry) appear to be very high for SMEs. weak physical infrastructure and transport To summarize, simultaneous application of faclities are undermining the long-term multiple standards and technical require- competitiveness of these sectors. ments the increasing costs and difficulties of (vi) While access to information about global testing and verification procedures; and rap- industry best practices or standards does idly changing consumer preferences of over- not appear to be a problem for most multi- seas markets raises the costs of entry into nationals, in the five countries examined in global markets for African SMEs. Many ex- this volume, the same cannot be said for isting SMEs and smallholder farmers are also local small- and medium-sized enterprises being forced to close as global competition (SMEs)-particularly for small farmer raises the bar on the products and process xxi Standards and Global Trade: A Voice for Africa standards that must be met before compa- including those related to standards, quality nies can export. management, and technical regulations. Many (viii) Some mdustry sectors in Africa have been of the export promotion plans in these coun- successful in the adoption of internationally tries mention the need to develop competi- acceptable compliance systems, for example, tive exportable products, yet, little attention the flower industry in Kenya and the fishing is given to quality-related issues. industry in Uganda. These industries have ex- The assessment of the national standards perienced improved product quality as well development framework presented m this as increased revenues. However, the price volume suggests that there are still numerous paid for these improvements has been signif- gaps in the national standards, metrology sys- icant, and in many cases, was not attainable tems, quality laws, and codes of practices. It without increased foreign direct investments appears there are many national standards and donor assistance backed by political will that need to be updated to conform to inter- and direct government support. For example, national norms (e.g., grading systems, agri- the fishing industry in Uganda and Kenya cultural practices, disease control, etc.). The went through several costly European Union Mozambique study, for example, points out (EU) bans, and has not recovered its earlier that the local cotton grading system is below production levels in Kenya. SMEs seeking to international standards. Whle this appears to export needed to make significant invest- benefit cotton farmers and traders, it causes ments in upgrading technology, equipment, technical problems in the ginneries, and af- and infrastructure, including the establish- fects cotton-seed separation and processing, ment of better quality control facilities before ultimately resulting in low quality lint sold at they could re-enter or expand their access to discounted prices. export markets. In some sectors, like textiles, (ii) Many African standards development agencies firms may need to develop completely new and notification points lack well-functioning product lines, overhaul spinning technology, information management infrastructure to develop a world class garment industry, etc. coordinate local standards-related activities (as is shown in the case of Nigeria). and interest groups with their international Finally, it is important to note that com- counterparts. The mechanisms for consulta- pliance with foreign and international stan- tions among national Sanitary and Phytosan- dards does not necessarily secure global itary Measures (SPS)/food safety authorities market share. Africa's deeper penetration of and other stakeholders, both internationally global markets ultimately depends on the and locally, appear to be inadequate, slow, and ability of its farms and farmers to produce sometimes inaccurate. high-end value and quality products at in- (iii) Representatives of key standards institutions ternationally competitive prices. This task cannot attend international meetings due to becomes more complicated as compliance to lack of funds. Even when they attend these foreign and international standards in Africa meetings, the lack of capacity and infra- is still fraught with many constraints and structure to develop scientific evidence to forthcoming challenges as the global stan- support negotiations at these meetings hin- dards development architecture evolves. ders them from influencing the outcomes significantly. For example, the capacity to un- The case studies also highlight institutional chal- dertake food safety risk assessments is very lenges facing many of these countries. These low in Africa-even in middle-income coun- include: tries like South Africa-such that contesting or supporting standards for maximum (i) A lack of consciousness about standards and residue levels, pest infection, etc., is very dif- technical regulations in policy-making. Trade ficult for local producers. liberalization has placed pressures on the en- (iv) Human and technological capacity is weak tire policy-making apparatus and institutions and there is Proliferation of regulatory roles dealing with export promotion in Africa, and responsibilities across national agencies. xxii Executive Summary These create difficulties resource allocation develop extension services and support sys- and enforcement problems. tems, leverage the use of technology, etc. a. Local regulations need to be updated and Here, the focus should be on strengthening enforcement mechanisms need to be im- backward and forward linkages between proved. The depth of required legal re- SMEs and large export firms. Such programs forms necessary in each country depends should also include financial support, tech- on the development stage of its private nology enhancement, and export support sector, its Standardisation, Quality Assur- services components that would support ance, Accreditation and Metrology SME investment in quality enhancement an- (SQAM), etc. chored on cost-effective upgrades of produc- b. Essential facilities, such as testing labora- tion and transaction processes.' tories, are not adequately staffed in many (ii) Streamline the roles, responsibilities, and countries in the region and scientific competencies of relevant standards moni- equipment is outdated. toring, certification and enforcement agen- c. Systematic collection and storage of cies. Adequate financing; and investment in records is not undertaken and local certi- human, physical, and information assets for fication agencies are not internationally better co-ordination and participation in lo- recognized. This situation is worsening cal, national, regional, and international given the declining levels of public expen- standards should be provided to these agen- ditures in many countries. cies. Such support should be anchored on d. A lack of rural infrastructure, sufficient programs that induce active private sector support services, technical information participation. and credit; as well as, high transportation (iii) Strengthen the legal framework and harmo- costs, constitute major problems for nization process of national quality laws, smallholders in the agricultural sector. standards, regulations, and policies to be con- (v) In supporting the private sector to invest in sistent with international norms. This would compliance, costs of compliance can be involve reviewing national laws and updating prohibitive for African governments, and them, and designing policies that create in- Foreign Direct Investment (FDI) is low. centives and influence private sector invest- Moreover, compliance with SPS measures ment in compliance. and environmental requirements may be- (iv) Establish integrated information manage- come moving targets because standards often ment and reporting tools that can be shared become more stringent once producers among trade development organizations, achieve compliance. their memberships and clients, and interna- tional counterparts. There is significant room In addressing these private sector and institutional for ICT-based projects that will enhance constraints, recommendations for a reform agenda communication between stakeholders in- are outlined in each chapter. In general, these in- volved in making, monitoring, enforcing, and clude the following components: adopting standards in Africa. (v) Support projects that target better certifica- (i) Expand support for the integration of SMEs tion, accreditation schemes, and enforcement into the standards development system by capacity. Monitoring and testing services designing programs and support schemes could be provided through accredited local tailored to improve SME farming practices, service providers to reduce costs and delays in 'These linkages should provide incentives to employ international standards and must be backed by adequate SME financing instruments. For example, a key strategy employed by South Africa was to develop an incentive scheme called "Competitiveness Fund" under its Department of Trade and Industry (DTI). The Fund offers grant fund assistance and comprehensive support of conformity assessment activities to its SMEs DTI also hosts a "Sector Partnership Fund" that supports five or more firms and brganizations in the development and execution of collaborative projects. XXiii Standards and Global Trade: A Voice for Africa product shipment. Local/regional certification for standards with a focus on the impact, systems can be expanded and customized to benefits, and importance of compliance. meet the needs of SMEs (for example, group (vii) Develop high impact awareness campaigns to certification schemes have been effective in mcrease private and public sector awareness South Africa). In addition, this process should of standards and technical regulations. These include developing programs to strengthen awareness programs should include local quality inspections at borders, ports, and pro- consumer awareness campaigns on the im- duction points. This may also extend to en- pact of standards, the need for better prod- hancing laboratory capabilities, deploying uct quality, and enforcement mechanisms more effective monitoring equipment, etc. through which violation of consumer qual- (vi) Strengthen national and/or regional capac- ity concerns can be addressed. ity to conduct risk analysis and other scien- (viii) Create better infrastructure for transporta- tific and policy research. These analyses will tion, and other shared facilities (e.g., pack provide critical evidence to boost negotiat- houses) that may help reduce costs of ing capacity at international meetings and supply chain management and logistics, resolve disputes that may arise from en- and improve delivery quality of export forcement either in exports or imports. This products. would help Africa better exercise rights within the context of theWorld Trade Or- A more detailed case-by-case set of recommenda- ganisation (WTO) agreements. This may also tions are provided in subsequent chapters of this extend into strengthening research capacity volume. xxiv commercial services, which rep- T R A D E resent another US$1.5 trillion F\C I L 'Ti [ I c T4 A 4 11) TK AKT(Stern, 2002). For Africa, the re- FAC LITATIO U lo N AND verse is true. Ng and Yeats (1996) S A NT A D A TTS -j estimate a decline in Sub-Saha- S LAIN L)IXISL) S I N S U B ran Africa's (SSA) share of world A * T TA* * K T * T -_ * exports between 1962 to 1964 AL A D A : and 1991 to 1993, equivalent to an over $11 billion reduction in AN OVERVIEW annual exports. This trend is partly a consequence of a de- pendency on export products whose share of world trade is de- clining, as well as, a simultane- L!J VER THE LAST DECADE, AFRICAN STATES HAVE ous decline in Africa's capacity to maintain its com- INTENSIFIED, WITH VARYING DEGREES OF petitive advantage in the production and export of success, the implementation of export-led policy traditional export commodities. More recently, Ng reforms that will spur economic growth. Yet, the and Yeats (2002) estimate that while global trade in continent's share of the world's output continues to Africa's traditional exports grew at an annual rate decline. Progressive attempts at improving the re- of below 2% between 1990 and 1999. gion's involvement in the world economy appear to This loss in global market share of traditional be marked by a sumultaneous decline in its impor- commodities is attributable to several factors in- tance to the global economy. The continent's trade cluding: (1) the impact of agricultural production with the rest of the world is declining and foreign subsidies in developed country markets; (2) anti- direct investment (FDI) has fallen. Income levels are export bias in the policies of SSA countries; (3) de- among the lowest in the world, and the continent's clining relative growth in global demand for Africa's debt overhang has further retarded growth over specialized traditional exports; (4) dysfunctional time. What role do non-tariff measures, product government intervention, including regulatory standards, and related capacity constraints play in policies and tax regimes; (5) high-risk and mo- this context? nopolistic market environments that have con- In 1970, total world trade of goods and services strained the development of financial markets and were just US$1.5 trillion in current dollars, and ensured low returns on investment and capital made up about 13% of the Gross National Product flight; (6) a depreciation in physical infrastructure (GDP). Today, the value of global trade in goods and human capital that has undermined cost- and services is approximately US$8 trillion. Trade effective and competitive production of Africa's in goods accounts for the largest share of global traditional exports (some of which relates directly flows at US$6 trillion, followed by trade in to meeting standards for international market xxv Standards and Global Trade: A Voice for Africa acceptance); and (7) external shocks and other con- Economic development and trade expansion in straints including those imposed by the continent's Africa is also being shaped by policies external to trading partners. Moreover, as noted in Ng and African economies. Stern (2002) highlights some Yeats (2002), product price instability may be ma- policy reforms that can and should be undertaken jor problem for exporters. One half of traditional by high-income countries that will generate signif- products experienced average price changes of 50% icant benefits for ordinary people in Africa and or more. Price changes are associated with collapse other developing countries. Some of these include of traditional product prices. (1) reducing agriculture subsidies;2 (2) reducing the The current problem with enhanced competi- large number of high tariffs that restrict imports tiveness for African exporters is also related to the from developing countries, particularly where tar- fact that overall competitive changes over the past iffs increase with the stage of production; (3) elim- decade have had only a marginal impact on the en- inating non-tariff measures that restrict trade vironment that affects export success. There is no including restrictive standards and technical regu- doubt that domestic policy reforms to remove lation, rules of origin, and anti-dumping duties that measures of trade protection would contribute to too frequently target developing countries; and African economic development and export expan- (4) removing restrictions on the temporary move- sion. This includes the type of regulatory and in- ment of natural persons supplying services. stitutional reform outlined in subsequent chapters In addition to these factors, Africa's debt burden in this volume. Africa should also move to diversify further undermmes its capacity for accelerated away from traditional exports-removal of anti- growth. The continent's debt burden is about US$200 export biases in domestic policy are critical. billion, increasing from 62% of GNP in 1990 to about Increased emphasis on standards and quality, a ma- 66 per cent in 2000. Foreign direct investment has also jor theme of this book, is one part of the overall been difficult to attract (Wohlmuth, K., et al-2000). context of reform. It is also important to recognize Considered together, these factors underline the the compounding effect of physical environment uncertainty of Africa's current position and com- and natural disasters on many of Africa's fragile plicate policy reform initiatives. In this context, economies. Many are landlocked, with poor infra- therefore, both foreign and local trade reforms are structure, and perilous diseases (including malaria necessary for Africa to reap the full benefits of and HIV) that undermine the development of openness and trade liberalization. For these bene- human capital. fits to be sustainable, the empowerment of African Reaping the benefits of reform, however, also de- public and private sector players to participate in pends on the successful engagement of African international trade, foreign partnership, invest- states with foreign national and regional institu- ment, and regional cooperation should be a funda- tions in the world economy. This engagement mental part of Africa's development process. process becomes more beneficial as African states Included in this process is the need to unprove become more open to trade (Sachs and Warner, global market penetration for Africa's agricultural 1995, 1997); develop better institutional quality to commodities and light manufactures as a central promote change and manage external shocks (Fosu, defense against poverty. This is because most 2000; Yilmaz and Gore, 2001); and secure access to African countries are still primarily agricultural- global markets and investment opportunities. As based, with most states dependent on about two African economies become more open and involved primary commodities for more than half of their in international trade, compliance to foreign and export earnings. Here again, voluntary standards international standards is also becoming more and mandatory technical requirements on food prominent an underlying factor driving export suc- safety, animal, and plant health in importing coun- cess, as the analysis in this book documents. tries play an important role. Additionally, Africa's 2in a speech delivered at the National Council of Applied Economic Research, New Delhi, November 28, 2002, Nicholas Stern, Senior Vice President and Chief Economist of the World Bank noted that the Organization for Economic Cooperation and Development (OECD) support for farmers is over US$300 billion-totaling almost one- third of all farm receipts. The potential impact of these policies on African exports has been highlighted in several New Partnership for Africa's Development (NEPAD) documents as well. xxvi Introduction comparative advantage remains, in part, focused on major turnaround. According to the World Bank the production of primary commodities (Wood Global Economic Prospects (2003), real growth in and Mayer, 2001). Therefore, securing new and di- Africa is estimated to rise to 3.2% in 2003 and to versified agricultural markets that consolidate and about 3.8% in 2004, with per capita growth aver- increase Africa's trade position in agriculture prod- aging 1.5% over the 2005-2015 period. Thus, to ucts and light manufactures will have direct imipact meet development objectives outlined in the Mil- on the incomes of many Africans, indirectly im- lennium Development Goals (MDG) alone, rapid proving their poverty situation. and sustained improvements in good, stable and Seeking access to markets alone is, however, not productive governance processes, macro-economic enough. In addition, significant investment-based stability, consistent deepening of regional and in- growth (financing and technology transfer) that ternational trade and investment opportunities, will improve product quality and production prac- and diversification of exports and markets are very tices, and help overcome supply-side constraints urgent and vital in Africa. that hinder competitiveness of African products The development of trade, in turn, requires prospects for export diversification, and other trade deeper penetration into global markets, develop- facilitation efforts, need to be improved. These con- ment of supply capacity and competitiveness, and straints include good production infrastructure, the strengthening of the institutional, human, and better access to credit for technology-based expan- regulatory capacity for trade and trade-related pol- sion, reduction in subsidies in developed country icy design. AU of these must be implemented in line markets, consistent policies that enable appropriate with global demand and standards. Central to this research, forecasting and competition, and private process is the recognition of the changing roles of sector-led human capital development etc. These mternational, regional, and local trade standards reforms need to be orchestrated in the context of and technical regulations, and the impact they can more stable macroeconomic environments that are have on the expected benefits from Africa's attempts anchored in better fiscal discipline, high growth at trade promotion and integration. rates, and a greater degree of labor absorption. African governments are conscious of these needs and are progressively prioritizing and stepping up efforts at widening intra-African market opportu- Understanding the link between standards, techni- nities, as well as, trade with other developing and cal regulations, and trade is crucial in the design of industrialized countries through trade liberaliza- broader development programs that can create new tion. The most up-to-date attempt is subsumed in opportunities for pro-poor growth. Standards and the "NEPAD Market Access Initiative" which un- technical regulations define what can (or cannot) derscores the need for effective participation of be exchanged, and outline the procedures under African countries in the World Trade Organization which such exchanges are or are not permissible. Doha agenda, anchored in successful regional inte- Wilson (2001) discusses two broad categories of gration, good governance, and increased produc- standards-product and process standards. Prod- tivity that would facilitate efficient exploitation of uct standards define quality, safety, authenticity, etc. trading opportunities created by multilateral, re- that goods should possess (e.g., minimum nutrition gional, and bilateral trade agreements. content of a food item, maximum pesticide residues With a per capita GDP decline from about 1.3% on an agricultural product, and performance re- peryear in the 1980s to 1.8% per year between 1990 quirements for pieces of furniture or machinery). and 1994,3 and real GDP falling from 3.2% in 2000 Process standards refer to the conditions under to 2.5% in 2002, Sub-Saharan Africa's development which products are produced, packaged or refined. prospects hinge on its ability to create favorable Examples include the use (or absence of use) of par- conditions for growth and reduction in poverty ticular inputs into crop or livestock production, the (Rodrik, 1998; Collier and Gunning, 1999). Fore- technical processes used for fishing, traceability casts of growth estimates for 2003-2015 fall far requirements required for meat, and some horti- short of the recommended growth target for a culture products, management practices used for 3About 5-6% below the average for all low-income developing nations. xxvii Standards and Global Trade: A Voice for Africa tree-felling and forestry management, and the work discounted prices. In some cases, voluntary stan- conditions of laborers. These process and product dards may have stiffer requirements than is required standards provide the premise for various cate- by regulatory authorities. Also conformity assess- gories of standards including rules that define la- ments are made in compliance to the demands of bor, food, health and environmental standards. the buyer. For example, in the horticulture industry, In this volume, the term "standards" is used to some buyers now demand descriptions of environ- refer to both voluntary market-driven standards, as mental circumstances and the location in which a well as, technical regulations. These standards, in product is grown. This is creating opportunities for principle, should be based on scientific evidence, differentiation among producers that adopt specific and are designed to facilitate information exchange, environmental standards and those who do not. ensure product quality, and the provision of im- The consequence, however, is that such require- portant objectives or goods that are otherwise neg- ments may add to production costs (especially for lected in the private market (e.g., public health and small- and medium-sized enterprises) of firms sup- safety). Standards and regulations can, therefore, plying these markets, or entering new ones. improve quality of life, create shared consumption benefits for the public, and solve common product Standards as Determinants of Competitive and quality problems. Well-defined standards can facilitate trade by reducing transaction and other g costs (including costs of information about the In addition to the benefits standards can produce, quality of goods or services and associated risks), there has been increasing concern about the use of and to improve linkages among firms across standards and technical regulations as discrimina- industries. tory non-tariff barriers to trade. Meeting standards mvolves costs-investments . . ~~~~~in equipment and staff to ensure compliance and Standards as a Prerequisite for Access to Markets costs related to proving conformity to standards. The process for formulating standards (national or Public welfare costs may include the systems needed international) can be complex, as well as costly. This to determine and certify that products meet legal is mcreasingly so as globalization drives more in- requirements set in national technical regulations. tensive international competition between firms These costs are generally referred to as costs of com- across nations. Changing global market conditions pliance. For the bearer of these costs, changes in now require firms to meet more refined, diverse and costs of compliance directly influence production sometimes unexpected and personalized customer costs, and may alter the relative gains that accrue to tastes and societal preferences. Consumer demand producers and consumers. This is particularly true is represented by a mix of informal rules reflected for agribusinesses and other firms in related indus- in industry practices (i.e., voluntary standards), as tries experiencing falling revenues due to a decline well as formal rules crafted within the context of in traditional African exports commodity prices. national regulatory frameworks (i.e., technical reg- ulations). Many times, regulations codify, replace, Standards as Instruments of Commercial Policy or underline pre-existing voluntary practices within an industry-and as such, can be private sector- Standards designed to ensure food safety, animal, driven. and plant health are critical. It is important to de- For many voluntary standards driven by con- sign standards and regulations, which consider risk, sumer demand, failure to comply with such stan- best practice international science, and trade. The dards may hinder consumer acceptance, but not standards development process can result in exces- necessarily block access to specific export markets. sively stringent levels of protection in favor of a For standards that are mandatory in international dominant interest group where the participation of or national law (mostly technical regulations), fail- diverse other interest and commercial stakeholders ure to comply prohibits a product or service from is limited, or where a dominant group has initial being sold in a given market. However, due to global bargaining strengths. This is because such a process or local weaknesses in enforcement, such products may be shaped by protectionist intents of a domi- may still find their way into the marketplace at nant interest group-such as a cartel or monopoly XXViii Introduction producer-which does not consider national wel- is due to differences in institutional and financial fare or consumer interests. When such standards capacity, infrastructure, human capital, consumer form the basis for regulations, they may effectively preferences and local conditions, and technological block market entry, exclude competition, and con- capacity, among other factors. This creates a gap be- solidate and monopolize markets. Greater market tween existing national standards and enforcement power, in turn, may be used to influence the allo- capacity in these countries, and those required in- cation of the benefits that may accrue from the use ternationally (termed "standards divide"). This is of these standards. Interest groups with less bar- especially prevalent in many developing and low- gaining strength, and who are unable to participate income countries, and may alter the gains to com- in the rule-making process, become standards-takers. pliance due to each country. Nevertheless, for firms In many cases, they become bearers of the compli- and farmers in developing Africa to participate fully ance costs associated with these standards. in the global marketplace, they must comply with Thus, when national government regulations and acceptable international standards, and must there- industry practices are designed to discriminate be- fore invest in compliance. tween sources of supply (e.g., through inefficient and duplicative national testing and certification re- quirements), they create secondary costs (or reduce gains from exchange) such that may restrict trade In the case of sub-Saharan Africa, progress is un- significantly. Furthermore, technical regulations dermined, in part, by trade barriers in the form of that are not based on international norms (espe- subsidies, tariffs, and other non-tariff barriers. cially when they differ across countries) may limit These non-tariff barriers include rules of origin and trade by increasing costs of market entry. By ex- increasingly stringent technical requirements tension, they can undermine global competition, imposed on traditional products (e.g., beef, aqua- shield local monopolies from foreign competition, culture, banana, and peanuts) from developmg divert trade, and impose severe costs on consumers. countries including Africa. Some of these restric- In addition, standards fragmentation may occur, tions extend to manufactures (e.g., the European where interest groups or countries tend to imple- bans on the importation of electronically regulated ment their own criteria even in the face of accepted earth leakage devices from countries like South international standards (e.g., CODEX) further Africa). There is increasing empirical evidence of complicates compliance costs and procedures for the negative impact of these technical regulations standards-takers. and other non-tariff barriers to trade-especially in Relative bargaining strengths and participation relation to phytosanitary and food safety rules. capacity are, therefore, two very crucial determi- Amjadi and Yeats (1995) have shown, for exam- nants of the outcomes of a standards development ple, that the overall importance of pre-Uruguay process. As a result, the improvement in effective Round non-tariff barriers is evident from the fact participation and balancing of relative bargaining that approximately US$5.9 billion of OECD strengths among stakeholders involved in rules set- imports from Africa faced these measures. More ting and enforcement is one of the central chal- recent empirical research at the World Bank also lenges facing current mechanisms governing the reviews the impact of standards on Africa's ex- formulation and enforcement of trade rules today ports. In a case study of the trade effect of Euro- -mcludmg the World Trade Organization frame- pean food safety standards on African exports, work. Wilson and Otsuki (2001a) find that the new har- It is important to note however, that even when monized European standard on aflatoxin B1-a standards are universal and fair, compliance costs, common contaminant affecting agricultural prod- especially those associated with upgrading produc- ucts-is estimated to cost African exporters over tion and infrastructure systems, and enforcement, US$670 million per year in lost nut and grain may still differ significantly across countries. This exports.4 4"Saving Two in A Billion A Case Study to Quantify the Trade Effect of Food Safety Standards," Tsunehiro Otsuki, John S Wilson, and Mirvat Sewadeh, Food Policy (26) 2001. xxix Standards and Global Trade: A Voice for Africa In addition, (Wilson and Otsuki, 2002a) suggests to address these challenges requires targeted re- that if governments followed international stan- search to enhance understanding of the incentives, dards for pesticide residues in bananas, instead of principles and constraints that influence produc- national standards set by many developed coun- tion and trade in different products, economic sec- tries, African banana exports would soar by about tors, and countries in Africa. US$410 million a year. The same is true for beef. Research conducted at the Bankindicates that the What about the WTO Disciplines? adoption of science-based international standards for minunum residue levels of veterinary drugs The WTO Agreement on Sanitary and Phytosani- could boost South Africa's beef exports by US$160 tary Standards (SPS) was designed to help address million a year. To summarize, by participating in some of the concerns that have been highlighted international standards, and implementing accept- above. The Agreement seeks to promote trans- able international rules, it is estimated that Africa parency in the standards development process and could gain up to US$1 billion a year from higher promote principles of national treatment, non- exports of nuts, dried fruits, and other agricultural discrimination, and use of sound science as the commodities. These potential losses can be very basis for standards. Moreover, standards should be costly to a continent with about 659 million applied only when necessary to protect human, inhabitants of which 300 million earn less than $1 plant, and animal health. a day.5 The Agreement aims to (1) encourage the adop- In further analysis of aflatoxin standards, Wilson tion of measures of scientific principles in the ap- and Otsuki show that the cost of not adopting a plication of standards; (2) prevent discrimination uniform international standard on aflatoxin (BI) is between members when identical or similar condi- estimated at US$38.8 billion in lower global cereals tions prevail, and reduce restrictions to interna- and nuts trade. If the world were to adopt a stan- tional trade; (3) promote SPS measures based on dard (chlorpyrifos) at a level set in the European international guidelines and common risk assess- Union, mstead of the one suggested by Codex-the ment techniques; and (4) encourage standards body charged with setting global standards-there based on broad-based participation and consensus. would be a US$5.3 billion loss in world banana ex- The SPS Agreement also provides a mechanism ports. To summarize, there is evidence to suggest for addressing issues related to developing country that losses associated with divergent national regu- capacity to meet compliance costs. Members agreed lations may block African firms and farmers from to facilitate the provision of technical assistance to entering new and diverse global product markets. developing country members through bilateral or Furthermore, African firms and farmers have relevant international agreements. This includes started to recognize and highlight the potential encouraging technical assistance in processing impact of technical barriers on their capacity to ex- technologies, research and infrastructure, advice, port. Preliminary results from a new survey of tech- credits, donations and grants for the purpose of nical barriers to trade conducted by the World seeking technical expertise, training and equip- Bank, African firms confirmed that product qual- ment, and the establishment of national regulatory ity and low demand are the most important factors bodies so that countries are able to adjust to, and that affect their firm's ability to export. See Box 1 comply with, SPS measures in their export markets. on next page for a summary of these results. In cases in which substantial investments are re- The impact of standards and mandatory techni- quired to fulfill SPS requirements of an importing cal regulations to Africa's trade position can, there- member, the latter is expected to consider such fore, not be overlooked. To participate effectively in technical assistance to the extent of permitting the global trade, African countries must develop the developing country members to maintain and capacity to meet international standards. This in it- expand its market access opportunities for the self is a formidable challenge. Developing strategies products involved. 5Moreover, Africa's trade and investment with the US still lags behind the rest of the world. Sub-Saharan Africa accounted for less than 1% of total US exports and less than 2% of total US imports in 2000. Likewise, the region accounts for 4% of total imports from the EU. xxx Introduction Box 1: The World Bank Global TBT Survey 2003 The World Bank Global TBT survey has the surveys highlight somewhat similar generated data sets from a firm-level survey of conclusions. The most important constraints 700 firms in 17 developing countries to Mozambican exporters are product quality, (including the five African countries reviewed low demand, and port charges and delays. under ATSP) on standards and technical Others include lack of skilled labor and access barriers to trade. The database, still under to credit. Unlike Kenya, Mozambican firms do construction, includes important information not consider tariffs and quotas in export from firms exporting agricultural products and markets, and foreign marketing costs as manufacturers in a wide range of industries. It significant constraints. In Nigeria, freight details information on cost structures, charges and product quality are ranked production and exports, impediments to highest in the variety of factors that affect domestic sales and exports, and operations to ability to export. Other important factors comply with regulations. Particular efforts are include port charges and delays, access to made in the survey to elicit information on credit, tariff and quotas in export markets, the relevant standards, government and low demand. Foreign marketing costs regulations, and technical barriers to trade and taxes on capital also seem to be very (TBTs) confronting exporters from developing important to a majority of Nigerian firms. countries seeking to enter developed country In South Africa, product quality, freight markets. The database is planned for release in charges, port charges, and delays are the 2003. Preliminary results from African surveys most important factors affecting exports are summarized below. while product quality, access to credit, and In Kenya, preliminary survey results from freight charges are the most important to the TBT Database confirm that product Ugandan firms. quality; taxes and tariffs in export markets, Over 70% of all firms surveyed in all and low demand were the most significant five countries except Kenya indicate that constraints to exports from Africa. Low compliance to technical regulations is demand ranked the highest. Other key important to increase export sales. In factors highlighted include access to credit Kenya, about half of the respondents and foreign marketing costs. In Mozambique, acknowledge this. These SPS provisions-if fully implemented- Africans, in concert with the development com- would be particularly important for Africa. There munity, are exploring ways to rationalize the costs is already a divide between local standards that are of these regulations, reduce the tendency for trade in place in many African countries and those of diversion or restriction inherent in their use, im- their major trading partners. As a result, there ap- prove participation in the standards development pears to be two main challenges facing the conti- process, and facilitate the harmonization of stan- nent. First, there is the need to invest in national dards. This process must involve strengthening standards development, monitoring and compliance the capacity of the private sector (and related reg- consistent with international norms. The develop- ulatory institutions that support them) in the ex- ment of these systems of standardization, quality port of higher quality products at competitive assurance, accreditation and metrology is a crucial prices. platform for sustained long-term competitiveness. In this context, measuring the current status Second, there is a need to develop effective ap- and limitations to standards development in Africa, proaches for improving the continent's participation vis-a-vis prevailing international standards devel- in the international standards development landscape opment processes could clarify a number of im- and monitoringframework so as to minimize unfair portant concerns. use of standards that will restrict exports from the Based on work conducted as part of preparation continent. for this volume there are several priorities for xxxi Standards and Global Trade: A Voice for Africa research in standards. First, gaps in African laws, strengthen the competencies and the capabilities policies, regulations, coordination, and monitoring of each country in meeting international stan- systems governing quality of products and produc- dards. This will help identify opportunities for tion processes need to be clearly identified, as a nec- deeper reforms and strengthen the foundations on essary step toward bridging the standards divide. which a regional and global framework can be fur- Revealing these gaps should inform African gov- ther developed. ernments as to whether their national technical reg- ulations differ significantly from international stan- Methodology and Scope for Analysis dards. This would guide further empirical research on whether regulations depart significantly from This volume contributes to ongoing search for cre- the least-trade-restricting standards available for a ative ways of strengthening Africa's capacity to given policy objective. comply with international standards. It identifies Second, identifying, assessing, and prioritizing opportunities for strengthening relative bargaining the constraints to coordination and monitoring of strengths and participation capacity of five6 African standards-related activities at the country and sec- countries in the global standards development tor level will facilitate the development of recom- framework. It also identifies key capacity con- mendations for reform. Developing actionable rec- straints that may prevent them from complying ommendations anchored in country-level and with international standards. Though the primary sector-specific analysis will serve very important focus is on SPS issues, the authors also discuss other purposes. standards and technical regulations applicable to specific industry sectors analyzed in each country. 1. They will delineate activities African countries Finally, the authors provide recommendations for can embark on to ensure their firms and farm- each sector and country based on their analysis. ers take advantage of global trade opportunities These recommendations highlight opportunities by exporting products that meet internationally for intervention and assistance that could enhance acceptable standards and quality. the compliance and participation capacity of these 2. These plans and underlying research evidence will countries. provide concrete documentation of the needs of This volume combines research efforts of teams African countries and the challenges they face m of African scholars and professionals that included exercising their rights-to inform the Doha trade specialists, economists, and standards experts. Agenda of the WTO. Recommendations can then Each chapter provides in-depth assessments of the be crystallized into effective pro)ect ideas and current and anticipated use of international stan- policies that will pave the way for reform that can dards, and capacity for compliance on a case-by-case maximize trade-related aid to Africa. basis for five countries in the region-including 3. Third, detailed analytical evidence can help to Kenya, Mozambique, Nigeria, South Africa, and advance other objectives: (i) It can buttress Mozambique. The analysis also includes a case-by- Africa's position in trade panel meetings as well case study of specific industry and commodity as dispute settlements, (ii) improve understand- sector of economic importance within each coun- ing of the various incentives and factors under- try. This work highlights, in detail, the main lying Africa's capacity to participate effectively in challenges and constraints facing the private sector global trade, and (iii) provide more information and supportmg organizations specific to each on how regulations operate in the African industry or commodity sector studied. environment. The country assessments were developed to meet the following ob)ectives: A critical evaluation of all these issues is best performed on a case-by-case basis. The analyses (i) Build awareness on the range, importance, and which follow adopt a country-by-country ap- impact of international standards and techni- proach with an action plan for each country ana- cal regulations on the current and prospective lyzed. Such a national agenda is important to trade of selected African countries, 6Kenya, Mozambique, Nigeria, South Africa, Uganda. xxxii Introduction (ii) Document the challenges and opportunities as where SPS measures have created compliance faced by these countries in meeting their (and compliance cost) barriers for local pro- international agreement obligations and faced ducer/exporters; where overseas market standards by African firms and farmers in complying (and testing procedures) are more stringent with official regulations and private standards, than those provided by international agencies (iii) Document and assess the performance of (i.e., CODEX); and how this has materially affected countries and industries (including firms and the country's exports. farmers) in responding to these challenges and The authors also identify challenges these opportunities, and countries face in conforming to standards set by (iv) Identify areas of priority attention and poten- international industry-specific organizations (e.g., tial modalities for strengthening public and International Coffee Organization; forestry certifi- private capacities to utilize and apply interna- cation requirements, etc). The chapters include in- tionally accepted and recognized standards formation on how problems can be addressed and and technical regulations. estimates of compliance costs. Finally, the studies draw conclusions about the current status of legal Particular attention was given to the role of stan- frameworks related to standards and include rec- dards and technical regulations in areas of high ex- ommendations on steps which should be taken by port potential in each country (e.g., agricultural government, private organizations, and interna- and food products and light manufacturing goods tional development agencies to assist Africa. The like textiles, wood products, leather/hides/skins and authors in each chapter have drawn on broader eco- footwear), together with the standards/regulations nomic analysis and other work ongoing at the associated with important material inputs needed World Bank and other organizations. Team-based by these industries (e.g., seeds, fertilizer, agro- research effort was also complemented by the use chemicals, animal feed and animal health products, of national workshops, focus group sessions, and farm and manufacturing machinery, etc.). See Table one-on-one interviews, and questionnaires which 1 for a list of commodity and industry sectors encouraged participation and input from key covered. private and public sector stakeholders in each Primary attention was given to laws, rules, and country. practices which pertain to health and safety objec- tives, while secondary attention was given to a va- riety of environmental standards/regulations, in- cluding those which have been included within Constraints international agreements or national laws and those The focus on trade facilitation through standards which have been adopted as private 'codes of prac- in this volume is based on Africa's need to im- tice' 0 Labor and related standards were not in- prove and secure access to world markets, which cluded in the scope of analysis in this work. will in turn contribute to export-led growth. With The chapters in this volume highlight instances domestic regulatory reform advancing in some where products have been banned or restricted African states,8 the continent's potential for in- from traditional markets on grounds of quality or creased trade and investment with the developed safety.7 A discussion is provided as to whether these world is growing. As the analyses in subsequent circumstances were caused by actual developments chapters demonstrates, capacity in the private and within the country (i.e., a disease) or due to changes public sectors remains weak, even as globalization in the overseas market rules/regulations or a hiatus increases the need for innovative changes in the in those regulations (which resulted in a de-facto private sector and strengthened public sector ban on imports). Specific cases were identified, such institutions. 7For example, there might have been cases where fish exports were banned due to fear of listeria contamination; nuts/legumes/or spices banned for exceeding aflatoxin limits; or other cases. 8These reforms have not always been consistent. Collier 2000 points out several instances where policy reforms have been punctuated by disruptions and policy reversals. xxxiii Standards and Global Trade: A Voice for Africa Box 2: Liberalization, Commodity Prices, Coffee Standards In Uganda, liberalization of the industry has agencies); and (iv) decentralization of quality been accompanied by increased involvement monitoring at the countryside to local of inexperienced private sector players that authorities. This would require a new statute compromise quality. This is exacerbated by to be put in place to clarify the roles of the fact that compliance to codes of various stakeholders in the process (ok) practices is voluntary, enforcement is weak, In Kenya, with respect to monitoring and penalties for non-compliance are not quality, the previous quality monitoring severe. Moreover, excess supply in functions of the Commodity Board in Kenya international markets has depressed coffee worked well, and as a result, Kenya coffee prices such that there is little price incentives was sold at a premium in international for investment in good quality coffee markets. The main industry concern now compliance practices. concerns how liberalization of the sector will Other industry constraints that must be affect the efficacy of the transfer of overcome to spur growth in exports of high responsibility of monitoring coffee quality quality coffee include: (i) better treatment of standards from CBK to independent aged coffee trees and prevalence of pests and marketing agents, millers, and factory diseases (e.g., coffee wilt); (ii) improvement in processors. KPCU is already taking the lead in harvest handling methods at farm and soliciting and providing financial support to primary processing levels; (iii) stronger coffee farmers and factories to maintain enforcement at the production and primary quality. It is not clear how this new processing levels (enforcement is weak due to arrangement and regulatory framework will unclear mandates among regulatory affect the coffee industry. Realizing the potential for SME-based and monitoring agencies, and business support associ- export-led growth requires better and more ations often lack the capacity and breadth of systematic efforts to help African firms and farm- networks and services necessary to mount high- ers increase their capacity to export, produce inter- impact development programs that will create and nationally acceptable and competitive products, sustain better market access for their member firms and overcome barriers to trade. African entrepre- and farmers. Collectively, for many African coun- neurs, firms, and farmers may be successful at run- tries, the support services offered by trade and ning small local businesses but many appear to be economic development agencies seem to be in- constrained from applying the same skills to chal- consistent in delivery, and shallow in foreign mar- lenges of dynamic global markets-especially in ket penetration, to stimulate rapid expansion of complying with international product and quality private sector activities. Specifically, in many of the standards in a competitive manner. Moreover, for countries and sectors reviewed in this volume, they most African firms, the means of identifying, qual- are limited in outreach and slack in direct connec- ifying, and sustaining long-term export potential in tivity to the standards of those of their trading mternational markets is difficult. Business support partners.9 services are usually of relatively poor quality, lack- Several country-specific constraints and chal- ing the timeliness and customization needed to lenges that limit compliance to international stan- support expansion in today's highly competitive dards in Africa are discussed in subsequent chap- global marketplace. ters. Among the most common include: just as African firms often lack the resources, links, and connections to effectively meet foreign (a) Participation: Until recently, complaints and international product and process standards, about standards (especially SPS) from African so do African standards-setting organizations, countries to the WTO have been limited 9Excluding in many cases South Africa XXXiV Introduction (Wilson, 2001). As can be drawn from the case participation to be effective, more African studies in this book, this is partly due to the states need to be actively involved in the fact that African countries participate less ef- process, on a selective basis, on standards of fectively in WTO and other foreign standards- high relevance to export markets. making processes. They also have very limited (b) Standards-takers: Lack of participation, cou- capacity and means to gather, analyze, absorb, pled with limited capacity to provide credible and implement decisions that emanate from information needed to articulate and defend these processes."i Though there appears to be their interests and/or complaints has trans- standard protocols for cooperation between formed many developing countries (African local agencies and enquiry points in Africa and firms and farmers in particular) into "standards- their international counterparts, this cooper- takers"-reactive, as opposed to proactive, ation is typically not sustained in a way that players in the international trade system. This is strategically significant to meet the policy position raises three main concerns for African or commercial ob)ectives of producers and ex- firms and farmers: (a) as standards-takers, they porters in many African states. This is in part are vulnerable to sudden or frequent changes because, unlike in many developed countries, in foreign standards, especially when such the mechanisms, agencies, and resources with changes are orchestrated with protectionist in- which African states sustain international tent." This vulnerability is more precarious trade negotiations appear to be underdevel- when standards are defined ambiguously and oped, under-financed, and sparingly inclusive the requirements associated with them are un- of the private sector and the civil society clear, scientific evidence is unresolved, and groups. This is changing as African economies compliance costs are high; (b) Many times, pursue more vigorous private sector-led their situation is exacerbated by simultaneous growth strategies. The case study on South exposure to divergent, multiple standards im- Africa, for example, highlights instances in posed by various trading partners. Servicing which South Africa has influenced the formu- several markets with varying standards in- lation of international standards. However, for creases production costs,12 complicates testing 10Africa's capacity to challenge or defend positions on exports of fruits and vegetables (especially regarding issues like maximum residue levels and pest risk analysis) for example is very weak. This is partly because there is lack of human capital, financial resources, and information infrastructure to maintain the required data, testing, and knowledge management for over long periods, necessary to develop credible pest risk analysis. Serious concerns already permeate the fastgrowing horticulture and flower industry in Kenya and Uganda These concerns are based on threats arising from the industry's capacity to comply with maximum residue levels, labor and environmental standards, and pest risk analysis required by its export markets For example, it is believed that the new EU requirement of inspections against nonindigenous harmful pests does not accommodate unique climatic conditions of producing African countries "1The South African study outlines that Spain rejected a few consignments of South African white fish in 2001 due to the so-called "parasite infestation " Similarly, during the early 1990s, Italy banned imports from one or two South African suppliers due to mercury content problems These acts were seen as an undesirable consequence of differing microbiological standards across countries, which have not yet been harmonized at CODEX level. However, South Africa experienced the most severe problems in early 1994 when France implemented EU Council Directive 91/493/EEC. This is the main EU legislation governing the health requirements of fishery products. Though other EU member states had given third countries time to prove compliance with the requirements of the Directive, the ban was implemented overnight in the French market. This step came as a shock to the South African Fishing industry, which believed the French government, was trying to appease fisherman who had protested in Brittany to protest difficult economic conditions and cheaper imports. 12Especially when such markets demand compliance to process standards that may require different production processes for the same export product, e.g, Members of South African Circuit Breakers Industry (CBI), for example, have pointed out that while Europeans suggest that IEC is the basis of all CENELEC standards, CBI are obliged to test according to EU standards. Alternatively, multiple process standards may limit trade by reducing the incentive for exporters to access more than one market, and benefit from economies of scale that may accrue from a uniform international standard that harmonizes production processes and allow for access to multiple markets, e g, it was after Ugandan and Kenyan fish firms suffered a ban from the EU that they decided to try out the US market. The transition was easier because fish exports to EU must comply with HACCP standards which are not required in the US market. xxxv Standards and Global Trade: A Voice for Africa and verification procedures;'3 and increases the abroad. As a consequence, private sector awareness burden of proof unnecessarily; (c) Foreign and investment in standards appear to be low across standards (e.g., packaging, testing, or environ- sectors - even in South Africa. This has created de- mental requirements) may become moving tar- mand for high impact awareness campaigns and the gets. Local consumer and producer groups and need for information centers from which informa- their supporting agencies abroad can influence tion about standards and quality is readily accessi- (if not monopolize) the development of stan- ble. It should be noted however, that some of the dards and codes of practice and make them information failure stems from inefficiencies in more stringent once their competitors management and information flow from responsi- achieve compliance.'4 It is important to note, ble international organizations, notification points, however, that some middle-income African and foreign governments themselves. countries, such as South Africa, have developed strong capacities to influence international (d) Trade Limiting Impact of Standards: The im- standards-setting, and in some cases have portance of understanding the impact of stan- become standards-setters (for example, the dards in Africa is also reflected in the rising SABS Mark and the timber industry). incidence of technical regulations as instru- (c) Information failure: As standards-takers, the ments of commercial policy by governments. lack of firsthand participation in the develop- Africa's private sector and trade development ment of international standards and voluntary agencies have increasingly voiced their con- codes of practice makes African firms and cerns on issues relating to restrictive use of farmers overly dependent on local standards standards for protectionist intentions. These development agencies for relevant information. concerns were implicit in the review of Chap- While the Internet is building tremendous con- ter VIII in "African Positive Agenda" summary nectivity, current management practices and of meeting co-sponsored by UNCTAD. They access to timely information from these agen- have also been explicitly outlined in the cies are inadequate, and suffer from varied "NEPAD Market Access Initiative" document quality levels. In some countries, where infor- (2002), which outlines Africa's position on mation management infrastructure is still weak market access issues. According to this docu- (e.g., Kenya, Nigeria, Uganda, etc.), there is a ment, African leaders highlight two important primary reliance on surface mail and postage concerns namely: the subsidies offered by services as a key mode of information transfer. OECD countries to farmers, and restrictive Such countries experience further delays in co- regulation through product standards. ordinating key activities between international Empirical evidence related to these concerns standards agencies to national contact points. has been highlighted in the previous sections. Collaboration and exchange of ideas on stan- Other specific examples of standards that can dards with their private sector counterparts is be trade-limiting are found in the case studies also limited. discussed in this book. In the case study on South African horticulture industry, for exam- The combined effect of limited private sector par- ple, the authors point out that quality and pack- ticipation, and information failure in part, explains aging requirements imposed by importers on why export and business development initiatives South African exports of fruits can be excessive. appear to be one-sided and do not foster effective For most South African citrus growers, the representation of the interests of African businesses packaging requirements are said to limit the iAs In Kenya, South African citrus exporters have to comply with two certification systems (EUREPGAP and HACCP) in order to export their produce, and do not have a say in the setting of these regulations (Grieb 2002). 141n Germany, local firms refuse to purchase foreign electrical components, as labor unions do not allow their members to install these products. Similarly, in 2001 in Kenya, for example, processed foods from Del Monte were restricted from European markets because of worker safety and environmental standards. Human rights associations were agitated that Del Monte did not provide adequate safety standards to its workers and that environmental health standards were not adhered to. This led to a boycott of Del Monte's products in most EU supermarkets. xxxvi Introduction proportion of their total crop that they may ex- South African farmers. The South African de- port to about 60 percent. Similar constraints ciduous fruit industry is particularly concerned with regard to packaging were confirmed in about this problem. other country case studies. It appears, therefore, CE marking'7 to EU regulatory requirements that packaging requirements are becoming an is also becoming an important and binding area of strict concern in meeting international constraint. Where the intervention of a notified standards. body is required, African firms are paying high Another concern is regulation that limits the fees to have conformity assessment work car- importation of fruits infected with citrus black ried out in the EU. Although many African spot (CBS). It is believed that this requirement countries have safety regulations governing the wll seriously constrain South Africa's exports manufacture and distribution of products, the of citrus fruits to Europe." Other rules of con- enforcement of these regulations is weak with cern include EUREGAP requirements relating mixed quality across sectors. This, in part, ex- to services provided to workers (e.g., washing plains the lack of recognition by EU regulators facilities and portable toilets for every 600 me- of the local conformity assessment infrastruc- ters in the orchard).'6 ture (i.e., the absence of mutual recognition) Pesticide residue requirements in EUREGAP that obliges exporters to test and certify over- are also critical areas of concern. To comply seas. As a result, many African firms pay con- with this requirement, pesticides that are used formity assessment fees in foreign currency that must be registered in the country of origin. In increases production costs and make their many African countries, including South product prices less competitive. Africa, many pesticides are either not regis- The challenge of conformity assessment is tered, or are registered for another crop or com- further compounded by certification con- modity. Registration requires two to three years straints. In the USA for example, large retailers, of costly trials. The costs associated with this such as Home Depot, insist on FSC certifica- process are so high that only those crops that tion. South African Industry leaders in the tim- are of high national economic importance are ber industry, for instance, consider the US mar- selected for plant protection and residue analy- ket as particularly difficult to do business sis. As a result, where the range of plant pro- because the US product quality requirements tection products of importance to South Africa are exceptionally high. For example, in terms of differs from those of its trading partners in Eu- visual quality, US importers are only interested rope, the latter may not support calls for max- in clear timber without any knots. They also in- imum residue levels for certain pesticide and sist on sliced veneer and do not accept rotary crop combinations that are of importance to cut veneer. This is of great concern to South South African industries. This may lead to the African timber exporters because it limits their loss of use of certain pesticides and activities US sales to only a relatively small number of vital to the pest management strategy of many carefully selected. "5CBS is perceived to be difficult to overcome because the fungus that causes black spots on the fruits can develop at any stage of production even after export processes have been concluded These spots are said to merely detract from the appearance of the fruit and are harmless to consumers The fungus does not occur in any winter rainfall areas and has never shown up in the Western Mediterranean climate. Moreover, South Africa has been exporting citrus fruits to Europe for over 70 years without any serious health issues. "I1t is unclear to South African citrus producers why such worker services are relevant to the citrus export exchange and they feel that this 15 rather a matter for resolution between them, the workers, the labor unions and the South African government (Grieb, 2002). As a result, these growers feel that many of the regulations they are being forced to adhere to are out of line with domestic norms, enormously time-consuming and unrelated to the core production issue-the quality of the fruit they produce. 17The CE Marking is the manufacturer's declaration, showing compliance with all applicable EU directives. For most products sold in the EU, the use of the CE Marking and a Declaration of Conformity are mandatory. Source Website TUV-Rheinland. xxxvii Standards and Global Trade: A Voice for Africa The role of some lobby groups and associa- with new equipment and inspection services tions were also found to impact trade prospects, while firms in Uganda and Kenya face costs re- at least in the short term. There appears to be lated more to labor and inspection services. an increasing demand among international This may have to do with the compliance customers for "social audits" Some customers strategies different countries adopt. These re- require reports from inspection bodies that sults however only show cost averages of all confirm that suppliers comply with local labor firms over a variety of industries. laws. In Kenya, for example, processed foods Compliance costs differ across industries de- from Del Monte were restricted from European pending on the stage of production practices markets in 2001 due to concerns over worker prevalent in the industry, and the level of sup- safety and environmental standards. Human port services available nationally to help the rights associations argued that Del Monte did private sector adapt to changing global indus- not provide adequate safety standards for try standards. workers and environmental health standards In the case of the Ugandan honey industry, were not applied. This resulted in a boycott of for example, sunk costs associated with com- Del Monte's products in most EU supermar- pliance are found to be very high. The Uganda kets. Similarly, while many African countries study references a feasibility report, referenced like Kenya and Uganda struggle with the chal- from the study contained in Chapter 5 of this lenge of restructuring the fishing industry af- book which suggests that up to US$300 mil- ter several bans, some buyers in developed lion, will be required for construction of pro- countries are already insisting on eco-friendly cessing facilities and the purchase of equipment fish harvesting and processing on the part of necessary to upgrade a honey-processing cen- suppliers. ter owned by Uganda Honey Association m (e) Costs and Financing of Compliance: Not only Kampala. These purchases would allow the are standards potentially trade limiting; the cost Uganda Honey Association to conform to ISO of complying with them can be prohibitive de- standards for food safety. This amount excludes pending on the type of standards applied, the the costs of airtight collection cans and protec- development stage of industry or country of in- tive gear needed by farmers, setting up of local terest, and the efficacy of support services avail- centers to train farmers in apiary management able to the local private sector. Preliminary ev- systems, improving awareness, and upgrading idence from the World Bank global TBT survey production processes. suggests, for example, that over 30% of all firms In the Ugandan coffee industry, the average surveyed in Africa believe that compliance with firm's production costs are said to increase by local labeling requirements costs less compared about 200% if compliance costs for good qual- to compliance with foreign regulations. The ity coffee are included. In South Africa, The same goes for testing and certification costs. In costs to comply with EUREPGAP (at two pack Mozambique, however, 50% of Mozambican houses for example) have been estimated at firms indicate that certification costs for com- RI, 290,000 (i.e., RI, 000,000 million for the plying with foreign regulations are much more new bar coding machine, R170 000 for a pack expensive than those for local certification house upgrade and R120 000 for relocating the requirements. workshop to comply with EUREPGAP- The results also show that African firms ex- Bakker, 2002). Similarly, the Department of perience additional costs as a result of invest- Trade and Industry in South Africa, which cur- ments in new equipment, labor, and inspection rently receives only about US$3,154 million activities related to compliance to international annually, has expended significant amounts of standards. A majority of the new investment money to upgrade the national metrology lab- costs range from 1-24% of total investments oratory over the past six years. This is done to costs. Inspection and additional labor costs also ensure South Africa's measurement standards fall within 1-24% of production costs. The data are at par with those of its trading partners. also suggests that Mozambican and South Financing such investments in compliance African firms experience costs associated more can be extremely costly and problematic for xxxviii Introduction African countries, especially where aid flows million yearly for Kenya, and a major source of have dropped by about 40% in the last decade, employment. Flowers contributed 53% of the savings rates are low, foreign direct investment annual earnings from the horticulture indus- is limited, and access to local credit is costly and try. Complying with standards intensifies com- predominantly short-term. The textile industry petition and, along with constantly changing in Kenya and Nigeria, for example, is seriously consumer demand for flowers, makes contin- constrained by availability of financial re- ual investments in upgrading skills and equip- sources to develop better cotton-seed develop- ment critical to business success. ment systems, plantations and farming prac- Awareness of SPS measures and access to in- tices, ginneries, and a garment industry that formation is problematic among SMEs in the wlll enable the industry take full advantage of countries studied. This is based, in part, on in- the Africa Growth and Opportunity Act centives and market structures prevalent in the launched by the United States to ease access for specific industries examined. For example, the African products (including textiles) into the case study on the fruits and vegetables sector in US market. Kenya confirms that: (1) Large producers with (f) Constraints to SME performance: Standards direct contacts with exporters have higher lev- impose different cost structures and investment els of awareness of standards required by ex- requirements that can undermine the ability of port markets compared to small producers; (2) small- and medium-sized farmers in Africa to Market channels based on forward contracts access developed country markets. For exam- with farmers create more awareness about stan- ple, analysis of flower production in Kenya dards as opposed to informal contracts. Pro- shows that the costs of flowers (e.g., Roses and duction contracts also provide a higher level of Carnations) that are grown in high investment awareness of standards to producers; (3) The structures and green houses, and are required presence of exporter agents creates more aware- to meet the stringent standards of the im- ness about standards to producers as opposed porters/consumers, are ten times higher on av- to independent agents; and (4) Exporters who erage than costs of flowers (e.g., Carthamus and sell directly to consumers rather than importers Solidago) grown under normal field condi- provide more value-added services, are more tions. However, the export price of Carthamus aware of standards required by export markets, is said to be only 50% less than for Carnations. and demand that their producers meet these In South Africa, while compliance costs do not requirements. seem to constrain multinationals and large To summarize, the lack of rural infrastruc- local companies from adherence to domestic ture, high transportation costs, insufficient or international standards, the government had support services, and limited access to techni- to devise various finance and technical cal information and credit, constitute major assistance schemes to help SMEs cope with the problems for smallholders in the agriculture required upgrade of equipment and facilities, sector. Installing the necessary traceability, la- and related costs of conformity assessment beling, and packaging systems is also important requirements. and have significant cost implications for SMEs Strict adherence to the "analytical zero" pes- in Africa. ticide residue requirement imposed by the EU (g) Experience with standards-related product may have serious cost implications for Kenyan bans, and the difficulty of the adjustment and Ugandan firms, especially SMEs, if not process: It appears from the case study evidence backed by adequate technical and financial as- presented here that the susceptibility of African sistance to pursue compliance. If this results in firms and farmers to bans, product rejections, another ban on Kenya's or Uganda's horticul- and trade-lumiting restrictions varies by country, ture products, such a ban will have significant industry size, and development stage. Fish ex- negative effects on the economy of these coun- ports from countries like Nigeria, for example, tries and greatly impact the livelihood of their have not experienced industry-wide fish bans. citizens. Horticulture industry is the third most Interviews with experts in the Nigerian fish in- important source of foreign exchange US$180 dustry suggest that this is because the industry xxxix Standards and Global Trade: A Voice for Africa focuses on minimally processed exports of restrictive trade policy, dysfunctional govern- frozen head-on shrimps, and have adopted good ments, political instability, and language barri- fishing practices. There are concerns that inci- ers. There have also been instances where stan- dences of product rejections may increase as dards and technical regulations have been used firms move up the production ladder into to limit trade. Diverse and non-transparent na- processed fish products. The experiences of fish tional standards and implementation proce- farmers in Southern and Eastern Africa have dures may further limit cross-border trade, es- been very different. pecially in Africa where the capacity to The case study on Uganda, for example, indi- undertake risk assessments is very low-even cates that the loss in reduced revenue as a result in middle-income countries like South Africa. of a fish ban from March to July 1999 alone is es- Lack of transparency creates potential avenues timated at about US$36.9 million. This excludes for trade-restrictive practices in the region. For the loss to fishermen due to reduced prices and example, an incident of a Kenyan ban on fishing which could total approximately US$1 imports of one-day old chicks from Mauritius million per month. Out of 11 factories, which because of alleged detection of Avian En- were operational before the ban, three closed cephalomyelitis in two shipments was not down and the remaining factories operated at backed by appropriate test evidence or detailed 20% capacity (Waniala, 2001). The decline in risk assessment. No notification of the action production resulted in about 60% to 70% of was made to the WTO by Kenya. The matter those directly employed in the industry losing was settled before the case reached WTO's dis- their Jobs. About 35,000 people involved in fish- pute settlement body. related activities (e.g., fishermen, fish mongers Enforcement of standards within the region is and transporters) lost their jobs. Others indi- also difficult, due in part to porous borders that rectly employed through the industry had support a significant volume of informal ex- earnings reduced by one third of their pre-ban change of goods by small traders. While African earnings. Related industries, such as packaging firms seem to be Indifferent about the extent of and transport were also negatively affected. uncontrolled informal trade, this trend, if left Individual firms have to make continual in- unchecked, reduces the effectiveness of stan- vestments to comply with quality requirements. dards monitoring and traceability mechanisms For example, over the last three years, addi- (including quarantine and pest monitoring pro- tional cost in equipment has ranged from grams, surveillance and monitoring of data on US$12,000 to US$13,500 for a representative disease spread, etc.). This increases the risk of the fish firm in Uganda while the training of per- spread of product defects or diseases that can un- sonnel on fish processing and handling cost dermine industry reputation across countries. In from US$2,500 to US$5,000. The initial cost of Mozambique for example, there is the need to certification was US$15,000 for each individual reduce aflatoxin and mycotoxm contamination firm while the hired testing and certification (like hepatic diseases) that affect consumers of services ranged from US$2,000 to US$4,000 peanuts, but the volume of informal trade in over the same period. These costs were born by peanuts that by-passes quality controls is very firms themselves apart from the training pro- high. On the other hand, vaccination campaigns, vided by development agencies such as coordination with neighboring agencies, and the UNIDO, USAID, and the World Bank.'8 introduction of geographic information systems (h) Potential limitations to intra-regional trade in have helped Mozambique to escape episodes of Africa: Overall, constraints to regional trade foot-and-mouth disease experienced by its range from lack of infrastructure and credit, to neighbors. '8Note, however, that these investments have been beneficial since they played an important role in getting the ban lifted and increasing fish exports. For example, fish exports increased from 14,075 tons before the ban to 28,119 tons after the ban This increase is partly attributed to the compliance to standards that enabled Ugandan fish and fishery products being upgraded from List 11 to List 1. Kenya's fishing industry has also undergone similar changes, but has not been as successful as their Ugandan counterparts. Xl Introduction (i) Other Domestic Constraints: Four very im- methods are becoming more complex facilities portant areas for capacity building are evident such as testing laboratories are not adequately in all of the country case studies. First are in- staffed in many African countries. Scientific stitutional constraints. There is an increasing equipment is outdated. Systematic collection need to strengthen the capacity of institutions and storage of records is not undertaken. involved in monitoring compliance to national Moreover, local certification agencies are not and international standards. This is particularly internationally recognized. This situation is important in Africa where liberalization and worsening given the declining levels of public subsequent dissolution of commodity boards expenditures in many countries. Middle- (in the absence of strong monitoring institu- income countries, such as South Africa, have tions) appears to have undermined the quality good facilities, but PRAs are done by a small of agricultural products.'9 Streamlining the group of personnel faced with a large backlog roles of agencies creates better focal points of of work. responsibility and competent authorities to im- Third is transport and logistics. Packaging, plement and monitor standards critical for marketing and distribution of agriculture compliance. Proliferation of duplicative roles products from the production point to the fi- and responsibilities was found to be one im- nal consumer is a formidable challenge in portant cause of declining quality systems in Africa. As shown in Table 1, port charges, de- the countries reviewed.20 Furthermore, many of lays, and freight costs are significant constraints the institutions examined in the studies still to exporting. The availability of adequate trans- lack the necessary sophistication and equip- port and logistics infrastructure and manage- ment for making adequate assessments of com- ment greatly affects market delivery quality of pliance and certification is still largely per- products, especially where such products are formed externally. There is the need for technical perishable. The publication "List of Deten- assistance and physical infrastructure upgrades tions" published by the Unites States Food and to promote public-private partnerships in Drug Administration (USFDA), for example, transforming standards into production tech- reveals that the main reasons for detentions niques and good agricultural practices. from Africa was that the food exports from the Second, capacity to undertake Pest Risk region were mostly rotten. 21 Analysis (PRA) and develop adequate trace- (i) Limited Incentives for Investment in Compli- ability systems needs to be strengthened. Al- ance: Incentives for investing in compliance can most all of the countries under review lack the be policy- or market-related. Though the case personnel, financial resources and technical de- studies did not explore policy incentives for tails necessary to undertake comprehensive compliance in detail, some examples are pro- PRAs required for exports of their horticulture vided. In certain instances, such as in Uganda's products. PRAs are of particular concern to coffee industry, policies and incentives pro- Uganda and Kenya, two countries with a high vided to farmers do not encourage investments growth and dependence on horticulture and in compliance, and may sometimes hinder it. flower products. While technology and testing The case study points out that coffee farmers "9The authors of the Nigeria case study, for example, argue that the absence of institutions that perform the quality functions of the defunct commodity boards was one of the main reasons for deterioration of the quality of cocoa and cocoa products There are concerns about the impact recent liberalization of the Kenyan coffee industry will have on the quality of Kenyan coffee exports 201n Kenya, for example, a lack of a unique focal point on fish quality monitoring and compliance was found to be one of the causes of the country's deteriorating fish export quality The loose organization of farmers within associations also undermines their capacity for organization and deployment of technical assistance that can help these farmers comply with required good agricultural practices and standards. The quality of organizations and associations involved in standards monitoring is mixed. 21Veena, Iha, "Strengthening Developing Countries' Capacities to Respond to Health, Sanitary and Environmental Requirements." A Scoping Paper for Selected Developing Countries, April 2002. xli Standards and Global Trade: A Voice for Africa have an incentive to invest in lesser quality cof- participation of more developing countries; fee production processes because the regulatory and (2) Until recently, most trade promotion penalty against low quality coffee suppliers are programs and development assistance have so small in magnitude compared to costs of not focused on the development of better investment in better processing facilities. More- quality systems needed to sustain trade. The over, there appears to be little price incentive ideas proposed in this volume suggest, sup- because the market price premium for higher porting developing countries in their efforts quality coffee is minimal. However, in the to bridge existing standards divide deserves flower and fish industry, in both Uganda and much more focused attention. This attention Kenya, investments in quality appear to be is already forthcoming. For example, G8 compensated through higher market prices. In member countries, through the Africa Action the fish industry, investments in compliance Plan (2002)22 have already pledged support in have resulted in increased exports from Uganda helping African states develop better capacity to the EU (but not in the case of Kenya). The for trade, including in SPS and other issues re- market in this case appears to have rewarded lated to technical regulations. compliance with higher market share. It ap- Section 3.4 of the G8 Africa Action Plan fo- pears that these premiums, if any, accrue to cuses on: Increasing the funding and improving producers of high-end value commodities or the quality of support for trade-related techni- marketing agents closer to the retail end of the cal assistance and capacity-building in Africa- production process (i.e., retailers and super- including (a) supporting the establishment and markets in Europe). expansion of trade-related technical assistance The low volume and quality of local demand programs m Africa; (b) supporting the estab- in Africa may also diminish a firm's interest in lishment of sub-regional market and trade investing in compliance, and may sometimes information offices to support trade-related compel national agencies to develop standards technical assistance and capacity-building in that are lower than international norms. For Africa; (c) assisting regional organizations in many African firms, producing for the local their efforts to integrate trade policy into mem- market is a necessary first step in the export ber country development plans; (d) working to process. However, in meeting demand in the lo- increase African participation in identifying cal market, the producer sacrifices quality for WTO-related technical assistance needs, and price that is affordable to the local consumers. providing technical assistance to African coun- This low local demand for quality is due, in tries to implement international agreements, part, to the poverty that pervades sub-Saharan such as the WTO agreement; (e) assisting African Africa. producers in meeting product and health stan- There are other issues to consider in regard dards in export markets; and (f) providing tech- to standards and enhanced market access. nical assistance to help African countries engage Some of the most prominent include: (1) in- in international negotiations, and in standards- tensifyied efforts to harmonize standards and setting systems. The continuous marginalization technical regulations to reduce duplication of of Africa from global trade creates an unprece- efforts that restrict trade. Underlying harmo- dented need to expedite the implementation of nization is a number of necessary first steps. this action plan. These include harmonization of threshold The action plans and ideas expressed in this limits across developed country markets, volume provide concrete examples of the type streamlining testing and certification require- of technical assistance and domestic reform ments, improving transparency in the devel- measures needed to strengthen economic per- opment and implementation of standards formance in Southern Africa. In addition, they and technical regulations, and supporting a can also serve to inform specific projects that more balanced global standards development might be implemented through the new Stan- framework that encompasses the input and dards and Trade Development Facility (STDF) 22The Africa Action Plan was released at the G8 Summit in Kananaskis in 2002. xlii Introduction established by the World Bank, World Trade implementation. These are the Kenya Plant Inspec- Organization, UN Food and Agriculture torate Services (KEPHIS) and Department of Vet- Organization, World Health Organization, erinary Services (DVS) under the Ministry of Agri- and international standards organizations to culture and Rural Development (MA&RD), and strengthen coordination in technical assis- Ministry of Health (MOH). tance on standards. The work in this volume The KEPHIS is responsible for standards related and through the project supported by the U.S. to health of plant and plant products and is the en- Government Trust Fund at the World Bank quiry point for the International Plant Protection has contributed to the rationale and under- Convention (IPPC). The DVS is responsible for pinnings of the facility's establishment. The standards related to health of animals and animal activities of the STDF will complement ongo- products and is the enquiry point for the Office of ing trade facilitation efforts in each country International des Epizootes (OIE). The MOH is re- towards greater access to global markets. Re- sponsible for standards related to food safety and is lated work in other development agencies and an enquiry point for both CAC and OIE on mat- African institutions has also been highlighted ters related to food safety. There are also many other in the subsequent chapters of this book. public and private organizations involved in stan- dards implementation particularly in creating awareness about the required standards for various A Summary of the Country Case Studies products. These organizations get involved in stan- and Action Plans dards development through their membership in The subsequent chapters of this book discuss the committees for standards development coordinated challenges and opportunities Kenya, Mozambique, by KEBS. Nigeria, South Africa, and Uganda face in con- Most standards for Kenyan products are set based forming to the standards set by international on international standards or guidelines developed industry-specific organizations (e.g., International by CAC, OIE, and IPPC. This is possible through Coffee Organization; forestry certification require- participation of Kenyan technical staff in some of ments, etc.). They also draw conclusions about the the meetings held by these organizations or use of current status of laws, regulations, capacities, and guidelines and procedures provided by the organi- programs in relation to standards and technical reg- zations. However, not all Kenyan standards con- ulations, and identify areas for priority attention form to internationally accepted standards. This is and recommend key steps, which should be taken partly because of constraints in financing atten- by government, private organizations, and interna- dance in international meetings by both the public tional development agencies. A summary on each and private sector officials involved in standards- country is provided below: setting. Failure to participate in international meet- ings inhibits institutional development, capacity 1. Kenya building, sensitizing and educating both the public and private sector individuals and firms on stan- International standards are important for Kenya be- dards implementation and conformity assessment cause merchandise trade contributes to about 40% schemes that guarantee acceptance of international of the total gross domestic product (GDP). The im- standards. pact of international standards will be felt more in Different bodies undertake different functions in the agricultural sector, particularly if they have a the administration of standards and implementa- negative impact on trade. tion of standards. The notifying agency of standards The mandate of coordinating standards develop- developed in Kenya to WTO is the Ministry of Trade ment and implementation lies with the Kenya Bu- and Industry (MTI). All the enquiry/focal points reau of Standards (KEBS), a public body set under (KEBS, KEPHIS, DVS, and MOH) communicate an Act of Parliament. The KEBS is also the focal the status of standards in the country to WTO point for information on international standards through MTI. The government has also established development from bodies such as Codex Alimenta- a National WTO Committee to coordinate prepara- rius Commission (CAC). Three other public bod- tions for negotiations of WTO agreements. Within ies are also involved in standards development and the national committee, specific sub-committees xliii Standards and Global Trade: A Voice for Africa are established to deal with various WTO agree- international accreditation for some laboratories ments such as the SPS and TBT Agreements. Be- involved in microbiology and chemical tests for sides the enquiry points, many public and private foodstuffs; (d) risk analysis and surveillance pro- sector organizations are also involved in imple- grams for pests, diseases, chemical residues and mentation of the standards. Some of the problems food safety; (e) control and eradication of pests, encountered in administration of standards are which, for example, has restricted exports of beef poor coordination among the various actors and products; and (f) production constraints including weak information flow regarding international ac- infrastructure weaknesses and different standards ceptable standards and practices among the various requirements for different markets, which make it actors. difficult for producers and exporters to meet the re- Capacity building efforts in standards particu- quired mternational standards.23 Standards have larly related to the SPS and TBT agreements of had different impacts on Kenyan industries. Exam- WTO have, in the past, focused on understanding ples from coffee, horticulture (fruits, vegetables, these agreements. The government, through the and flowers), fish, and textiles industries are used National Subcommittee on SPS and TBT, imple- to illustrate these differences. ments these efforts. The focus has been to create awareness among stakeholders on the need for The Coffee Industry. in Kenya has undergone ma- compliance with quality standards for products if jor reforms with liberalization of the Kenyan econ- they have to be competitive in the export markets. omy in 1993. New entities (processing factories, Some capacity has been developed at KEBS, marketing agents, and millers) have emerged from KEPHIS, DVS, and MOH for standards develop- formerly government-controlled institutions that ment through formal training. However, this were charged with standards implementation. capacity is insufficient to deal with risk analysis (as- These organizations are ad)usting to a new legal sociated with food safety, and health of animals and framework and they require technical support (fi- plants and their products) in conformity with risk nancial and human capacity) to deliver better serv- assessment methodologies promulgated by the rel- ices to farmers. The costs of standards compliance evant international organizations. Potential exports for the coffee industry vary. At the production level, (e.g., beef, flowers, vegetables, and fruits) are re- annual coffee production costs, which include stricted to markets because of significant disease or methods that allow compliance to standards, range pests. In addition, the infrastructure for assessing from US$600 to US$1000 per ha. Other costs are required standards for animal and plant health is incurred at the processing levels and range from deficient. US$158 to US$770 per ton of coffee for factory pro- Kenya faces constraints in implementation of cessing and US$100 per ton for coffee milling. standards and production of products that make it difficult for the country to comply fully with inter- The Horticultural Industry. (fruits, vegetables, and national obligations related to standards. Imple- flowers) has expanded significantly in recent years. mentation constraints include: (a) alignment of do- It is the second most important export industry for mestic technical regulations with international the country after tea. The industry is reasonably standards. For example, standards for processed well organized with respect to production and mar- fruits and vegetables provided for by the KEBS Act keting arrangements. Stakeholders (producers, are weaker than international standards; (b) weak- exporters, and private sector organizations) coor- nesses in export and import certification systems. dinate the activities of the industry, which include Examples include weaknesses in certifying livestock advice on implementation of standards of the pro- products for export to European Union, Japan and duce for the export markets. The major challenges USA markets and imports of textiles into the coun- in standards are the ability to meet the minimum try; (c) inadequate testing capabilities including residual levels (MRLs) in the export markets, pest "3For example, the poor transportation network which leads to long transportation periods for fresh horticultural products from production to exporting points necessitates investments in cooling vehicles for transportation of the produce and storage facilities at the ports of export to maintain standards for fresh produce required at the export markets. xliv Introduction risk analysis, and continually changing consumer A good cottonseed development and distribution preferences (e.g., adherence to socially and envi- system that ensures provision of quality seed and ronmentally sound production methods). other inputs to farmers, as well as, an efficient mar- keting system for cotton lint is required to solve Cost of Compliance Estimates Vary by Commodity. these problems. Textile manufacturing is also con- The compliance costs to meet these changing stan- strained by use of obsolete technology, machinery dards vary with the level of intervention and type and equipment. Another issue is the weak legisla- of crop grown. At farm-level, farmers are required tion to control imports of substandard textiles. The to invest in capacity, to advise, and to inspect the compliance costs for maintaining standards vary produce for good agricultural practices. This costs with each level of intervention. At farm level, the about US$2,000 per month for a production capac- compliance costs relate to costs of production and ity of five tons of fruits or vegetables or ten tons of vary from US$100 to US$200 per ha. At the gin- flowers daily. Investment for quality controls from ning and manufacturing levels, costs of investing in the farm to port-of-export for the same tonnage of ginning and manufacturing capacity varies de- fruits/vegetables or flowers, respectively costs about pending on size of factory. US$123,000. This kind of investment is only In conclusion, Kenya has the basic infrastructure affordable to large commercial farmers. Small grow- for implementation of standards to facilitate inter- ers are only able to achieve this through group national trade in agricultural commodities and investments or contracts with large-scale growers. agro-industrial products. The constraints in the sys- tem, however, include (1) lack of funds to attend Fishing. is an emerging export industry for Kenya. international meetings for standards development; The industry has faced problems with standards (2) capacity to define appropriate standards for the compliance, however, and fish exports have been country and undertake risk analysis in food safety, banned to European Union markets in the past few and health of animals and plants and their prod- years. This is because of weak hygiene and sanitary ucts; and (3) implementation of standards. Thus, standards at fishing landing beaches and capacity public programs are recommended to support pub- (human and equipment) to examine and certify the lic institutions in formulation, development and quality of exported fish. The compliance costs vary implementation of standards as well as making it with the level of intervention. However, the gov- possible for the country to comply with WTO ernment has developed a new institutional frame- SPS/TBT requirements. work to overcome these constraints. At the beach The major constraints in implementation of stan- levels, about US$90,000 is required to develop the dards are a lack of technical knowledge and limited necessary infrastructure (clean water, drainage, in- funding to enable farmers, particularly small farm- sulated boxes, electricity and roads) per beach to ers, to maintain required standards. Thus, com- maintain required health and sanitary standards. At modity support programs that could empower the processing level, the costs of maintaining stan- producers to meet the required standards in the pro- dards for management of Hazard Analysis Critical duction and marketing of different commodities are Control Point (HACCP) are estimated at about recommended. The focus is on small producers that US$19,200 per fish processing firm. are not able to invest in facilities to enable them to meet acceptable international standards. The rec- Cotton and Textiles. The cotton-textile industry has ommended projects in the chapter on Kenya target undergone different phases of development since the constraints faced by each industry such as ac- independence in 1963, starting with rapid growth cessing export markets or financing facilities re- in the 1960s to mid-1980 and a decline in the 1990s. quired for achieving acceptable standards in the The focus currently is to revive the industry to ex- markets. The priorities in Kenya center on small- ploit emerging export market opportunities such as scale producers of horticulture, fish, cotton, and cof- those offered by the United States through the fee, and associations for the production of these African Growth and Opportunity Act (AGOA). commodities. These projects could be useful in con- Quality cotton production is hindered by lack of tributing toward poverty alleviation in rural areas, quality seed to farmers, sustainable disease and as identified in Kenya's recent Poverty Reduction pests control methods and weak ginning facilities. Strategy paper (PRSP, 2002). xlv Standards and Global Trade: A Voice for Africa 2. Mozambique and low yields of cotton varieties used for more than a decade, influencing production yields and Mozan bque'itystinfarastruue,vexopot pasbeermnc si product quality, for example. Other capacity prior- and quality standards development has been sig- nificantly a b. A ity areas for improvement include public invest- nificantly affected by the country's civil war. As a ment in roads and transportation systems, liimited result, the main objective of Mozambique's post- mnty in rads and t ansp rtains imited civil war national programs and policies is the re- response to their needs; a low level of farmer edu- building of its infrastructure and reduction of the p cation, reducing their capacity to work through level of absolute poverty. The government program cations and groups.iObsolete e th in for 2000-2004, as well as other national programs ginneries, with low productivity and freqnt and policies in agriculture, industry and trade, rec- breakdowns are also significant problems Thereqae ognize the need to increase the quality of domestic also clear financial constraints hampering the in- phroduchtio andevtloparen consumerpprotetion of vestment that private companies need to make to through the development and application of ap- assure a more efficient and effective service to farm- propriate standards and technical regulations as a erandtriaioofpbclbrtryeu- necessary step in alleviating poverty through trade. ers and deterioration of public laboratory equip- Mozambique's mdustrial and commercial poli- ment and tools. cies consider the importance of developing the na- tionl qalit sytem ccodingto nteratinal Peanut Industry. Peanuts are cultivated by small rules. However, though qualityand st andardation . farmers in all provinces, and are part of the staple rules. However, though quality and standardization diet in several regions, particularly in the south of issues are reflected in several documents, they are M not yet the subject of appropriate development pro- Moamue Aosignifcnt volum of ioal grams,~~~~~~~~~ ~ nete atgvrmn o oo ee, peanut production is not covered by quality con- gr ther at government nor donor level. trols. There are potential export markets for Quality is not yet prioritized by the private sector as a requirement for international market access, peanuts that require certification to aflatoxin lim- though the development of important pro)ects like products. Reducing this and other mycotoxin loca the Mozal project have encouraged some compa- tamination in peanuts is a significant chaolenge for nies to invest in product quality and related issues. Mozambique farmers. Progress in this area would not only impact opportunities for exports but also National Standards System. The Mozambique study domestic sales, as individuals are more at risk with examines the challenges facing the country's pro- higher levels of contamination as if infected with ducers of peanuts, salt, cotton, horticulture, and fish hepatitis. Various extension services and research to products. The need to take a more systematic ap- support better varieties and production methods proach to quality led to the establishment of the that may reduce aflatoxin contamination have been National Institute of Standardization and Quality implemented with varying degrees of success, and (INNOQ) m 1993. The establishment of the insti- there is increased demand for the use of better test- tute followed the perceived need to monitor re- ing and decontamination methods, and improved gional and international developments more closely storage facilities. and to support local firms in efforts to improve quality. The standards-setting system is coordinated The Fish Industry. The fisheries sector is one of the by INNOQ. Various bodies participate on the de- most important contributors to the Mozambican velopment of standards either on a voluntary or a economy, representing 27.7% of Mozambique's to- mandatory (technical regulations) basis. The na- tal exports in 2000. Prawn exports rose from 5,694 tional standardization program includes issues that tons in 1994 to 9,729 tons in 2000. The total har- are regional priorities (such as labeling of food- vest of fish and seafood in 2000 was 39,065 tons and stuffs, fruit and juices) and products that are na- the estimate for 2001 is 32,781 tons (Ministry of tional priorities (such as copra, honey, sugar, tea, Fisheries). Over the past 10 years, prawns account and cashew nuts, among others). for 2l1%/b-38% of the total catch of fish and seafood. Investment opportunities in the fisheries sector lie The Cotton Industry. Some major constraints iden- primarily in the need for a gradual replacement of tified in the cotton industry include: degeneration the fishing fleet and upgrading testing laboratories. xlvi Introduction Training for middle- and senior-level staff of the laboratories and calibration services from South various bodies and companies will also be neces- Africa, but costs are high. There are also serious sary. Existing regulations also may need to be re- attempts at securing approval for a national con- vised in some aspects. formity mark. This will, however, require better Mozambique's legal and regulatory framework service quality from national laboratories. Accred- also needs to be updated and new legislation and itation is being managed within a regional context, regulations introduced. A brief analysis of the in- with national focal points designated to address stitutions responsible for the application of legisla- regional accreditation issues. tion shows that institutional capacity has increased in recent years. With regard to research institutions, Consumer Interests. Mozambique has three organ- the establishment of a Ministry of Science and izations representing consumers' interests: PRO- Technology to develop programs that will enhance CONSUMERS, DECOM and the Consumer research capacity in the country is ongoing, and Protection Institute, the first two being very active. supervision activities in some other Ministries are These consumer associations have seats on the var- being improved. MADER is also reorganizing its ious committees and working groups dealing with research institutions. There is limited capacity to standardization and metrology. The associations enforce existing technical regulations. The quality are newly established and lack the technical capac- inspections at the border and in shops are not effi- ity to become more active in this aspect. The gov- cient because of the lack of infrastructures and per- ernment has selected Intertek Testing Services to sonnel. Laboratories are not well-equipped and carry out pre-shipment inspections, while SGS per- they face the same problems as the other public forms inspections of exports, which is contracted institutions. by a third party. It is believed that the growing need Mozambique has also participated in standardiza- to follow international standards, the SADC Trade tion activities in the SADC region. The business Protocol, and the process of state sector reform, will community, however, needs to be more involved in contribute to the improvement of public institu- the development of Mozambican standards. Priori- tions involved in the standardization process. tizing standards-related activities is a major challenge for Mozambique. Consumers, in general, do not de- Aligning Goals with the Southern African Devel- mand quality, volume of production is low, and the opment Community (SADC). Mozambique has a few export products are guided by specification final draft quality policy (under consideration for requirements for different destination markets. approval) and a five-year strategic plan, which will Weights and measures inspection in Mozambique is be implemented when funding is identified from virtually non-existent and the infrastructure that public budgets. The plan is intended to align with would create confidence in the accuracy of meas- the SADC Trade Protocol goals, which emphasize urements in the country is only now being devel- the need for harmonization of standards and oped. There is no formal sub-system of certification technical regulations as one of the ways to facili- except for some government bodies which carry out tate trade in the region. The need to properly man- preliminary inspections. age programs related to quality, in general, and to standardization, in particular, has led the Mm- Certification. In addressmg certification constraints, istries in charge of Industry and Trade in the INNOQ has established cooperation agreements region to adopt a Memorandum of Understanding with its Portuguese counterpart the Portuguese on Standardization, Quality Assurance, Accredita- Association for Certification (APCER)-and with tion and Metrology (SQAM). Participation in the South African Bureau of Standards (SABS), regional and international standards-setting or- aimed at starting joint activities in certification. Pri- ganizations is, however, limited to officials from vate sector adoption of the ISO 9000 standard is various government organizations. Language bar- also encouraged and under way. Three firms, in the riers, inadequate financial and technical capaci- service sector, have been by ISO 9000-certified stan- ties, and a lack of awareness regarding SQAM dards, one by SABS and two by APCER. However, issues are among the constraints that restrict cement is the only Mozambican product certified effective participation in both regional and global by SABS. Certified companies utilize accredited standards-related activities. xlvii Standards and Global Trade: A Voice for Africa Finally, the study highlights priority action items predominantly dependent on crude oil exports. which require urgent attention. These include: Diversification of exports is a major challenge for (1) the development of an appropriate regulatory Nigeria, and agricultural exports and output has system including one for food safety protection; declined. The dissolution of Commodity Boards, (2) effective control mechanisms for import and expected to stimulate the growth and diversity of export goods; (3) development of an appropriate non-oil exports by the private sector, has had a neg- standards-setting system including facilities for ative effect on the quality of agricultural products training, metrology, accreditation, testing and because the quality control functions of the com- certification; (4) strengthening of the country's modity boards were not promptly reinstated. participation on regional and international Nigeria has skilled laborers, however, it lacks the standards-setting bodies; and (5) support of the resources and vintage infrastructure to conduct sci- development of selected sectors in order to im- entific research and properly harness inputs into prove exports. Proposed projects to deliver these standard development. For example, apart from the action points are highlighted in the concluding fact that standardization equipment is obsolete, section of the case study. modern communication equipment is lacking, including computers, which directly impacts 3. Nigeria Nigeria's ability to benefit from standards and re- lated information information technology systems The private sector in Nigeria is faced with crippling can provide. constraints such as high cost of production arising In Nigeria, though local legislation relating to from devaluation of the local currency, high interest standards and technical regulations predate the rates, increasing energy costs, inadequate infrastruc- WTO SPS Agreement, enforcement is weak, espe- ture such as telecommunication, and transportation cially since the elimination of the Commodity and domestic policy barriers. These factors are Boards system in Nigeria. This has led to the rejec- directly related to high costs of production and the tion of Nigerian products in importing countries. failure of private enterprises. Even if these factors are The evidence shows that many of these rejections removed, producing to meet the required interna- were due to the fact that commodities were not tional standards remains a challenge. Undoubtedly, certified and were not subject to pre-shipment in- if non-standard related constraints are removed, this spection. Through its standards regulatory agencies, will lower the cost of standards compliance. Yet, SON, NAFDAC, and PQS, Nigeria has been involved meeting quality standards still remains a problem to in standardization; however, serious constraints are be solved if Nigerian firms are to derive full benefits evident. These include; inadequate equipment and from the market opportunities created through the skilled technicians, lack of capacity to conduct risk WTO, AGOA, bilateral agreements, and regional assessment, and a limited laboratories accreditation market initiatives. program. These constraints suggest priority areas As in the Mozambique study, the chapter on for technical assistance. Most programs in techni- Nigeria examines the awareness and impact of in- cal assistance since 1995 have been supported by ternational standards and technical regulations on multilateral institutions such as the UNDP, Nigeria's trade. It also assesses the current status of UNICEF, UNIDO, IAEA, and FAO, among others. its laws, regulations, capacities and programs relat- In Nigeria, the level of awareness by local firms ing to standards and technical regulations. Addi- and farmers with international standards is mixed. tionally, the level of participation in international One reason for this is inadequate funding that lim- standards-setting processes is identified, and areas its outreach and communication activities of pub- needing priority attention at the national level are lic and private sector groups. Public agencies have listed. The chapter provides recommendations on developed strategies to improve the dissemination key steps to be taken by government, private or- of information including organizing workshops ganizations, and relevant international develop- on food safety and quality focusing on hygienic ment agencies to alleviate negative impacts and practices, HACCP, and GMP; use of technical/ strengthen positive influences. news publications, informative press releases from Unlike Mozambique and the other countries the press and electronic media, advertisements, reviewed in this volume, the Nigerian economy is interviews, talk shows, consultative meetings with xlviii Introduction stakeholders, corporate briefs, paid advertise- tially away from primary exports to processed and ments, and interviews. Other recent programs manufactured merchandise. While some progress have focused on the issuing of communiques, dis- was made to penetrate "new" (geographic) markets, tribution of information and handbills, and at- the traditional markets of the developed countries tendance at commodity shows. Nonetheless, pub- remain particularly important. Ties with these mar- lic awareness of quality and related standards is kets are believed to have become even stronger as still very low. the result of the SA-EU TDCA and the AGOA of The Nigerian study advances the following pri- the US. Deeper penetration into the more sophis- ority actions: need for a 'Standards Campaign' in ticated domains of international trade, as suggested the six geopolitical zones of Nigeria to create and by these developments, increasingly requires South sustain awareness among consumers and produc- African producers to comply with applicable inter- ers especially small scale producers; need to national standards to reap the benefits inherent in strengthen the National Codex Committee includ- standards compliance. ing its Secretariat to be able to modernize and in- It remains important in South Africa to build on tegrate properly into international standardization existing standards and compliance infrastructure, processes; equipment should be upgraded through especially with regard to regulatory standards. Frag- procurement of new technology in conformity with mentation in a different sense, of the functions of assessment and risk analysis; staff knowledge re- standards-setting, compliance and dispute settle- quires upgrading, especially with regard to demon- ment, in the case of South Africa remains to be strating equivalence of standards through regular addressed. Furthermore, apart from regulatory scientific training of laboratory staff; and coopera- requirements, standards that are being imple- tion among regional (ECOWAS) members for at- mented in the procurement of merchandise by large tending international standards-setting meetings developed country importers in the retail sector should be engendered; harmonization of standards can, in fact, become barriers to trade. through the ISO, ARSO, etc., should continue and While the SQAM initiative in South Africa ap- be intensified by ensuring regular attendance of pears promising, problems are evident at several meetings; budgetary provisions from the Nigerian levels (See the full chapter in this volume for more government to standards institutions should be complete details). These are briefly: There are idio- improved; bilateral technical assistance needs to be syncrasies in the budgeting system. While the NML introduced and sustained in line with the require- and SANAS submit their budgets to the Ministry of ments of the relevant articles of the SPS and TBT Trade and Industry for approval, the SABS is allo- Agreements; formation of well-equipped private cated its core funding through Parliament's Science laboratories need to be facilitated by providing the Vote for the Science Councils. This means that the enabling environment through relevant laws; and SABS is forced to "compete" with research organi- information and telecommunications facilities zations for funding (which the SABS is not). The should be modernized to enhance good manage- notification link to the WTO via the SABS works ment of the standardization process. Some project well. However, there is no effective mechanism of ideas to facilitate the implementation of these rec- notifying South African industry of foreign techni- ommendations were also identified. cal regulations. This means that industry is often not informed of draft regulations in other coun- 4. South Africa tries. The process of standards harmonization within SADC has also been very slow. This is due, During the 1990's, South Africa stabilized its in part, to the fact that member states' delegates fail macro-economic environment thereby laying the to participate in technical committee meetings due foundations for more rapid and sustainable growth. to financial constraints. Trade liberalization played an indispensable part in The interaction between government depart- this process and the economy is increasingly being ments in standards matters is limited. There are, for drawn into the global economy while the overall example, no regular meetings between government economic growth rate is becoming even more de- officials to discuss issues of common interest in stan- pendant on export growth than ever before. The dards and technical regulations. The main obstacles composition of the export basket changed substan- to participating in the process of standards-setting xlix Standards and Global Trade: A Voice for Africa are timely notification, capacity in dealing with stan- stimulated the growth and diversity of horticultural dards-setting, language barriers, length of protocols exports by the private sector. The share of non- and poor commercial understanding of those traditional exports in total exports rose from about charged with negotiating on behalf of industry. The 14% in 1990 to just less than 40% in 2001. How- agencies that serve as national contact points for ever, the diversity of Ugandan exports in terms of CODEX and IPPC have performed well, however, market destination is still lacking as the country's consultations with other departments needs to be exports destined the European Union alone (about strengthened. 69% in 1999) has been rising over the past decade. Although the cost of compliance to standards, Whereas pohcy-oriented constraints to external based on an initial review of results of the World trade (e.g., tariffs, quotas, etc.) have reduced consid- Bank Technical Barriers to Trade Survey, appears erably over the past ten years, the role non-policy- not to be a primary obstacle to firms, problems are induced constraints, including poor infrastructure, apparent in the following areas: (a) non-transpar- inefficient institutions and stringent standards, are ent international conformity assessment require- increasing to significantly impact external trade. ments that lead to lengthy intervals before infor- Much as the infrastructure and institutional con- mation is received; (b) the foreign cost component straints are important factors in limiting external for SMEs; and (c) the need to upgrade facilities, e.g., trade, the Uganda analysis focused on the role and in plant equipment, hampers the ability of SMEs to impact of standards and technical regulations on the participate in serving international markets. competitiveness of Ugandan exports. The study shows that the South African govern- The responsibility of developing, monitoring and ment does provide significant assistance to SMEs in enforcing standards in Uganda falls under different standards, quality assurance, accreditation and ministries. Implementation of sanitary and phy- metrology. Most respondents interviewed in South tosanitary requirements is the responsibility of the Africa agreed that conformity assessment is impor- Crop Protection Department at Kawanda Agricul- tant to export success and that SMEs had benefited tural Research Institute (KARI) and Fisheries De- from ISO 9000 certification, not only from a busi- partment under the MAAIF, while those m the ness point of view but also from a management manufacturing sector are implemented by the point of view. UNBS which falls under the Ministry of Tourism, Trade and Industry. Currently, these institutions 5. Uganda have limited capacity (both personnel and infra- structure) to effect their mandate. For example, Uganda has implemented a range of trade policy there are 28 government gazette custom entry/exit reforms since 1987. These reforms have aimed to points that are supposed to have inspection units reduce or eliminate policy biases against exports, in Uganda, but presently SPIS, a department in the while others have included direct export promotion MAAIF based at KARI, serves only 11 points. measures. The significance of policy-induced bar- UNBS faces considerable constraints mainly riers to trade has been substantially reduced. The regarding human capacity and infrastructure foreign exchange market has been liberalized while requirement to fulfill its obligations, (i.e., inspec- domestic and external marketing of monopolies tion, monitoring and enforcement of the compli- have been abolished. Producer and consumer prices ance with the standards). It lacks equipment, have been deregulated. Tariff rates have either been sufficient technical staff and financial resources. reduced or rationalized and some non-tariff trade UNBS requires about 130 technical staff but only restrictions (e.g., quotas, import ban, etc.) have 50 are in place currently. Four laboratories (lo- been converted into tariff equivalents, and taxes on cated at Nakawa in Kampala) are still seeking exports have been abolished. international recognition. The constraints to ac- These policy initiatives have provided incentives, creditation are mainly both the lack of equipment in the form of increased producer prices and to increase the capacity of these laboratories and prompt payment, to farmers resulting into in- the financial resources to commence the accredi- creased growth and diversity of Ugandan exports. tation process. The overall estimated cost of re- For example, the elimination of the monopoly by structuring the four laboratories for accreditation the Uganda Produce Marketing Board (PMB) has is US$12 million. In addition, UNBS lacks their Introduction own permanent office space which is expected to have also played a role in standards development, cost US$11.4 million. monitoring and enforcement. For example, the At the regional level, a lot of progress has been TQM, which started operations in 1988 and is af- attained in standardization programs since the re- filiated with International Quality Media AS (a vival of EAC in 1998. The work on harmonization Norwegian Company), trains corporate bodies and of laws regarding legal metrology has started. Train- other organizations in the Total Quality Manage- ing needs in standardization, quality assurance, ment process as per the ISO certification standards. metrology and testing have been identified but they The cost of training and certification tends to be needed funding. About 207 standards for goods and prohibitive to small business establishments. Certi- some codes of practice have been harmonized and fication costs are about US$3,000 and training costs notification of harmonized standards to WTO has average US$7,000, which is done every 3 years. been made. An idea of establishing the East African There are projects providing financial assistance to Accreditation Body for Quality Systems has been organizations to train for compliance with ISO mooted and consumer organization, in the region standards. For example the BUDS-SSE project un- are slated to participate in the development of der PSF has assisted about 40 organizations while regional standards. the USAID funded SPEED project is presently as- The sector-specific diagnostics on the Uganda sisting the fish industry and will move to other sec- study focuses on the coffee, fish, honey, floriculture, tors and a European Union project EBAS based in horticulture, and light manufacturing sub-sectors. Nairobi. These sub-sectors are very important export earn- Overall, there is considerable appreciation (both ers and employment providers in Uganda. Further- by public and private producers) of the need to de- more, the fish, flower and horticultural exports have velop and comply with standards but major prob- experienced considerable improvements over the lems in the setting, monitoring and enforcement of past decade and these are sectors where quality re- standards remain and include the following: quirements have shown to be more stringent. There have been numerous private initiatives to develop, (a) There is limited capacity (both in infrastruc- monitor, and enforce standards under producers/ ture and technical personnel) in most institu- exporters' associations and codes of practice. tions responsible for the setting, monitoring Producers/exporters' associations undertake train- and enforcing of standards in the country. ing to their members in matters relating to quality There are some efforts underway to harmonize management. standards across the region, mainly in the East The study also points out areas where incen- African community (EAC) and COMESA, tives/penalties for producers to comply with stan- which may reduce costs of enforcement of stan- dards are non-existent or weak. Enforcement of dards compliance. standards is also found to be weak, though with (b) Compliance to standards requirements is largely variation with different stages in production and being spearheaded by producers mainly for ex- distribution chains and across sectors. Fast growing port markets. Therefore, compliance applies to but relatively new sectors (e.g., horticulture, honey, only a small portion of production. This limits etc.) are poorly organized. Uganda's horticultural producers from taking advantage of standards sector comprises of small, scattered and poorly fi- development and compliance, which would not nanced producers and exporters, which makes it be so if standards requirements were uniformly difficult to organize and regularize their standards applied to output irrespective of the market. on quality assurance, pest and sanitary control at (c) There is limited awareness of the nature and ex- the farm- or firm-level. Capacity to carry out pest istence of standards (at varying levels) among risk analysis is also very weak and this undermines producers, particularly international stan- export market opportunities created by trade pref- dards.However, some sectors have attempted to erential agreements like AGOA that require such develop and enforce standards in the form of tests and standards. codes of practice, which demonstrates the Private institutions (e.g., SGS, ACE, TQM and wlllingness to comply with standards and producers/exporters' associations with voluntary appreciation of the importance of standards by standards, as specified in various codes of practice). producers and exporters. Standards and Global Trade: A Voice for Africa (d) The enforcement of standards is more at the Collier, P. and Gunning, J. W. (1999), "Why Has Africa export level, yet the standards or quality con- Grown Slowly?", Journal of American Perspectives trol should start right from the first point of 1 3, No. 3 (Summer 1999): 3-22 Collier, R and Gunning, J. W. (1999), "Explaining production through the production chain and African Economic Performance", journal of Economic distribution system. Literature, Vol. XXXVII (March): 64-111 (e) Inspecting, monitoring, and certifying local Deardoff and Stern (1998), "Measurement of Non-tariff firms with international recognition are limited. Barriers", University of Michigan Press. Acquiring these services from foreign firms are Fafchamps, M. (2001), "Networks, Communities and Markets in Sub-Saharan Africa Implications for Firm very expensive for most producers. There are Growth and Investment", Journal of African considerable cost savings if local firms are ac- Economies, 10 (2): 109-142 credited for certification to the level of other in- Finger, J.M. (2002), "The Doha Agenda and Develop- ternational standards-setting bodies. UNBS and ment: A View from the Uruguay Round", Paper pre- other government agencies responsible for de- pared for presentation at the annual meetings of the veloping and enforcing standards are inade- Asian Development Bank, Shanghai, China, May 11, 2002. quately funded and understaffed; therefore they Fischer, R and Serra, P., (2000), "Standards and Protec- do not perform to the expectations. tion", journal of International Economics, 52, (f) Incentives for compliance with standards are p. 377-400, 2000, FONDECYT 1950513. still weak in some sectors, such as coffee, but Fouroutan, F. (1998), "Comments on "Why is Trade Re- strong in other sectors, for example in fish and form so Difficult in Africa?" by Dani Rodrik", journal of African Economies, 7 (1), AERC Supplement May flowers where no sales can be made without 1997. pp 146-149. meeting the standards. Fosu, A.K, et al (2001), "Business Environment and In- vestment in Africa: An Overview", journal of African The subsequent sections of this book present a more Economies, 10 (2): 1-11 detailed case-by-case analysis of the issues outlined G8 Africa Action Plan, (2002), see above. Chapter 1 presents the case study and action http://www.state.gov/e/eb/rls/othr/I 151 5.htm Global Economic Prospects and the Developing Coun- plan for Kenya in greater detail. Chapter 2 discusses tries (2003), Washington D C., World Bank. challenges and opportunities for bridging the stan- Global Poverty Report (June 2002), "Achieving the Mil- dards divide in Mozambique. Chapter 3 examines lennium Development Goals in Africa: Progress, evidence of Nigeria's participation in international Prospects, and Policy Implications", Washington standards development, and prospects for non-oil D.C., World Bank. epr'role in set- Guillaumont, P. et al, "How Instability Lowers exports. Chapter 4 reviews South Africa's role In set- African Growth", journal of African Economies, ting international standards and opportunities for 8 (1): 87-107. advancement. Chapter 5 provides a detailed study Gyimah-Brempong, K. and Traynor, T.L. (1 999), "Politi- of Uganda's standards development system. cal Instability, Investment and Economic Growth in Sub-Saharan Africa", journal of African Economies, 8 (1): 52-86. References Helleiner, G.K. (Eds) (2002), "Non-Traditional Export Promotion in Africa: Experience and Issues", United Amiadi, A. and Yeats, A. (1995), "Non-tariff Barriers Nations University Africa Faces. What Did the Uruguay Round Accom- Hertel, TW., Masters, W.A, and Elbehri, A. (1998), "The plish, and What Remains to be Done?", Policy Re- Uruguay Round and Africa: a Global, General Equilib- search Working Paper No. 1439, Washington DC rium Analysis", Journal of African Economies, 7 (2): World Bank 208-234. Akyuz, Y and Gore, C. (2001), "African Economic De- Hoeffler, A. (2002), "Openness, Investment and velopment in a Comparative Perspective", Cam- Growth", journal of African Economies, 10 (4): bridge Journal of Economics, 25:265-288 470-497. Callaghy, T.M. (1995), "Africa and the World Political Hoekman, B. et al (Eds), (2002), "Envisioning Alternative Economy- Still Caught Between A Rock and A Hard Futures: Reshaping Global Trade Architecture for De- Place", Africa in World Politics, 2nd edition, eds. John velopment" in Development, Trade, and the WTO- W Harbeson and Donald Rothchild (Boulder West- A Handbook Washington DC: World Bank view Press, 1995), pp. 41-68 Hoekman, B. et al (2002), "Reducing Agricultural Tariffs Coe, D T and Hoffmaister, A.W. (1999), "North-South versus Domestic Support: What's More Important for Trade Is Africa Unusual?", journal of African Developing Countries?" Policy Research Working Economies, 8 (2). 228-256. Paper No. 2918, Washington DC, World Bank Introduction lanchovichina, E et al (2002), "Unrestricted Market Ac- Rodrik, D. (1998), "Why Is Trade Reform So Difficult In cess for Sub-Saharan Africa How Much Is It Worth Africa", journal of African Economies v7, nO (Supple- and Who Pays?" Journal of African Economies, 10 ment 1 June 1998): 43-69 (4): 410-432. Sachs, J. and Warner, A (1995), "Economic Reform and Ingo, M. and Winters, L A. (Eds), (2001), "Agricultural the Process of Global Integration", Brookings Papers Trade Liberalization in a New Trade Round: Perspec- on Economic Activity vO, nl (1995): 1-95 tives of Developing Countries and Transition Sachs, I. and Warner, A. (1997), "Sources of Slow Economies", Discussion Paper No. 418, Washington Growth in African Economies", journal of African DC: World Bank Economies v6, n3 (October 1997) 335-76 Lall, S. and Wangwe, S. (1998), "Industrial Policy and Sachs, J. and Warner, A. (1997), "Fundamental Sources Industrialization in Sub-Saharan Africa", journal of of Long-run Growth", American Economic Review African Economies, 7 (1)- AERC Supplement May v87, n2 (May 1997): 184-88 1997: 70-107 Shafaeddin S M, (1996), "Risks of Future Marginalization Maskus, K and Wilson, I.S. (2001), "A Review of Past At- of SSA in International Trade" Geneva, Switzerland: tempts and New Policy Context", in "Quantifying United Nations Conference on Trade and Develop- the Impact of Technical Barriers to Trade: Can it be ment. Done7" by Maskus, K and Wilson, J S (Eds), Univer- Standards and Trade Database (2003), "TBT Survey Re- sity of Michigan Press. sults on Kenya, Mozambique, Nigeria, South Africa, McCarthy, C "Opportunities and Challenges Facing and Uganda", Washington DC, World Bank Africa in the Development of Key Export Sectors Un- Wang, Z K and Winters, L.A. (1998), "Africa's Role in der the WTO Agreement-A Focus on Mining, Man- Multilateral Trade Negotiations Past and Future", ufacturing, and Services", WTO Framework Papers Journal of African Economies, 7 (1)- 1-33 (CRC-3-5), Collaborative Research Prolect Waniala, N (2001), "Impact of SPS Measures on Michalopoulos, C. (1998), "Developing Countries' Par- Uganda Fish Exports", Paper presented at the ticipation in the World Trade Organization", Policy UNCTAD-sponsored Workshop on Standards and Research Working Paper No 1906, Washington DC, Trade, Kampala. World Bank Wilson, J.S (2001), "Advancing the WTO Agenda on NEPAD Initiative on Market Access (2002), see Trade and Standards: A Developing Country Voice in http l/wwwl worldbank org/wbiep/trade/Standards/ the Debate", Draft Paper Prepared for the African files/agr-init-mkt-access Rdf Economic Research Consortium Conference on Trade, Ng, F. and Yeats, A. (1996), "Open Economies Work Geneva, March 8-9, 2001 Betterl Did Africa's Protectionist Policies Cause its Wilson, ).S. et al (2001), "A Race to the Top? A Case Marginalization in World Trade?", Policy Research Study of Food Safety Standards on African Exports", Working Paper No. 1636, Washington DC, World Policy Research Working Paper No. 2563, Washington Bank DC: World Bank Ng, F. and Yeats, A (2002), "What Can Africa Expect Wilson, J.S. et al (May 2001), "Agriculture in the from Its Traditional Exports7" Africa Region Working WTO The Role of Product Attributes in Agricultural Paper Series, No. 26. Washington DC, World Bank Negotiations", The International Agricultural North, D.C. (1990), "Institutions, Institutional Change Trade Research Consortium Commissioned Paper and Economic Performance", Cambridge University Number 17 Press Wilson, I.5 and Otsuki, T, (2001), "To Spray or Not to Oramah, B 0 and Abou-Lehaf, C (1998), "Commodity Spray: Pesticides, Banana Exports, and Food Safety", Composition of African Trade and Intra-African Trade Policy Research Working Paper No. 2805, Washington Potential", Journal of African Economies, 7 (2) DC: World Bank 263-300 Wilson, J.S. and Otsuki, T., (2001), "Global Trade and Oyejide, A. et al, (2001), "Quantifying the Trade Impact Food Safety: Winners and Losers in a Fragmented of Sanitary and Phytosanitary Standards. What is System", Policy Research Working Paper No. 2689, Known and Issues of Importance for Sub-Saharan Washington DC World Bank Africa" in "Quantifying the Impact of Technical Wilson, I.S. (2002), "Standards, Regulation, and Trade. Barriers to Trade. Can it be Done?", Maskus, K and WTO Rules and Developing Country Concerns", in Wilson, ).S. (Eds), University of Michigan Press. Development, Trade, and the WTO-A Handbook, Oyejide, A. (1998), "Using Trade and Industrial Policies Bernard Hoekman, Aaditya Mattoo, and Philip Eng- to Foster African Development: Some perspectives on lish, eds Washington DC: World Bank Issues and Modalities", Journal of African Economies, Wohimuth, K. et al (Eds), (2000/1), "Africa's Reintegra- 7 (1)- (AERC Supplement May 1997), pp 34-42. tion into the World Economy: Part A. Basic Issues", Oyelide, A. (1998), "Trade Policy and Regional Integra- African Development Perspectives Year Book tion in the Development Context: Emerging Patterns Wohlmuth, K. et al (Eds), (2000/1), "Africa's Reintegra- Issues and Lessons for Sub-Saharan Africa", Journal of tion into the World Economy: Part B: Country Case African Economies, 7 (1): (AERC Supplement May Studies", African Development Perspectives Year 1997), pp. 108-145. Book Standards and Global Trade: A Voice for Africa Wood, A. and Mayer, 1. (2001), "African's Export Struc- Yeats, A. et al (1996), "Did External Barriers Cause the ture in a Comparative Perspective", Cambridge Jour- Marginalization of Sub-Saharan Africa in World nal of Economics 2001, 25: 369-394. Trade?", Policy Research Working Paper No. 1586, World Development Report (2002) "Building Institu- Washington DC World Bank tions for Markets", Washington DC: World Bank - Yilmaz, A. and Gore, C (2001), "Africa Economic Yeats, A. (1994), "What are OECD Trade Preferences Development in a Comparative Perspective", Worth to Sub-Saharan Africa?", Policy Research Work- Cambridge Journal of Economics v25, n3 (May ing Paper No. 1254, Washington DC: World Bank 2001). 265-288 liv M P P~ n it r~ market access to export markets. IM PROVING For Kenya, international stan- SA A k ,dards are important because MARKET ACLCESSJ trade is an important contribu- DT r at T N tor to GDP with merchandise T H 1 A) U G Hj trade contributing about 40 per- ST~AND 'I~ARDS cent of the total GDP. Agricul- S TAIN DARD S tural commodities and agro- processed products dominate COMPLTANCE this trade. Thus noncompliance with international standards for trade in goods affects the per- formance of the Kenyan econ- A Diagnostic and Road Map for Kenya omy because they have an impact on agriculture, which is the back- bone of the economy. In practice, however, standards m and technical regulations may be ENYA'S ECONOMY RELIES HEAVILY ON AGRI- strategically used to enhance the competitive posi- CULTURE AND EXPORTS OF AGRICULTURAL tion of countries or individual firms. Depending on commodities and agroprocessed products that industry or market circumstances, standards and dominate its international trade. The removal of re- technical regulations can raise or lower economic ef- strictive trade policies by importing countries, par- ficiency, promote or block competition, facilitate or ticularly Europe under the ACP-EU Lome Agree- constrain international trade, and enable or exclude ment contributed to the good performance of the the participation of the poor in remunerative eco- nontraditional exports in Kenya. This was further nomic activities. sustained by trade liberalization in the country. The different integration organizations within This study focuses on the impact of international Africa are expected to operate as building blocks to- standards and technical regulations on the current ward the achievement of a single large market on and prospective trade of Kenya, and documents the the African continent. According to Kenya's Devel- challenges and opportunities faced by the country opment Plans (1997-2000 and 2002-08), the coun- in meeting international agreement obligations. try will work toward the continued reduction and International standards play an important role in eventual elimination of tariff and nontariff barri- international trade with the advent of reductions in ers to trade among members of a common trading tariff and nontariffs barriers to trade. This is because bloc, while recognizing the need to implement failure to meet international standards for goods and changes at the institutlonal level to promote these to comply with the WTO SPS Agreement can inhibit regional initiatives. o 'idNr-..a o \ o 0 - N N o a tn m o N m - ' N N V o o o t o N N W L o O .N N - o - M - N _ o o M _ N %0 \ o m N 0 L NS 0 - N N 0 _ o m NNa0 LOO O oe) 'r On o14 O 00 0 o x_ N o N 0 _ n 'ON oN N _ _ - _ - _ t - N q o- - N v 0 NLO0 , x oo 00 Vf o o .N Ns \o o UP m O vNO o 0'N /O' (>s svN - - - - \ - .-t 0% m 002 m *n rs Cs o r. IN CN In o In ri o In \P "I \I \. _i vo V: o N 0r co cl v m o K ooN N Le oo x o O en _ r- N \0 0 Ln M VnN P C\ O PI,r X _ - O NL N t C)14 14- C v~N \0_ £ \0 0 On ur4 PS O O 0s V) V L) N 1 s(°0 st V, 1N r1 _ o_ 0NE N O V) 6 u S - 0* e NN O N - - - - - - 0 E 0' CY) C\ 0 'I - 0 NN~~~~~~~~~~~~~~~~~~~~~~~ C .' aN%0 'OefN N%0vtoN 0 = N N - = = - _ - - =- - = = _ _ 0 = = . _ _ _ _ _ = L 1I. N t 0 LM O1 I N N F N - - - -O~C~f -2°s-X z 0. 0'' o o- 0' \0NtO \ eo _r N n_\ C 0 NrnU C 0\ 't N r'0 m \0 0 00 _ _ L) rNr 0\ O No 0'n00 0i N O N 8- - o - D 00~~~~~~~~~~~~~~~~~~~~~~~ C)~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ -C M,~~~~~~~~~~~~~~~~ O 'CN~0 'Crnu2uO _m nLOLL 0 Cv __ g -~~~~~~~~~~~) - 0' t "q -0 t, c :3 w a) C E AA 604~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~a 0'NNotoN. E IIIIIIIrorn -'rn O 'O I 0 0 Z p 0 -~~~~~~~~~~ N ~~~~0 CI C C CC- 006L6 0' ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~ Ut.) - -~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~4 0-0,' 0' CuE~~~- m 0 U 0 0 ~~~ - u C c c u ~ ~ Q w0c I Cu Cu6- 0 0 Lu 0 z~~~~~~~~~~~~~~~~~~~~~~~~~~~~C E ~ > 0 ' 0 Cu ~~~~~~~~~~~~~~~ ~ ~ ~~~~~V - 0Q V) w 0 M 0 ~~~~~) O-O*- <~ Cu CL o Udc inUC Cu cu U-w o o ' c S I _ N ES _ rs U~~~) \0 a _ 0 _ _ en O ) O ) O O > 0 N 00 fn - 0\ \0 00 0\ o £_ N on o N on o P, rn re '0Nc N N N 'T V N \ N - q \0 en -< v o X o CO _ x -s 1 \ O 0\ in Nr _ M 00 1\ Vn M \0 X0 W) 0\ a0 rN a\ in _ ° 0\ _ IT v ¢ I- n N N N \ - t r v \ -, E\ _ C> 0 oo , \0 0 r %O 00 n rn OO G\ \0 C\ % \0 C) 0 vN \ N 'r Xa g) a\ In eS-N N \o * N ( SN %0 00 _: f _ > CN e N ,c6 a _ _ ___14_ _ ___ _ 0\ : ,, > ;' n ^ n , -~~~~~~~~~~~~~~~~~~~~~~~ CY z Io Improving Market Access Through Standards Compliance: A Diagnostic and Road Map for Kenya The second decade after independence (1974-80) significant economic and governance reforms. Thus coincided with the first international oil and en- in 1993, Kenya established significant structural and ergy price crisis of 1973 that witnessed a decline macroeconomic reforms to create a more conducive in economic growth in the mid-1970s. The onset environment of economic growth (WTO 2001). of the oil price crisis revealed serious structural These reforms included price decontrol on all com- constraints within the economy (World Bank modities, removal of import licensing and foreign 1994). Agricultural growth slowed as the forces exchange controls, reforms in the financial sector that boosted its production during the 1960s weak- and in investment incentives, abandonment of im- ened. In addition, the policies used favored the port substitution, adoption of outward-oriented industrial sector at the expense of the agriculture policies and privatization of public enterprises. sector (Nyangito 1999; Ikiara and others 1993). In- Kenya also dismantled its quantitative import re- dustrial growth declined because of a weak incen- strictions and price controls on important pro- tive system that favored production for the domes- ducts; tariffs remained the main trade policy in- tic market over international market, and because strument. The tariff structure was rationalized and of diminishing opportunities for efficient import incentive schemes were initiated. Several public en- substitution. These factors were exacerbated by terprises were restructured and the influence of the collapse in 1977 of the EAC, which was the most agricultural boards reduced. traditional market outlet for Kenyan industry, The policy reforms have had an important im- and the growing inefficiency of public industrial pact on the balance of payments, which in turn has investments. After the second international oil affected the performance of the economy. The re- price crisis in 1977 and the severe drought in lated financing needs, the pursuance of a tight mon- 1984, the structural constraints worsened leading etary policy and the high level of nonperforming to slower growth, high inflation, and deterioration loans in commercial banks' portfolios contributed in the balance of payments. The economy grew to the maintenance of high interest rates. The high at an average of 5.2 percent per year during that level of interest rates, and the relative stability of in- period. terest rates and the Kenyan shilling favored short- By mid- 1980s, severe structural constraints term capital inflows. Through sales of treasury bills, emerged within the economy that prevented it from the Central Bank of Kenya (CBK) sterilized the im- achieving the growth rates of the 1960s. Although pact of its intervention in the foreign exchange mar- indications pointed to the oil crisis, other countries ket to contain the appreciation of the Kenya shilling that were at the same level of economic develop- that could result from large capital inflows. The ment as Kenya and that faced simflar external sterilization policy fueled the increase in interest forces, were able to emerge from the crisis un- rates (WTO 2000; Ndungu and Ngugi 2000). Re- scathed because of sound macroeconomic and sumption of economic growth, which led to a structural flexibilities (WTO 2000). It became evi- higher increase in imports than exports, con- dent that Kenya's internal policies and structural tributed to further deterioration of Kenya's trade rigidities were constraining the country's economic deficit in 1995 and 1999; Kenya has run a current growth and development. This led the government account deficit since then (see Table 1.3). to adopt structural adjustments programs through the publication of the Sessional Paper No. 1 of 1986 Foreign Direct Investments and Overseas Devel- on Economic Management for Renewed Growth opment Assistance. The evolution of foreign direct (Kenya 1986). uivestments (FDI) has been somewhat erratic over The reforms, though effective in terms of reduc- the past decade, with a general downward trend ing protection and encouraging manufactured ex- (WTO 2000). FDI in Kenya was some US$20 million ports, did not bring about any meaningful im- in 1997, up from US$13 million in 1996. The FDI in- provement in the performance of the economy. flows to Kenya averaged US$10 million per year dur- Indeed, if any thing, the economic growth rate con- ing 1992-97, against an annual average US$35 million tinued to decline and registered an average growth during 1986-91. FDI increased in 1994 as Kenya's of about 4.1 percent in 1990, 2.3 percent in 1991, economy recovered and reached US$33 million in 0.5 percent in 1992, and 0.2 percent in 1993 when 1995. A downward trend in FDI has been recorded the country was denied donor aid until it initiated since then. As a percentage of gross fixed capital 10 00 n 'T 00 It rN li q t t s "o O It Ln- N ' _ T rS eN m 0 ' 0 V- t . o a0 oo oo rN x a 0 o * 0% rN \o o - o o N m oo ro e N 0 i N - 0 N O O o4 0 es _ N 0rN eo- - - _(C N N N e - N r-r(Ns - I I r _ _ ( N ON % oN CO N en n M M a rm Ln v 0 C, 'IO m o oN n rn 00 to - 0 N N ~~~~~~~~~O~ Li 00 'I 'IT srx v N m C o \0 . P E _0 rS 00 N 00 V, fN CY 00 cn -)L - .> 0\ 0 M .> sr, r - 00 Nm C0 - cnD - N V ---- r- \- V- 0\ 00 M C- o r eN O \ Oo t N M N 0 o Vn \ oo NC4 00 ~O 'I- Ln 00 P, N 00 O\ IT 'T C> N o\ 0\ IT 0 No \. 00 , % O Co\- \ O %N r\ - T n4 N ' N N N~~~~~~~~~' In C\ \0 00 oEooa oo N OR Ct IN 0\ N o \o ur O\ M t1 In 'IT un tZ M r C> C or N oo M 7 'i Lr CN vi 0% enN % 00 - 0 : \CO e N 00 It ON 0\O _ 00 0 C\' Ch- - 1 ( N . t(N Nn _-I -( e I 0(N _ 0 N( CO0 00 0 (N\N 0%0V 0 . 0 O ' Lo In 04 oT O Gs VE 6 oo _n o - 4 O~ IT _i Aa o 00 n \0 si 00 O 0 o% (-(N N 0 o0 O 'I- N oO, 0 - N N enCOn o o 0 % Vo _- V- '(N b K N o o oo oo oo aCO o eN u- C r . X O( 'I _ ' t 1N 0P CO _ O N m r O 00 0 I I _ fS _00%_II I _- _ - - = I I _\0 enN _ C\ 00 _ _C \ N-0 N e O O0 m m 00I - O 0I_ D (N 00 0 00 _0%0n 0 n ( N 0000 0 O v - I V en Cn , V (N - eN N n en \ O _ -n m - - - -(N re ~ ~ ~~~% Io ES \ > 0E f8 n rl C) 'IT 00 00 r 000 ffi~~~ ID X 'T q- < t _ 0 1>V- oO m tEi O) 1\ 0 %O \ 0 a I N e \ Qn _ M m M - en m - 0 - - - O- - - - - - - - - - - ---- - E 0E~~~C p I _O£t w m O E c 8- cn 6, u 0~~~~~~~~~~~~~~ -E - I A1 V 0 -i O - _ C | 0)~ ~~~~~~~~~~ E~~~~~~~~~~~~~~~~~~~~ ° a n ' ~~~~~~~c c E) aJ O E_ ° c e -o2.E 1 ° , 0 n~~~~ c E - s~~~~~~~~~~- E >> g _ _ C C~~~~~~~~cC > C C: D- n e o r'. (N O - cn V- ON \- I O I r-, o c7 N _ ar v L n N O\- V) ND I I m 0 Z O -. o n c'j \D -D X . I 'o Vi oo oi Lr V) "i I I - 8 0 N m O r'a O\LI - n\0 - r- r' r00 m m 0 nr \ o (N oo LI N N -0 In I 'N O\ 00 00 LI v LI 1- 00 N\ 00 \ I sr Io o, 0 o 1 \0 PN OD V) v I o oo oo Ln cxLn re q-o rn )~~~~~C C) L v 00 mm -0 0 00 I~~~~~~~~~~ 00 co N . \ O O> I\ I I -C 0~~~~~~ D~~~~ 0 L'i~~~~~~~~~~~~0 . vo oX o V C 0 A O ~ 0) 0) 0) 0) 0O c a~~~~) 6 62.0 882 940 101.8' 860 117.1 90.4 :93.9 6 Total 1885.2 1631i.6 1483.7 25665 27738 303 302.0 i 3194.8 2830.1 ,3175.3 36909 Visible jalanc.e 724 2 669=6 404.4 |l 656 5 1033 8 914 0 11 20 4 4 1237 4 11496 1 4` 515 18E 2 Total trade 3046.2 25937 '2563.0 1 4476.4 4513.9 52106 4963.6 5152.1 0 45106 4899.2 551 S Sources. Central Bureau of Statistics, Statistical Abstract (2000) and Economic Survey (2002). Improving Market Access Through Standards Compliance: A Diagnostic and Road Map for Kenya Table 1.5 Destination of Exports to Important Markets as a Percentage of Total Exports 1994-2001 COMESA Rest United Rest Year EAC Less EAC of Africa EU States Japan Middle East of World 1994 j 22.6 | T 1 i3.5 i 7 1 36.1 3.3 0.8 1.7 K s 1995 28.5 10.1 9.9 32.2 2.7 0.7 2.3 13.6 1996 29.2 9.0 8.9 32.4 2.7 0.8 3.2 13.8 1997 29.2 8.9 8.6 31.6 2.9 0.8 3.2 14.8 1998 29.7 7.5 10.6 29.1 2.6 0.8 4.0 15.7 1999 30.5 2.3 16.9 27.4 2.3 0.9 4.4 15.3 2000 26.2 7.5 11.9 29.8 2.1 1.0 4.9 16.6 2001 295 7.2 12.4 ?271 2 0.9 6.1 14.5 Source: Kenya, Economic Surveys (various years). Structure of Trade. The structure of Kenya's trade vegetables). Other exports include mainly soda ash, in exports (Table 1.6) indicates that there has been petroleum products, cement, clothing, and leather no marked difference in its composition since the products. Except for tea and crude vegetable mate- country became a WTO member. Agricultural trade rials, traditional exports performed poorly in the in food and beverages has not changed and it 1980s and 1990s; growth averaged 7.4 percent. Non- continues to dominate Kenyan exports constituting traditional exports performed better: in which an average of 53 percent of the total exports dur- growth was estimated at 20.1 percent (Mwega ing 1994-98. Kenya's exports can be divided into 2000). The good performance of the nontraditional traditional and nontraditional exports. Kenya's tra- exports is attributed to the removal of restrictive ditional exports are those that account for more trade policies by importing countries, particularly than 3 percent of total exports in the base year Europe under the ACP-EU Lome Agreement. The (1980) (Blackhurst and Lyakurwa),' and include in- good performance in 1992-96 overlaps with trade dustrial supplies, coffee, tea, and crude vegetable liberalization and is explained by the "removal of materials. Nontraditional exports include most of bureaucratic bottlenecks and availability of foreign the horticultural products, and flowers. exchange" (Kenya, Economic Survey 1996). Kenyan exports are dominated by agricultural commodities, particularly tea, coffee, pyrethrum, Imports. Industrial supplies dominate imports and horticultural products (flowers, fruits and with a share of 36 percent of total imports into Table 1.6 Composition of Kenyan Exports in Broad Categories 1994-2001 (percent) Type of Commodities 1994 1995 1996 1997 1998 1999 2000 2001 Food and beverages 51.50 51.10 l 52.90 53.90 57.40 55.9 56.3 49.2 Industrial supplies 29.40 26.90 26.10 22.40 18.30 17.9 19.1 22.7 Fuel and lubricants 6.50 I 5.30 1i 6.60 9.00 i 9.10 8.2 8.6 10.2 Machinery and capital equipment 0.90 1.40 0.90 0.60 I 0.90 1.3 0.5 0.6 Transport equipment 1.10 0.50 0.50 0.40 0.60 1 0.9 0.5 0.4 Consumer goods 13.60 14.80 1310 13.90 13.70 15.9 15.1 L 16.8 Source: Kenya, Economic Surveys (various years). 1 "Markets and market access for African exports: Past, present and future." Framework paper presented at the African Economic Research Consortium Workshop on Africa and World Trading System held at Novotel Hotel, Accra, Ghana, 24-25 October. Cited by Mwega (2000). Standards and Global Trade: A Voice for Africa Table 1.7 Composition of Kenyan Imports in Broad Categories (percent) Food and b verage §11.04 4.53 7.69 6.62- 8.60 7.3 77 l. 5 lndusnal upple- 3~So3 39.22 36.60 39.75 -3'3.83 32.6 2741A Fuel and lubric-ant' >1&15 12.98 16.09 15.50 16.13 16.4 25.6 201 u e § 1! ! ! s 1v5.35 19.25 18.16, 16.9-1 -17.63 14.2 15I'8 129_ Transport equipe V ' 12.27 17.00 1 14.42 14.43 15.67 8.7 6.a4 1.6- Cnu i: *oo5 d El li 6.82 7.03 7.04 6.79 8.14 0.56 0A41 3 Source Kenya, Economic Surveys (various years) Kenya followed by machinery and capital equip- level of the Harmonized System; many, including ment at about 15 percent. Food and beverages mainly agricultural and petroleum products, are constitute an average of 8 percent. Imports into subject to a combination of specific duties. Kenya are less dispersed than exports (Table 1.7). In addition to tariffs, "suspended" (stand-by) du- The EU accounted for about 33 percent of Kenya's ties, which were as high as 70 percent increased to import in 1999 (down from 36 percent in 1994), 95 percent, the maximum ad valorem import du- while the other African countries accounted for ties are on wheat flour, meslin flour, and certain about 10 percent, and the rest of the world ac- types of sugar. The suspended duties replaced the counted for 41 percent. Imports from the United variable duties on food and currently apply to 17 States have also remained relatively constant, but percent of all tariff lines at the HS eight-digit level, imports from Japan have declined. Manufactured in agriculture and manufacturing. The maximum goods account for most of the imports from the EU, suspended duty of 70 percent also applies to maize, the United States, and Japan, whereas the African rice, and milk. The simple average rate of Kenya's countries account for most of the agricultural nonspecific imports duties (inclusive of applied products (e.g., processed goods and maize from suspended duties) is 18 percent (WTO 2000). South Africa; maize and beans from Uganda and Approximately 3.7 percent of all tariffs lines are Tanzania). However, most of Kenya's wheat exports duty free while 38 percent carry rates higher than come from Australia, Argentina, Canada, and the 15 percent; except paper, paperboard, cards, and United States. office stationery; and rates higher than 35 percent apply to agricultural products and their trans- formations. An import declaration fee (IDF) of 2.75 percent is collected on all imports mcluding Tariffs have been Kenya's main trade policy instru- those not subject to the preshipment inspection ment; however, since Kenya became a member of that is required for all imports worth at least the World Trade Organization (WTO) in 1995, the US$5,000. The inclusion of the fee raises to 20.75 overall level of protection of its economy has been percent the average rate of import duties. At an ag- reduced. The country has dismantled most nontar- gregate the positive escalation of Kenya's tariff iff restrictions, except for the moral, health, security, (highly pronounced on products such as textiles, and environmental conventions to which it is a wearing apparel, leather, and metallic, rubber, pe- signatory. The tariff structure has been simplified troleum, and chemical products) means that the through the reduction of the number of bands from effective protection provided to most industries is eight in 1994 to five in 1990 (0 percent, 5 percent, higher than the nominal rate. A value added tax of 10 percent, 15 percent, and 25 percent on tariffs for 15 percent and excise duties ranging up to 135 per- imports) and the lowering of the maximum ad val- cent (the excise duties are mixed or specific in orem rates from 60 percent m 1992 to 25 percent in certain products) are levied both on imports and 1999. Mixed duties apply to 10 percent of all tariffs locally produced goods. Approximately 15 percent lines and specific duties to 30 lines at the eight-digit of Kenya's tariff lines are bound at ceiling rates 10 Improving Market Access Through Standards Compliance: A Diagnostic and Road Map for Kenya ranging from 18 percent on pharmaceutical goods on Development (IGAD), the African Caribbean, to 100 percent on all agricultural products. Other Pacific-European Union (ACP-EC), and the WTO. duties and charges on all these products are bound The different integration organizations within at a zero rate, notwithstanding the imposition of Africa are expected to operate as building blocks to- the IDF on all imports and a fee of 1 percent on ward the achievement of a single large market on agricultural imports. the African continent. According to Kenya's Devel- Except for timber and fish, Kenya has abolished opment Plans (1997-2000 and 2002-08), the coun- export duties and taxes on all products. In August try will work toward the continued reduction and 1993, Kenya abolished export subsidies granted un- eventual elimination of tariff and nontariff barriers der the export compensation scheme. Three main to trade among members of a common trading incentive schemes-the export processing zone, the bloc, while recognizing the need to implement manufacturing under bond, and the duty remis- changes at the institutional level to promote these sion schemes-are currently available to export- regional initiatives. The plan also states the need for oriented companies. The Minister for Finance may, a shift in the government's role away from control on a discretionary basis, remit duties payable on im- and regulation toward the facilitation of private sec- ports: import duties are remitted on specific inputs tor development, and the need for closure of the or those used by specified firms and certain state- gap between policy objectives and their implemen- owned companies. However, certain agricultural tation. Sectoral policies are aimed at enhancmg pro- products and food products are subject to special duction and productivity, through a continuous export licenses for self-sufficient purposes. process of economic reform and trade liberaliza- tion, as a way to promote a more efficient alloca- Trade Policy tion of resources, while improving the environment for private domestic and foreign investment. Spe- Trade policy formulation is the responsibility of cific emphasis is placed on strengthening the agri- several ministries (Office of the President, Ministry culture sector, and promoting value-added activi- of Trade and Industry, Ministry of Finance and ties through the processing of agricultural goods. Planning, Ministry of Foreign Affairs, and Ministry of Agriculture and Rural Development), which con- stitute the Cabinet's economic subcommittee, and the Central Bank. However, recommendations can The government through the Ministry of Trade and be made by two interministerial and consultative Industry (MTI) handles all issues relating to the WTO communities, which include the private sector. agreements. The Ministry has devoted a large amount Mainly the Ministry of Trade and Industry imple- of resources over a number of years toward WTO is- ments the trade policy. sues. The Department of External Trade (DET) of the Kenya is a founding member of the WTO and ministry is responsible for WTO matters. There are signed the treaty in 1995. It accords at least Most officers at the capital in Nairobi and in Geneva work- Favored Nation (MFN) treatment to all its trading ing specifically on WTO issues. Furthermore, there is partners. Provisions of the WTO Agreements cannot a standing committee known as National Committee be invoked before Kenyan national courts. However, on World Trade Organization (NCWTO), which in- Kenya is reviewing its legislation, including laws on cludes in its membership representatives from rele- antidumping, countervailing, and intellectual prop- vant government departments and agencies as well as erty rights, to bring it into conformity with WTO private institutions, which prepares for WTO negoti- Agreements. Kenya's commitment to WTO princi- ations. Various subcommittees assist the NCWTO in ples is integral to its economic policies. In addition its work; among them are the subcommittees on San- to its participation in the multilateral trading system, itary and Phytosanitary (SPS) agreement and the Kenya also pursues preferential trade agreements Technical Barriers to Trade (TBT) agreement. as a means of increasing trade flows. The country Administrative responsibility for issues related is a member of the Common market of Eastern to standards agreements (SPS and TBT) with regard and Southern Africa (COMESA), the East African to trade is the responsibility of the Ministry of Trade Community (EAC), the organization of African and Industry (MTI). However, MTI delegates respon- Unity (OAU), the Inter-governmental Authority sibilities of implementation to the Kenya Bureau of Standards and Global Trade: A Voice for Africa Standards (KEBS), Kenya Plant Health Inspectorate consequences on market access, which have impli- Services (KEPHIS), and the Department of Veteri- cations for the future performance of this subsec- nary Services (DVS) under the Ministry of Agricul- tor, have become important. The fisheries industry ture and Rural Development (MA&RD), and the De- is included for analysis because in addition to the partment of Public Health of the Ministry of Health. horticultural sector, it provides a case in which the requirements of the SPS Agreement have affected exports from Kenya. The cotton textile industry is Macroeconomy and Standards also selected to provide evidence of the impact of Kenya's economy relies heavily on agriculture and ex- standards on the light manufacturing industries. ports of agricultural commodities and agroprocessed products that dominate its international trade. The standards required in the export markets can facii- Kenya's tate or constrain trade in these products and there- fore affect the performance of the economy. For ex- The WTO agreement on the application of Sanitary ample, if Kenyan exporters of tea, coffee, horticulture, and Phytosanitary Measures (SPS) sets out the or fish cannot meet the standards required in the in- rights and obligations of WTO members in relation ternational markets, the country's competitiveness in to certain requirements that may restrict interna- these exports is affected and this is reflected in the tional trade. Specifically, the agreement requires poor performance of the economy. member countries to base their sanitary and phy- In addition to the impact standards have on the tosanitary measures on international standards and traditional Kenyan exports, the country has a di- where they do not conform, to justify their meas- verse range of agricultural products whose stan- ures on the basis of risk assessment, a consistent ap- dards vary. However, the opportunities and chal- proach to risk management, and the adoption of lenges created by the international agreements on the least trade restrictive means of achieving the ap- standards for Kenyan products have not been doc- propriate level of protection for human, animal or umented. This is important as export trade has an plant life, or health. Such measures are presumed significant impact on the Kenyan economy. not to constitute arbitrary or unjustifiable barri- ers to trade. The Agreement recognizes three inter- national standardizing bodies as the source of its international standards-setting mechanism: (a) In- Kenya's exports are dominated by agricultural ex- ternational Plant Protection Convention (IPPC), ports. Tea is currently the leading export, followed (b) Codex Alimetarius Commission (CAC), and by horticulture and coffee. These commodities ac- (c) The Office International des Epizooties (OIE). count for more than 50 percent of the country's ex- The CodexAlimentarius (Food law or Code) com- port earnings and are the main sources of employ- mission is the mternational body responsible for the ment for many Kenyans. execution of the joint FAO/WHO food standards Coffee, horticulture (fruits, vegetables, and flow- program. Started in 1962 by FAO and WHO, the pro- ers), fish, and cotton textiles are analyzed as case gram is aimed at protecting the health of consumers studies in this chapter. Coffee is chosen because it as well as faclitating international trade. Codex is a is an important export crop and represents the tra- collection of international food standards adopted ditional exports, which together with tea has dom- by the Commission and presented in a uniform man- inated Kenya's economy. An analysis of market ac- ner. It mcludes standards for all principal foods cess conditions for Kenyan exports indicates that whether processed, semi-processed, or raw. It also in- the traditional exports for Kenya (tea and coffee) cludes provisions in respect to the hygienic and nu- do not have a problem of accessing markets in tritional quality of food, including microbiological industrial countries but there are issues on stan- norms, provisions of food additives, pesticide dards, particularly quality concerns, which affect residues, contaminants, labeling, and presentations export earnings. The horticultural subsector (fruits, and methods of analysis and sampling. vegetables, and flowers) is chosen because it has The international organization for standards grown rapidly in recent years but a number of is- technical committee is made up of seven subcom- sues on standards, particularly concerns on SPS and mittees and it is the ISO section that deals with the 12 Improving Market Access Through Standards Compliance: A Diagnostic and Road Map for Kenya development of standards for environment guid- animal products, plant and plant products, and food ance, environment audits, and ecolabeling. The In- safety. These are the Kenya Plant Health Inspectorate tegrated Plant Protection Convention (IPPC) deals Services (KEPHIS) for standards on health of plants with integrated economic management of pests and and plant products, the Department of Veterinary rational use of pesticides, and gives guidelines on Services (DVS) for standards on health of animal standards for plant and plant health protection. The and animal products, and the Fisheries Department Office International des Epizooties (OIE) deals with is responsible for fisheries. The Ministry of Health standards for animal health. (MoH) is responsible for food safety standards. Kenya is a member of these international organ- izations and participates m the meetings of these Kenya Bureau of Standards (KEBS). The KEBS is organizations. The country has adopted some of the a national government body established under the standards of these organizations and has in some Standards Act Cap 496 of the Laws of Kenya charged cases adopted guidelines of these organizations to with standards development and implementation, set its own standards. The country is also a mem- certification of products and firms, testing, and ber of the African Regional Standards Organization metrology. The KEBS is the contact point for (ARSO), which is mandated to promote standard- CODEX- and ISO-related standards. It coordinates ization activities in Africa, and to elaborate and Kenya's viewpoints on international standards de- harmonize regional standards. veloped by CAC and ISO for various products, par- ticularly those that are important for local and ex- Standards Development and port trade. These are mainly agricultural products and include tea, horticulture, coffee, pyrethrum, sisal, hides and skins, fish, and many others. The The public organization responsible for develop- KEBS involves industry stakeholders in standards ment, setting, and implementing of standards in development through sector technical committee Kenya is the Kenya Bureau of Standards (KEBS). discussions and where possible, stakeholders are This organization works closely with three main included as delegates to international standards- public organizations in the development and im- setting forums. The procedure used to develop stan- plementation of health standards on animal and dards is outlined in Box 1.1. All standards in Kenya are industry driven, or, in ommendations to the NSC for approval. Then, matters of health and safety, initiated by the rel- the standards are published and gazetted. The evant government authorities. The proposals for technical committees also advise on items of na- new standards are submitted through the Stan- tional interest following receipt of notification, dards Industrial Council (SIC), an advisory body, and prepare comments to international technical which evaluates the proposals on the basis of committees. The KEBS establishes Kenyan stan- studies or analyses made. The recommendations dards for products in all industrial sectors focus- made by the SIC are forwarded to the National ing on specifications, codes of practice methods Standards Council who, after considering the of test, and glossary of terms. KEBS has estab- facts presented, approve the proposals for the de- lished about 1000 standards for processed and velopment of the standard by the technical com- manufactured agricultural products. Most Kenyan mittees. The technical committees consist of rep- standards are based on international standards, resentatives from all interested parties and which are either adopted without change, or stakeholders who are guided by experts from adopted to allow for local conditions, and in a KEBS. The technical committee drafts the stan- few instances, Kenyan standards have been de- dards and sends them back to the SIC for rec- veloped for a number of unique local products. 13 Standards and Global Trade: A Voice for Africa Legal notices provided for under the Standards dards are compulsory allows for inspection to be Act declare all Kenyan standards compulsory. In- carried out at the manufacturing stage. Samples are spectors appointed under the Act enforce the set taken for testing during inspection. Occasionally, standards. A product quality certification scheme random samples are taken at the point of sale and (diamond mark), calibration mark scheme, safety tested. Imported products must comply with local mark scheme, and ISO quality management mark standards or approved regional or international schemes have been declared and are operational. standards. New products entering Kenya must un- The Quality System Accreditation Committee has dergo inspection and testing prior to the first con- been established to accredit ISO to firms and labo- signment being shipped into the country, and ratories. It is estimated that about 12 percent of the preinspection certificates of compliance are issued. agricultural and food processing firms have a plant KEBS inspectors thereafter take samples during certified by ISO 9000 (World Bank 2002). The man- random inspections of following consignments at agement standards for Hazard Analysis Critical the ports of entry into Kenya. The samples are tested Control Point (HACCP) and Codex Standard for in KEBS laboratories or other available facilities at risk analysis have also been adopted, particularly in KEPHIS or at the Government Chemist under the the fruits, vegetables, and fisheries industries. Ministry of Health. Provision is made for product Kenya, through KEBS, is a member of interna- certification by the exporting country either tional standards-setting bodies, namely, CAC and through mutual certification agreements or by ISO. The country participates in some of the tech- prior investigation to confirm the competence of nical committees of these organizations and the the certificator. However, KEBS inspectors must choice is made from a project priority list for the scrutinize all compliance certificates received for an country. For example, in the last two years KEBS imported consignment before customs are notified staff participated in three ISO meetings (ISO TC and a consignment is released. 34SC 8 on tea held in Kenya; ISO TC 176 Working Quality inspection of imports is carried out at the Groups (19 and 20) held in Nairobi; and ISO port of entry by KEBS on all Imports into Kenya, COPOLCO held in Trinidad). In addition, during covering food, beverages, vegetable oils and fats, the same period, KEBS participated in 5 Codex chemicals, electric machinery, apparatus and appli- meetings of the 22 meetings planned. The KEBS ances, and textiles. The quality inspection fee is 0.2 technical committees for standards setting advise percent of the C&F value and is payable before is- on items of interest and prepare comments for del- suance of a certificate of release. Imports that are egates attending various international meetings of tested by the KEBS and found not complying with these organizations. The country would like to the requirements of the relevant Kenyan standards attend all annual, biannual, and technical meetings cannot be sold in the Kenyan market. The importer each year, but financial constraints limit them to a will have to return them to the country of origin at few select meetings each year. The country is not a the owner's cost. secretariat for any technical committee on interna- All local manufacturers pay an annual product tional standards-setting but in the past it has hosted levy based on volume or value. This levy covers the two ISO technical meetings as indicated above. cost of inspection and testing. The manufacturer or KEBS also participates in the development of re- any person requesting additional tests, however, will gional Codex and ISO standards for Africa being a pay for tests that are carried out. For all inspections, member of the African Regional Organization for a quality inspection fee of 0.2 percent and 0.1 per- Standardization (ARSO). During 2000-01, the cent of the C&F value of the final products and raw country was the Chair holder of the main commit- materials, respectively is charged. Inspection and tee for the member states. The main function of testing fees of import consignment samples are paid ARSO is the development of regional standards, by the importer or the exporting agent, and are harmonization of technical regulations, and iden- based on the actual cost for the work. tification of new standards projects at national and The KEBS assists Kenyan mdustries in promoting international levels. and developing organized in-plant standardization When enforcing standards, the KEBS officers visit through training programs in the form of seminars, production firms and supermarkets and collect attachments, and factory visits. The focus is on samples for analysis. The fact that all national stan- standardization, industrial quality control, quality 14 Improving Market Access Through Standards Compliance: A Diagnostic and Road Map for Kenya management, laboratory testing, and metrology. It For this reason, KEBS requires more funds to enable also offers technical advice to manufacturers, ex- participation in more committees of Codex and porters, importers, and others in the fields of qual- ISO at the international level. The Codex contact ity assurance, formulation of standards, measure- point at KEBS needs communication equipment ment and calibration, setting up in-plant testing such as a computer to facilitate linkage between it facilities, setting ISO-9000 systems, quality stan- and the stakeholders in the country and at the dards for the country of exports, and quality of international level. imported products. The Bureau of Standards has about 800 staff Kenya Plant Health Inspectorate Services members with half the number being technical (KEPHIS). KEPHIS is a government parastatal un- staff. Most of the staff is based at the Nairobi Head- der the Ministry of Agriculture and Rural Devel- quarters. Other staff members are in the regional opment (MA&RD) and was established in 1997 branches and the export or import border ports. to be in charge of plant health aspects including KEBS has testing facilities at Nairobi and the re- overseeing the health of plants and plant materi- gional centers as well as at the main port of entry. als for import and export. The organization was It also uses laboratories owned by KEPHIS, the established after the realization of the weakness in Government Chemist, and the Departments of the previous fragmented regulatory mechanisms Agriculture and Fisheries. Five KEBS laboratories for sanitary and phytosanitary measures that ex- have been accredited by UKAS in the past 10 years. isted In different government bodies. KEPHIS de- Furthermore, KEBS is accredited as an ISO 9000 rives its regulatory powers from the Plant Protec- certificator by QSAC. However, there is no stan- tion Act Cap 324, Agriculture Produce (Export) dards accrediting body in Kenya, which is interna- Cap 319, Seed Act Cap 326, and Pest Control Prod- tionally recognized, and the country has to rely on ucts Act Cap 346 of the Laws of Kenya. foreign bodies for this purpose. This restricts trade KEPHIS coordinates all viewpoints related to the in most products as Kenyan recommendations and health of plants and plant products and is the con- procedures such as on ISO 9001, ISO 14001, and tact point for IPPC. KEPHIS works closely with HACCP are not recognized internationally unless KEBS to formulate standards related to plant and accredited by an internationally recognized body. plant materials. The staff of KEPHIS regularly par- KEBS has recognized this problem and has started ticipates in international meetings of IPPC. The championing a program to establish an accrediting funds that enable the staff to attend the meetings body that will be associated with an internationally are provided by FAO on request by KEPHIS. The recognized body. managing director is a member of the Interim The Bureau's funding comes from various sources Commissions on Phytosanitary Measures and the including Standards Levy order, Import Quality in- Standards Committee. As a result of KEPHIS's par- spection fees, annual Government Grants, sale of ticipation it has developed guidelines for pest risk Bureau Products (Kenyan Standards, foreign stan- analysis based on IPPC procedures. dards, testing services, and so on), and grants from KEPHIS's mandate for the implementation of donors and well wishers. The annual budget is about SPS focuses on plant protection services including US$1.5 million, most of which is generated inter- quarantine of imported plants and plant products, nally (80 percent). The KEBS estimates that they re- phytosanitary certification of exports and export quire an additional US$280,000 annually to enable grading, and implementation of national policy on them undertake their functions effectively. the introduction and use of genetically modified Although KEBS's mandate is well defined and it organisms. has some capacity to undertake its obligations, it The Plant Protection Act contains provisions to faces constraints in terms of limited laboratory ca- restrict the spread of insect pests and pathogens pacity and libraries in the branches required for ef- that occur in isolated areas of Kenya and to declare fective implementation of its activities. With the disease-free zones. Currently, there is a domestic adoption of WTO Agreement on SPS and TBT, quarantine on the following pests and diseases. there is more need for KBS staff to participate in the development of International Standards and 1. Larger grain borer (Prostephanus truncates) con- their subsequent adoption as national standards. fined to south-eastern Kenya; 15 Standards and Global Trade: A Voice for Africa 2. Serpentine leaf minor (liriomyza trifolii) con- and import control activities are supported by a fined to eastern Kenya; well-equipped laboratory facility at Nairobi. The 3. Cassava bacterial blight (Xanthomanas maniho- strict application and observations of export stan- tisi) confined to cassava-growing areas of West- dards are responsible for the expansion of a wide ern Kenya; range of horticultural exports from Kenya. How- 4. Banana nematode (Radophilus simulus) confined ever, KEPHIS has not prepared a detailed pest to central Kenya; and analysis risk list covering a long period and a wide 5. Ascochyta blight of cowpeas (assochyta rabrei) in- area and this is a hindrance in exporting to some troduced in Kenya in 1990 and confined to countries (such as the United States, Japan, and Machakos District. South Africa). KEPHIS has departments of Administrative Ser- KEPHIS coordinates and regulates all matters re- vices, Plant Breeders Rights Services, Quality Con- lating to plant quarantine and restricts the entry of trol Services, and Plant Protection Services to aid plants and plant products into the country without in undertaking its mandate. It has headquarters in its permission and runs the Kenya Plant Quaran- Nairobi and branches for other districts based in tine Services (PQS) for this purpose. The PQS has Nakuru, Kitale, and Mombasa and a plant quaran- made regulations and a list of plants specifying tine station in Nairobi. It has offices at all ports of those that are prohibited and those that must be entry to check and ensure that export or import of compulsorily imported upon obtaining import plant or plant products is inspected and certified to permits and issuing a Pythosanitary Certificate and, be free from mvasive plant species, noxious weeds, or, certificate of origin after having verified that injurious foreign pests, and diseases. the shipment meets the entry requirements (see KEPHIS has over 60 scientists, 100 technical of- Box 1.2). ficers, and 150 support staff. It collaborates with KEPHIS has also developed arrangements for the national and international organizations whose certification of plants and plant products for ex- goals are to protect plant health, quality inputs, and port that is generally accepted by Kenya's trading plant produce. The estimated annual budget for partners. All plant and plant products for export KEPHIS is US$1.5 million, most of which is inter- are inspected and issued a phytosanitary export nally generated while the government provides the certification at the port of export. KEPHIS's export balance. Plants and plant products imported into Kenya diseases prior to their leaving the country and must be inspected. The regulations stipulate that the plants meet Kenya's requirements. The pre- and postentry treatment to be undertaken PQS is equipped with a tissue culture laboratory upon arrival of plant products to eliminate dis- for in vitro rapid multiplication of imported ease and pest risks. A variety of facilities includ- plant materials for tests, studies, commercial ing a postentry plant quarantine facility supports propagation, and conservation of germplasm. controls at the borders. The plant pathology Imported plants and plant materials may, if nec- clinics provide diagnostic services on diseased essary, be detained in the quarantine station or plant parts. An entomology clinic provides sim- special nurseries. Plants arriving without au- ilar services for pests. A copy of a permit issued thority and accompanying documents may be by KEPHIS and an additional phytosanitary cer- destroyed or reshipped back at the owner's cost. tificate or international equivalent must accom- An importer who contravenes or fails to comply pany all plants and plant materials entering the with this Act is liable to a fine not exceeding country. The phytosanitary certificate verifies US$250 equivalent in Kenya shillings or impris- that the competent authority in the exporting onment for a period not exceeding six months country has examined the plants for pests and or both. 16 Improving Market Access Through Standards Compliance: A Diagnostic and Road Map for Kenya Department of Veterinary Services (DVS) and existence of disease epidemic, quarantine, and Fisheries Department. The Department of Veteri- disease-free zones. It also inspects and provides nary Services (DVS) is a department under the documents (no-objection permit for livestock im- Ministry of Agriculture and Rural Development ports and veterinary health and sanitary certificate (MA&RD) and is charged with overseeing ani- for livestock exports) that facilitate trade in live- mal health services in the country. Its regulatory stock and livestock products. powers are derived from the Animal Diseases Act The Division of Veterinary Public Health of the Cap 364, Fertilizer and Animal Foodstuff Act Cap DVS is the chair of the National Codex Commit- 345, Dairy Industry Act Cap 336, Pest Control Act tee and is responsible for attending interna- Cap 346, and the Meat Control Act Cap. The main tional Codex and OIE meetings related to stan- functions of the DVS are: dards on health of animal and animal products. However, Kenya's attendance in the annual and a. Livestock disease control through monitoring the biannual Codex and OIE meetings and also the health status of livestock, regular vaccinations, technical committees is rare. Some of the meet- vaccine production and distribution, and impor- ings that DVS officials have attended include tation of suitable vaccines. meetings on food hygiene, residues of veterinary b. Implementation of meat hygiene through the su- drugs in foods and meat hygiene. The DVS con- pervision of slaughterhouses and meat-processing siders measurers developed by OIE such as dis- facilities, facilitating inspection and certification of ease-free areas to be appropriate but the country meat imports and exports. has not been able to do so. This partly explains c. Implementation of milk hygiene. why beef products are restricted to EU, United d. Implementation and supervision of health and States and Japan markets. The DVS also appreci- hygiene of all other livestock and livestock prod-. ates the need to implement the residue program ucts and livestock feeds and use of drugs, vac- to determine the safety of the use of drugs and cines and chemicals for animal use. pesticides in livestock products and risk analysis on various food-borne diseases but these activi- The DVS coordinates all viewpoints on standards ties are not performed adequately because of related to animal health (livestock disease control, financial constraints (see Box 1.3). meat and milk hygiene) and is the focal point for The DVS has laboratories in Kabete and Nairobi OIE. The DVS is involved in the formulation of for testing the disease status of imports and exports standards related to the health of animal and animal of animal and animal products, and has officers at products and has the mandate to determine the other ports of entry. The Nairobi laboratory has The Animal Diseases and Quarantine Act allow the quarantine period, must be stated in the the DVS to enforce the SPS for livestock and veterinary certificate to confirm freedom from livestock products. There is a specific veterinary diseases. The animals may be held for 14 cdays import permit for each species (e.g., cattle, in the quarantine facilities at the port of entry goats,.sheep, pigs, and birds). All animals for at the cost of the importer. All costs of post- export to Kenya must be held for 21 days in arrival selection, testing, treatment, transport, approved quarantine facilities that must be reg- quarantine, and service must be borne by the ularly inspected by the veterinary authorities of importer. The Veterinary Officer at the port or the exporting country subject to inspection by airport of entry issues a health clearance cer- the Veterinary Officer from Kenya, where nec- tificate if inspection shows the animals to be essary. All the tests, clinical examinations, and healthy and all accompanying health certifi- treatment, which must be carried out during cates are in order. 17 Standards and Global Trade: A Voice for Africa capacity (human and equipment) to undertake di- has 20 fish inspectors responsible for the issuance of agnostic and quality assurance work for most live- the inspection certificates. There are laboratories in stock and analysis of various livestock products. Kisumu and Mombasa and one is under construc- The DVS has a countrywide extension network of tion in Nairobi for use in the detection and diagno- veterinarians who help in advising farmers on an- sis of diseases. However, they are inadequately imal disease control and surveillance of disease. equipped and in some cases, the Department uses There are also five regional laboratories that are KEBS and KEPHIS laboratories for diagnosis of fish used for diagnostic tests by farmers. However, the diseases at a fee of US$100 per sample. Division of Veterinary Public Health, which is re- sponsible for the implementation of the SPS aspect Ministry of Health (MoH). Food standards (other on the health of animal and animal products is un- than those within the responsibility of the De- derstaffed. It has only 50 veterinarians and 700 meat partment of Veterinary Services (DVS) and the inspectors countrywide. The staff is responsible for Department of Fisheries within the MA&RD) are providing services on veterinary public health for adopted via a procedure managed by the KEBS the whole country and providing meat inspection as indicated earlier and implemented by the Min- services in all slaughterhouses including Kenya's istry of Health (MoH) under the provisions of the only three operational export abbattoirs. Public Health Act Cap 242 and the Food, Drugs, Improvements in animal husbandry are a major and Chemical Substances Act Cap 254. focus for the DVS and sanitation is an important is- The country has developed standards for food sue. Accordingly, the DVS endeavors to apply most safety for most food products. Codex food stan- of the OIE norms, modified as appropriate for lo- dards are considered when developing food stan- cal circumstances, to domestic disease control and dards for application within Kenya (including surveillance and control of imports of animals and standards for imported food). Cases in which no animal products. However, exports are constrained standards have been developed for imported food- by the presence of significant animal diseases such stuffs, there is a requirement that the imported as foot and mouth disease, Rift Valley fever, conta- food comply with the standards of the exporting gious bovine pleuropneumonia, and African swine country. The main problem with implementation fever. Problems are also encountered with animal of standards is lack of information among the health infrastructure. For example, while the five re- general public. The standards are not common gional laboratories in the country can diagnose an- knowledge for the business community because of imal diseases, there is no adequate capacity to test for weaknesses in information dissemination by the residues m red meat, poultry, and dairy products. responsible authorities (MoH and KEBS) regard- Similarly, implementation of risk analysis of various ing the standards (see Box 1.4). diseases to determine disease-free zones in the coun- try is not undertaken. The government currently has Relationships between Contac Points and not invested in these programs because of financial National Authorities for Trade Policy constraints. This is despite the potential the coun- try has to export animals and animal products. Overall, the Ministry of Trade and Industry (MTI) The Department of Fisheries is also a department is responsible for trade agreements and it coordi- under the MA&RD and is the competent authority nates with all public agencies involved in standards for export certification for fish and fish products. The setting and implementation at a ministerial level standards for fish were modified recently (Fisheries and at the National Committee on WTO and Fish Quality Assurance Regulations 2000). The (NCWTO) level. The MTI is the notifying author- principal requirement of the regulation is that all fish ity for WTO issues. The KEBS, KEPHIS, and DVS products have to be inspected and thereafter a health are contact points for CAC, IPPC, and OIE, re- certificate is issued to accompany exports. The pro- spectively, while MoH deals in food safety matters. cedure of issuing the health certificate involves en- The KEBS is responsible for ensurmg that all suring that fish handling and processing meet the goods offered for trade in Kenya, whether imports sanitary conditions laid out by the Fisheries Depart- or exports or for the domestic market, meet stipu- ment. A fee of 0.5 percent of the FOB value of export lated standards. KEPHIS coordinates all issues is charged for the health certificate. The Department related to crop pests and disease control and is 18 Improving Market Access Through Standards Compliance: A Diagnostic and Road Map for Kenya Ministry of Health officers stationed at recog- for the purposes of the prevention of any infec- nized entry points into the country (Port Health tious or communicable diseases. It is a require- Offices) are responsible for taking samples of ment that a health certificate accompany im- foods imported and submit them to laboratories ports of these goods from the country of origin for analysis as appropriate. Microbiological certifying that the products meet the sanitary analysis is carried out by the National Public standards. Besides, most food products are also Health Laboratories free of charge or by a simi- subjected to radioactive tests. The Institute of lar facility maintained by the Kenya Bureau of Nuclear Sciences, University of Nairobi under- Standards who charge a fee of 0.2 percent of takes the tests but this is coordinated by the port the CIF value for the service. Food tests and health offices. A fee of US$40 is paid to the In- chemical substances are subjected to inspection stitute by importers for the radioactive tests. responsible for inspection, testing, certification, safety. Thus, a feature of the implementation of quarantine control, and variety testing and de- standards in Kenya is fragmentation of responsi- scription of all planting materials. It is also re- bilities. Fragmentation sometimes leads to over- sponsible for grading and inspection of plants and laps and inefficiencies in implementation of the plant produce at the ports of entry and exit and also functions on different bodies. For example, KEBS approves all importation and exportation licenses for plants and seed. KEPHIS advises on relevant matters on plant and plant health in which the SPS Coordinating Standards Development and TBT Agreements are concerned. The DVS is re- in Kenya sponsible for animal disease control and advises on matters related to animal health. The Pest Control |w+oi+joN7 Products Board (PCPB), also under the Ministry of Agriculture and Rural Development (MOA&RD), is responsible for standards related to agricultural chemicals. The MoH is responsible for inspection PUBLIC BODIES of foods, drugs, and chemicals to ensure food safety. MTIINTERNATIONAL The enquiry points and the MTI are linked through the National Committee on WTO (NCWTO) so KEBS _ that the KEBS, KEPHIS, DVS, and MoH have rep- CAC resentatives who advise on specific issues of trade MOARD IPPC and standards.: Figure 1.1 outlines the linkages DvSEPI among the various bodies. PCBP 7/ 1 E The three government ministries involved in MOH v standards setting and implementation are MTI, MOARD, and MoH. The MTI plays a leading role in standards setting and implementation through KEBS and in standards notification. The Ministry of Agriculture and Rural Development (MOARD), PRIVATE SECTOR under which KEPHIS, DVS and PCPB fall, is in KAM charge of standards setting and implementation for KFC animal and animal products, and the health of plant FPEAK and plant products in the country. AFIPEK The Ministry of Health (MoH) plays a leading ETC. role in setting and implementing standards on food Standards and Global Trade: A Voice for Africa and port health offices duplicate each other in the Coffee. Similarly, the Tea Board and the Kenya Tea mspection of foods for quality. DVS and the port Development Agency (KTDA) have also attended health offices also duplicate roles in the inspection meetings of ISO TC 34 SC for Tea. of animal products. There is need for better coor- dination to avoid overlaps that affect the enforce- Experiences of Private Sector Involvement ment of the standards in the country. Private sector participation in standards setting is mixed. Codes of practice are the instruments private businesses commonly use to achieve stan- Kenyan standards relevant to TBT and SPS are no- dards including both classic quality standards such tified to the World Trade Organisation (WTO) by as taste, color, and size, as well as newer standards KEBS through the Ministry of Trade and Industry. such as food safety, social justice, and environmen- The KEBS is the Secretariat of the National Codex tal protection. Individual companies may develop Committee, which reviews Codex draft standards them or draw from model codes, which are usually and documents for the Codex Alimentarius. The industry specific. The Codes of Conduct exist, for Ministry of Agriculture and Rural Development example, for fresh fruits and vegetables, flowers, and through KEPHIS and the DVS notifies Kenyan stan- fish. These industry-specific codes are derived from dards on TBT and SPS measures on plant and international standards or requirements of export animal health. markets for these products.2 However, the partici- The KEBS, KEPHIS, and DVS also notify pation of Kenyan private business is not as strong Kenyans (firms and farmers) about TBT and SPS as it should be. It rarely sends representatives to in- standards using newsletters, letters, and meetings ternational meetings for standards setting. The of stakeholders. The Export Promotion Council World Bank Database on trade and standards (EPC) also plays a leading role in notifying for- (2002) indicates that only about 10 percent of eign investors and local producers on the SPS Kenyan agricultural and food processing firms par- and TBT standards for all products traded in ticipate in international standards development Kenya. The KEBS, KEPHIS, and EPC have online meetings. facilities for standards on TBT and SPS. The stan- Another weakness in the participation of the pri- dards specifications under Kenyan laws and reg- vate sector in international standards-setting is the ulations are mandatory whereas codes and meth- failure to influence recognition of the domestic ods of tests are not mandatory. However, the codes of conduct with similar codes in the export NCWTO SPS and TBT committee has observed markets. For example, the Kenyan fruit and veg- that the dissemination of information to stake- etable industry, although an important player in the holders is not adequate. This is partly because European market, has had little input into, or par- of fragmentation of duties among the enquiry ticipation in, the European discussions about codes points and overlaps in functions among the of practice. Officials in the Kenyan fruit and veg- authorities as well. etable industry has attempted, mainly through trade associations, to participate tried to take part in the European Union discussions about harmo- Participation in International Industry and nization of codes of practice; but this has not been successful. For instance, the Fresh Produce Associ- Public agricultural commodity organizations such ation of Kenya (FPEAK) and the Flower Label Pro- as the Coffee Board of Kenya (CBK) and the Kenya gram (FLP) of Germany unsuccessfully tried to Planters Cooperative Union (KPCU) also get in- "marry" their codes into a common label in 1998 volved in standards setting by international organi- (USAID 2001). FPEAK is also not an associate zations such as the International Coffee Organization member of EUREP, a group of leading European (ICO). Representatives from these organizations oc- food retailers whose ob)ective is to raise standards casionally attend meetings of ISO TC SC 15 for for the production of fresh fruits and vegetables. 2 The code of conduct for fresh horticultural producers takes into account EU technical and market standards while the code of conduct for fish is also derived from international and EU standards. 20 Improving Market Access Through Standards Compliance: A Diagnostic and Road Map for Kenya Producers and producer groups can become asso- from different government ministries or depart- ciate members and participate in the negotiation of ments or parastatals, each with specific interests the standards. However, the Kenya Flower Council and expertise, which may not necessarily be of (KFC) has been able to make progress through the technical standards. It is often difficult to organ- Kenya Flower Day in London in the last two years. ize harmonious and effective participation, given Despite this weakness, the efforts by COLEACP, an their special knowledge and experience in the EU and ACP countries' initiative to support stan- agenda area. In most cases, only representatives dards development and implementation in ACP from KEBS attend. One solution to this problem countries will help in harmonization of standards is for the government to increase funding to for products targeted to the EU market. organizations involved in standards setting to The invitations from KEBS to the members of participate more effectively. International devel- Kenya's delegations to technical meetings organ- opment agencies can help the Government of ized by international bodies are opportunities for Kenya to finance these efforts. the private sector in Kenya to influence interna- Failure to participate in the international meet- tional standards-setting. Their views during the ings inhibits institutional development, capacity meetings could influence standards setting inter- building, sensitizing, and educating the private sec- nationally and in Kenya. However, it is rare for the tor on standards implementation and conformity private sector to attend these meetings. This lack assessment schemes such as quality schemes that of attendance is attributed to financial constraints. guarantee acceptance of international standards. However, it could be that stakeholders fail to ap- Currently, there is little proactive participation in preciate the role they can play in influencing in- the area by the private sector in Kenya. Most in- ternational standards and the benefits that they can dustry actors take a reactive position to interna- derive from it, because industry organizations can tional standards. This is exemplified, for example, afford to sponsor participants in the international by the adoption of European Union regulations on meetings. fish and horticultural produce unconditionally. Noncompliance with these regulations, as deter- mined by the importing countries, automatically Counternations l Str sandardW-Seakine inleads to trade penalties such as fines, destruction of produce, or total ban of exports from the affected Kenya is a full, paying member of international countries. The paucity of expertise, resources, and standards-setting organizations (Codex, IPPC, technical capacity in many countries constrains and OIE). Officers involved in standards develop- their ability to play a significant role in the imple- ment attend some of the meetings organized by mentation of these laws and regulations. the bodies. The benefits derived from the meet- ings include information used as a basis for Kenyan standards setting thereby making it easy Reglations to Reguations aNd for Kenyan standards to be easily accepted inter- Relationships to International Norms nationally. These include standards for many This section outlines the important legislation that products such as coffee, tea, horticulture and fish, forms the basis for standards setting in Kenya and milk and milk products. how the standards are related to international norms. A major weakness in international standards- setting is the failure for the country to be repre- Standards Legislation sented in all meetings organized by international bodies. Kenyan participation in the setting and Legislation or regulations on standards in Kenya are negotiation of international trading standards is established as Acts of Parliament, which empower limited due to lack of resources and organiza- various organizations to enforce the regulations. tional complications. More often than not, ven- The laws serve the following functions: ues for such international meetings are in the industrial countries, and this limits the level and * Ensure that agricultural inputs are safe to use quality of participation because of administrative * Create control mechanisms to ensure quality of and financial constraints. The relevant actors are inputs and products 21 Standards and Global Trade: A Voice for Africa * Ensure that food consumed is produced and han- (PCPB) to assess pest control products for safety, dled in a hygienic manner efficacy, quality, and economic value and licenses * Standards are available various categories of pesticide traders and to gen- * Protect consumers from health hazards erally advise the Kenyan government on the choice of pest control products in the country. The legislation can be grouped into five main groups according to the purposes of the legislations. Quality of Agricultural Inputs and Produce. The Agricultural Produce Act Cap 319 provides for Standards Formulation and Implementation. grading and inspection of produce, and its regula- The main legislation responsible for this is the Stan- tion, preparation, and manufacture. It also allows dards Act Cap 496. The Act provides for the estab- for the certification of horticulture exports through lishment of the Kenya Bureau of Standards (1974) the Horticultural Inspection Services and estab- and specifies its functions, including promote stan- lishes the Horticultural Crops Development Au- dardization in industry. It also empowers the KEBS thority (HCDA) for the purpose of supervision and to prevail in cases of conflicts with standards under control of production. The Fertilizers and Animal other Acts. Foodstuffs Act provides for the enforcement of technical standards for fertilizer use in Kenya and Public Health Safeguards. The legislation for these those for animal feeds. safeguards includes Public Health Act Cap 242: Foods, Drugs and Chemical Substances Cap. 254, Conformity of Laws to International Standards Pharmacy and Poisons Act Cap. 244, and Radiation Kenyan standards on food safety, and animal and Protection Act cap. 243. The Acts provide for pro- plant health are based on various Acts of Parliament tection of human health and the prevention of the as indicated in the previous section. The matrix spread of diseases, and prevention and control of below shows the conformity of Kenya's standards food adulteration. to international standards for selected commodi- ties. The matrix also shows that most Kenyan stan- Health of Animal and Animal Products. The An- dards for many products are derived from internal imal Health Act Cap 364 provides for the safe- standards and therefore conform to international guard of Kenya's animals (livestock and wildlife), norms. It confers the powers on the DVS to control im- ports and exports of animal and animal products, Standards for Importation of Selected Products and other living organisms. This is also supple- mented by the requirements of the Public Health This section reviews importation standards for Act Cap 242. milled sugar, maize, and wheat to illustrate the standards for selected products in Kenya. These Protection of Plants and Plant Products. The three are important food imports into Kenya. Plant Protection Act (1937) and, the Seed and Va- rieties Act (1972) were the basis for the establish- Milled Sugar. The international commission for ment of the Kenya Plant Health Inspectorate Ser- internationally traded white sugar sets the quality vice (KEPHIS) to regulate plant health and safety standards referred as International Commission for as well as the regulation of agricultural inputs Unified Methods of Sugar Analysis (ICUMSA) for (agrochemical, seeds, and so on) and produce. sugar. Kenya has recognized the standards set by this Thus, KEPHIS has the mandate to monitor for gov- organization for sugar and has incorporated the ernment, business sector, scientists, farmers, and requirements in setting KEBS minimum quality other stakeholders all issues related to plant health standards of milled sugar to be manufactured and and quality control of agricultural products. The imported. The maximum value has been set at 400 Act is supplemented by the Pests Control Products ICUMSA units although sugar traded internation- Act Cap 346, which regulates and controls the use ally should not register more than 150 ICUMSA of products for the control of pests. The Act gives units. The lower the unit, the whiter the color and the mandate to the Pest Control Products Board the more costly it becomes. 22 Improving Market Access Through Standards Compliance: A Diagnostic and Road Map for Kenya Matrix on Comparative Kenyan and International Standards for Selected Commodities Commodity I Kenyan Standard International Standard Te aKSO1-65 Specification for Black Tea IS03720 Black Tea Basic requirements Chemical requirements for Black Tea (oven (Tea shall not have taint and be dried to constant mass at 103±2°C reasonably free from extraneous matter) Coffee KSO1-593 ISOI-104760 Green coffee Defect Specification for green coffee beans reference Fish KS05-1516 code of hygienic practice for European standards the handling, processing, storage, and EU Directive 91/493/EEC placing of fish on the market KSO5-1399ptl CODEX STAN 165 Horticultural KS 1 758 Code of practice for the Good agricultural practice MAAFF, UK; products Horticultural industry Integrated Crop Management, UK; and Environmental Protection Agency, USA Fruits (Fresh KSO1-393: 1983 Kenya standard CODEX ALIMENTARIUS VOL. SB. fruits, e.g., specification fQr fresh pineapples CODEX STAN 182-188, 196-197 avocado, pineapple, mango, papaya and pineapple) Flowers KSO1-695 cut flowers Reference UN/EEC standard H-1 on cut flowers The KEBS standard KS05-58:2000 defines and including its packaging method and assignment of specifies chemical and microbiological require- grades. Rules for grading of wheat and beans are ments for refined sugar. The standard is derived also provided. from Codex Stan 4-198 for white sugar. The general The Kenya Bureau of Standards specifications requirements are that refined sugar shall have fla- have been set for dry shelled maize under title vor and shall be free from any foreign materials and KSO 1-42:1997, which recognizes all vital parameters odor; shall be free from traces of pests, rodents, and geared toward ensuring the safety of the consumer. any other contaminant; and shall be free from any The National Cereals Produce Board (NCPB) spec- objectionable extraneous matter. ifications for dry shelled maize purchased from farmers are also set in line with the quality standards Maize. Cap 319 of the laws of Kenya (Agriculture for shelled maize set by the Kenya Bureau of Stan- Produce Export) provides for the grading of maize dards under title KSO1-42:1997. The quality speci- rules to regulate the quality exported from Kenya, fication standards are shown in Table 1.8. Table 1.8 Quality Specifications for Dry Shelled Maize KSCO1-42:1997 NCPB Specifications Grade Requirements (% by wt) Factor FAQ (%) Kl Moisture content 13.5 13.5 Foreign matter 1 1 Broken grains 2 2 Pest damaged grains 3 3 Discoloured grains 2 2 Source: NcPB, Nairobi (2002). Standards and Global Trade: A Voice for Africa NCPB, the main maize-purchasing agency, buys to a financial penalty. The quality standards for maize grains on the basis of Fair Average Quality wheat are shown in Table 1.9. (FAQ) criteria that effectively constitute a single average grade at intake. The grading factors con- stituting the FAQ grade are determined through LaborLawsandInternationalNorms surveys in the industry and are a compromise Kenya's laws on labor are outlined in a number of quality level designed to meet the requirements of Acts of Parliament. They include the Employment the consumers. They also include quality factors, Act Cap 226; Employment of Women, Young Per- such as insect damage, rotten grains, and foreign sons, and Children's Act Cap 227; the Regulation of extraneous matter levels, which are achieved when Wages and Conditions of Employment Act Cap the farmer takes reasonable care in harvesting the 229; 234; the Trade Disputes Act Cap 234; and the produce. Workmen's Compensation Act Cap 236. The Employment Act, among other things, deals Wheat. The wheat industry quality rules were first with issues regarding the employment of women enacted under the Wheat Industry Ordinance of and juveniles and issues such as keeping of records 1952, which prescribed conditions under which and penalty for failure to obey the law. It prohibits wheat, flour, and wheat feed were graded, in- the employment of a child, whether gainfully or spected, distributed, imported and exported; as- otherwise, in an industrial undertaking. Children certained the grades of wheat flour and wheat may, however, be employed in family businesses, in- milled for sale; and identified the type and speci- cluding agriculture. The Act also requires an em- fication of machinery installed in mills. Kenyan ployer to maintain a register indicating the date of wheat is rarely exported now but the Wheat Millers entry and exit from employment and to ensure reg- Association has defined its own standards for the ular medical examination of employees. The Em- wheat that they buy from farmers with a maximum ployment of Women, Young Persons and Children's defect of 10 percent. A well-cleaned mature grain Act provides for the enforcement officers to ensure will normally yield the higher specific weight that the protection of these groups while in employ- is necessary for dough forming during baking. ment, prohibits the employment of women and Thus, the higher the specific weight, the better the young persons in certain economic sectors, and sets grade. If any of the defects exceed the percentage the minimum age for employment. It also pro- given, then the wheat may be rejected or it will be vides for the maintenance of registers, issuance of at the discretion of the miller and may be subject permits, medical examination, and for necessary Table 1.9 Quality Specifications for Wheat NCPB KSC01-42:1997 Specifications Grade Requirements Factor or Defect FAQ (%) (% by wt) Kl Moisture content 13.5 13.5 Infested wheat 0 0 Immature wheat 5 5 Foreign matter 1 1 Heat damaged wheat 3 3 Broken wheat 2 2 Germinated wheat 2 2 insect/pest-damaged wheat 2 2 Weather-damaged or discolored wheat 5 5 Foreign seed excluding datura 2 seed per kg maximum 3 3 Total defects allowed 10 10 Source: NCPB, Nairobi (2002). Improving Market Access Through Standards Compliance: A Diagnostic and Road Map for Kenya inspections to be carried out. The Regulation of in the three East African countries and also take into Wages and Conditions of Employment Act sets the account the recommended international standards minimum wages payable to employees. The Work- and practices from organizations such as IPPC and men's Compensation Act covers workers m the OIE. They also take into account the principles of event of injury out of or in the course of work. the WTO SPS Agreement. The basis for the EAC de- In addition to the national legislation, Kenya is a velopment of common standards is the ongoing re- signatory of the International Labor Organization gional integration effort to form one trading bloc (ILO) conventions on employment and labor. The under a customs union. Therefore, there is a need conventions specify the standard minimum age a for common measures on standards and regula- laborer must be, define conditions of night work, tions on trade to be harmonized. This will make it medical examination, and underground work. easy for the three East African countries to comply Since 1954, Kenya has ratified 47 ILO Conventions with the SPS Agreement. of which 41 are in force. Some of the main con- ventions ratified by Kenya include Convention Standards and Regulations for Important Inputs No. 29 on Forced Labor, No. 98 on The Right to Organize Trade Unions and Collective Bargaining, The regulations for the important inputs are also No. 105 on Abolition of Forced Labor, and No. 138 based on various Acts of Parliament. The mamn stan- on Minimum Age. The country has not, however, dards are for seeds and chemicals used in agricul- ratified three core conventions, namely No. 87 on tural production. Freedom of Association, No. 100 on Equal Remu- neration, and No. 111 on Nondiscrimination in Seed Quality and Standards. Kenya's regulations Employment and Occupations. for seed certification and licensmg are outlined un- der the Seed and Plant Varieties Act of 1972. KEPHIS regulates all seed that is intended for sale in Kenya to ensure that it is of the variety and qual- An important area in which regional standards ity named. The seed cannot be sold in Kenya un- developments have influenced standards setting in less it is certified by KEPHIS through a rigorous re- Kenya is on sanitary and phytosanitary measures. lease procedure. The process of seed certification The EAC Secretariat for the three east African coun- (from breeder to foundation to commercial seed) tries, Kenya, Tanzania, and Uganda have developed is mandatory before its local sale in Kenya. The tri- a harmonized system of sanitary and phytosani- als in the country take one to three years before ap- tary measures to apply for the three countries. This proval. KEPHIS is the only body that certifies any work was spearheaded by the Association of Agri- agricultural seed in Kenya and licenses dealers cultural Research for Central and Eastern Africa through District Agricultural Committees, which (ASARECA). The harmonized measures focus on represent farmers' interests. * Requirements for importation of plant and plant Agrochemicals. Kenya imports most of its agro- products chemicals. The importation is subject to prior au- * Requirements for exportation of plants and plant thorization by the Pest Control Products Board products (PCPB), which inspects and licenses all premises in- * Plant quarantine measures volved in the production, distribution, and sale of * Importation and release of exotic biological con- agrochemicals. It also registers all agrochemicals im- trol agents ported or distributed in Kenya. Local testing of the * Importation of Living Organisms for research chemicals by an appointed research agency is re- * Standards of export or import of plant materials quired before their registration. The 1963 Fertilizers * Communication mechanisms among partner and Animal Foodstuffs Act, revised in 1977, provides states (vigilance) for technical standards to be met by fertilizers for * Breeding of seed and release of varieties use in Kenya. A Code of Conduct, which was de- veloped from the United Nations Food and Agri- The measures that have been used to develop EAC culture Organization Code, specifies the require- standards are based on current standards applicable ments for the manufacture, packaging, labeling, and 25 Standards and Global Trade: A Voice for Africa distribution of agrochemicals in the country. There recognize the potentially deleterious consequences is a requirement that all persons involved m such of uncontrolled biotechnology activities and rec- activities must sign the Code of Conduct. ommend that safety measures are the basis of pe- Although the standards for inputs are in place nal sanctions. However, such penalties can be im- and are clear on quality and handling of the inputs, posed only after the enactment of legislation or the some problems have been encountered. Cases have establishment of ministerial rules and regulations been reported in the past in which substandard in- but these have not yet been finalized. Therefore, the puts (e.g., seed maize and pesticides for coffee dis- regulation of research and commercialization of ease control) were sold to farmers. This is an indi- biotechnology products is governed by the broad cation of weak enforcement of the laws that govern rules governing general research and commercial- standards on agricultural mputs. ization of imported plants and plant materials as well as animal and animal materials. Enactment of regulations to govern biotechnology activities in the Imports for Research and Commercialization ggg of Biotechnology Products country is still missing and this is an area that needs to be addressed. Kenya has laws that govern the importation of plant materials (e.g., seeds, cuttings, plantlets, and seedlings), and animals for research and commer- cialization in broad terms as discussed in earlier sec- Kenya has established and implemented the nec- tions. However, no legislation has been enacted essary structures and procedures to comply with specifically to deal with research and commercial- the SPS Agreement. There exist contact points for ization of products derived from biotechnology international bodies involved in standards setting and, in particular, genetically modified organisms that are coordinated by the Ministry of Trade and (GMOs). Instead, the government developed regu- Industry for the purposes of notifying the WTO. lations and guidelines for biosafety in biotechnol- There is a SPS and TBT subcommittee of the ogy for the country in 1998 through the National WTO, which prepares Kenya's position on stan- Council for Science and Technology (NCST). dards for deliberation by the NCWTO and whose According to the guidelines, the NCST is the au- recommendations Kenya's representatives send to thority designated to oversee the implementation the WTO. The country participates frequently in of the regulations and guidelines on the biosafety all meetings on SPS and TBT. However, members of biotechnology products. The functions for NCST of the SPS and TBT subcommittee are not satis- include reviewing and ascertaining the suitability of fied with the feedback on the information from both physical and biological procedures appropri- the NCWTO secretariat to the industry actors. ate for research, and development of biotechnol- Stakeholders from some industries, particularly ogy products, reviewing the proposals on research horticulture, complain of limited access to noti- and recommending those that can be implemented, fications of standards in export markets. Another and ensuring adequate testing of genetically trans- concern by the SPS and TBT subcommittee re- formed materials developed elsewhere before intro- lates to the delegations to the international meet- ducing them for local trials. ings. The subcommittee considers some of the top The NCST is mandated to form subcommittees managers, who represent the country, not to be to help in undertaking the outlined functions. The the best qualified technically and therefore rec- guidelines also provide safety measures (familiarity, ommend that more technical staff be sent to the risk assessment and management, control meas- meetings. ures, and maintenance and dissemination of infor- The country has striven to develop standards that mation) and regulatory procedures for research and are based on international standards as indicated in commercialization of biotechnology products. The section entitled Conformity of Laws to Inter- guidelines are aimed at providing minimum safety national Standards. However, standards for some requirements, and those involved in biotechnology products such as locally manufactured farm im- activities are encouraged to establish additional plements and equipment need to be adapted to arrangements provided that they do not contra- the unique requirements of the country. The SPS dict the regulations and guidelines. The guidelines Agreement obliges WTO members to base their 26 Improving Market Access Through Standards Compliance: A Diagnostic and Road Map for Kenya standards measures on a risk assessment appropri- PCPB's activities cover the whole country and it uses ate to the circumstances (in which import require- its own laboratories for analysis, and the laboratories ments are not based on specific relevant interna- of other research institutions for bioefficacy field tri- tional norms). Kenya's capacity to carry out such als. The PCPB also works closely with KEBS to ensure risk analysis, which requires substantial empirical that appropriate authorization papers accompany all data and considerable professional expertise if it is pesticide products entering or leaving the country. to conform to the risk assessment methodologies promulgated by the relevant international organi- The Horticultural Crops Development Authority zations is constrained. This is an aspect that needs (HCDA). The HCDA is a parastatal under the to be strengthened. Ministry of Agriculture and Rural Development charged with the responsibility of supporting the production and marketing of horticultural crops in Oheirganizatioenes' PaicipationanKenya. Its specific functions include: Their Effectiveness Other than the organizations that are directly in- * Advising growers on the use of certified planting volved in standards setting and implementation, materials and helping them to identify both lo- discussed in the section "Kenya Economic Context," cal and export market outlets for their produce; there are several government institutions and pri- * Dissemination of marketing information and ex- vate organizations involved in standards imple- port statistics to investors, exporters, and pro- mentation in some way. The functions include in- ducers for planning purposes; spection and provision of advisory services to * Organizing groups of small growers for produc- producers and firms. This section examines those tion and marketing purposes of export crops; public and private organizations, focusing on their * Advising growers, exporters, and processors to functions and the services they provide to farmers plan production in relation to market demand; and firms. * Training farmers in the proper use of inputs, par- ticularly pesticides so that farmers adhere to the minimum residual levels (MRLs); * Advising producers and exporters of appropriate The public organizations involved in providing post-harvest handling techniques; services on standards include the Pest Control * Licensing horticultural exporters and collecting Products Board (PCPB), the Horticultural Crops government levies on exports (each exporter pays Development Authority (HCDA), and the Ministry some fee on an annual basis to HCDA to be of Agriculture and Rural Development (MA&RD). allowed to export). Pest Control Products Board (PCPB). The PCPB is The HCDA is mandated to implement and moni- a parastatal under the Ministry of Agriculture and tor grades and standards in the horticulture indus- Rural Development. Its mandate is to register all pes- try but it is not directly involved in the implemen- ticides used in the country, license the premises that tation of those standards. In most cases, it helps in are used for storage of pesticides, monitor all dealers promoting awareness of standards, particularly on to ensure safe and proper use of pesticides, and co- horticulture exports among small and large grow- ordinate the training of pesticide applicators to ers. It also licenses exporters of horticultural pro- ensure the safety of all concerned. The PCPB was es- duce and is paid about US$2.5 per ton of exported tablished under the Pest Control Products Act Cap 46. produce for its functions. The rationale for licens- The PCPB is also a contact point for Codex and uses ing exporters in an era of liberalized markets is guidelines from international standards such as FAO questioned by stakeholders and particularly be- and European Environmental Protection Agency cause exports have to meet the required markets Standards for Herbicides, Insecticides, Fungicides, standards. and Acaricides to advise producers and firms on the required standards of use. It also advises on WHO Ministry of Agriculture and Rural Development standards for public health pests, for example, insec- (MA&RD). MA&RD is responsible for the imple- ticides for mosquito, bilharzia, and malaria. The mentation of standards for plants and animals. It is 27 Standards and Global Trade: A Voice for Africa also responsible for all agricultural extension activ- * Liaison with other stakeholders such as research ities and therefore has a role of disseminating in- and regulatory bodies that can help in enhancing formation regarding standards on plant and animal their members' competitiveness. health. The ministry has different divisions charged with extension activities in specific groups of crops One of FPEAK's mandates is to link exporters with and animals. However, there are no serious efforts groups of small farmers to promote smaUlholder by the divisions to educate growers on grades and farm production and support exports from small standards. MA&RD has also not recruited new staff farmers through technical assistance and training, for some time now (for most of the 1990s to small grants to invest in infrastructure such as date) and the extension staff to farmer ratio is quite grading sheds and charcoal coolers, and loans to low, approximately 1:1000. Additionally, liaison purchase inputs. FPEAK also provides services to activities with research bodies are not adequately member exporters such as market intelligence, pro- undertaken. This has created a situation in which motion of Kenyan products abroad, and govern- farmers are not motivated to seek the advice of the ment lobbying. extension staff on standards. Without the technical and financial support of FPEAK, many farmers will not be able to meet the Private Organizations Participation in quality requirements of exporters. Similarly, with- out the help of FPEAK in organizing groups of farmers, many small exporters would not find it A number of private-sector organizations are in- profitable to contract with small farmers because volved in the implementation of standards In Kenya. of high risk and transaction cost. FPEAK usually Most of these organizations are involved through assigns exporters to specific groups of farmers. participation in committees organized by KEBS, The perception of both farmers and traders KEPHIS, PCPB, and DVS or by members of the working with FPEAK is that they have both bene- Kenyan delegations to CODEX, IPPC, and OIE meet- fited from such an arrangement and that FPEAK ings. The organizations are also represented in the provides a valuable service. However, the organ- technical committees of the National Committee on ization is still struggling with its financial and WTO. Some of the organizations are involved in the organizational sustainability in the long run. The implementation of standards and in the dissemina- outgrower scheme was supported by USAID-Kenya tion of information on the required standards for the for a long time in the 1990s to support smallhold- products that are of interest to their members. ers in horticulture production. Fresh Produce Exporters Association of Kenya Agrochemicals Association of Kenya (AAK). The (FPEAK). FPEAK is a private association of about AAK is a private association of international and 200 exporters. Currently, it is the only association local companies involved in the agrochemical trade. of exporters of fruits and vegetables. The objective The association mostly lobbies the government for of FPEAK is to undertake all those activities that a better business environment and trains retailers increase the competitiveness of its members. These and end users in the use of the products manufac- include: tured by its member companies. AAK can play a larger role in ensuring that only legal chemicals are * Provision of market information, organizing ex- marketed in the country by being a watchdog for hibitions and trade shows, and searching for new the industry and advising farmers accordingly. The niche markets association has a potential for industry self-regula- * Implementation of FPEAK Code of Practice tion in marketing and use of pesticides, if effectively * Implementation of an outgrower support scheme guided by national and international policies. that aims at enabling their members to source produce from smallholders who meet the strin- Kenya Flower Council (KFC). KFC, established in gent market requirements 1994, is a voluntary self-financing private organi- * Lobbymg the government for better trading zation. The council is made up of flower growers terms and other necessary support such as im- and exporters (small and large) but 32 members provement of the infrastructure make up about 65 percent of the total flower 28 Improving Market Access Through Standards Compliance: A Diagnostic and Road Map for Kenya production in Kenya. The main objective of the fish processors, fish importers, the government, and KFC is to provide a forum for flower growers for development agencies. It was formally registered on self-regulation and a forum for discussion and 29 May 2000 as a company and is funded by the support of flower production and export. Some of fish processing and exporting industries. The Asso- its functions include: ciation comprises membership drawn from fish processors in the Lake Victoria Basin involved in * Ensuring implementation of code of practice for Nile Perch processing and export, and from the all growers seafood processors of the coastal region of Kenya. * Ensurmg use of consistent standards There are 17 fish-processing factories based in * Transferring best demonstration practices Nairobi, Mombasa, Kisumu, Homabay, and Migori * Fostering responsible and safe production of cut that cover 90 percent of the active fish processors flowers and exporters in Kenya. * Promoting a safe working environment for flow- Within the industry, AFIPEK aims at specifically ers production harmonizing the quality standards in all member * Ensuring the welfare of workers in accordance industries and promoting the marketing of Kenyan with the Kenyan law fisheries products through: Membership in KFC is only open to those produc- * Establishing and maintaining an internationally ers, exporters, and propagators of cut flowers who recognized code of practise and HACCP across comply within a 12-month period with a minimum all member industries set of labor and environmental standards. The labor * Facilitating marketing of Kenyan fish by, among standards relate to wage, work hours, housing, others, organizing participation in international worker safety, and annual leave. The environmental fish exhibitions, and trade negotiations with po- standards relate to good practice guidelines on the tential importers use of locally registered agrochemicals, minimizing * Liasing with the government, laboratories, de- the use of WHO-classified "extremely" and "highly" velopment agencies, and other stakeholders to hazardous pesticides and reducing pesticide use. improve the fisheries industry in Kenya. * Helping members in aspects such as value-adding, Kenya Association of Manufacturers (KAM). The product development, packaging, and marketing KAM, which plays a leading role in lobbying for ap- * Training members on quality control practises propriate policies for manufacturers of various such as HACCP and GMP products, is an association of all manufacturers in * Research and dissemination of the latest tech- Kenya. The KAM has various committees, which nology and market information to the members deal with service and policy-related issues for var- ious sectors. The Association has a Standing Com- AFIPEK recognizes the positive role self-regulation mittee on SPS and TBT, which disseminates infor- can play within the industry. In 2000, the associa- mation regarding grades and standards for various tion with the help of UNIDO drafted a Code of products to its members. Practice for all sectors in the fisheries industry. This The influence of KAM on standards setting and code is based on the EU Code of Practice in the formulation is through its representatives in the fisheries sector and the Fisheries Act requirements. standards formulation committees of KEBS and Membership of the association implies that a par- KEPHIS. The KAM is also represented in the Na- ticular establishment agrees to abide by the Code tional Committee on WTO under the Ministry of of Practice. All AFIPEK members have instituted Trade and Industry. HACCP practices in their establishments and comply with the Kenya Fisheries Act 2000 and EU Kenya Fish Processors and Exporters Association Directive 91/493/EC. (AFIPEK). The Kenya Fish Processors and Ex- porters Association (AFIPEK) is the only fish Association of Better Land Husbandry (ABLH). processors' association recognized by the govern- The ABLH is an NGO funded by donors. ABLH pro- ment as being the competent authority on fishery. motes organic farming or use of minimal agrochem- The organization provides a vital link between the icals. The association is currently trying to mstitute 29 Standards and Global Trade: A Voice for Africa a certification program for organically produced (KEBS, KEPHIS, DVS, and MoH), as well as those fruits and vegetables targeting the export market. mvolved in the implementation of standards (e.g., HCDA, PCPB, etc.), and representatives from in- Kenya Institute of Organic Farming (KIOF). The dustry organizations (e.g., KAM, FPEAK, KFC, KIOF is a local private body that promotes the con- Chamber of Commerce and Industry, etc.). Some cepts of organic farming in Kenya. KIOF focuses of the committee members have had opportunities mainly on the production of organic produce with of attending overseas meetings of the interna- little, if any, interest in marketing. However, the tional standards-setting bodies. Furthermore, the members will benefit from a certification program members have also had the opportunity to attend being sought by ABLH as it will enable export of and participate in local as well as overseas semi- duly certified organic products. nars and workshops organized by the World Trade organization (WTO), United National Conference SGS International. SGS is an international organ- on Trade and Development (UNCTAD), and the ization that operates a certification division under International Trade Center (ITC). International Certification Services (SGS-ICS), The government has also organized seminars and whose role is to audit for certification under the ISO workshops on both SPS and TBT Agreements to 9000X series, ISO 14000, HACCP, and the code of sensitize the stakeholders and the business com- practice. The agency also undertakes preshipment munity in general to the importance of both sani- inspection (PSI) for imports into Kenya. PSI in- tary and phytosanitary measures as well as on Tech- volves verification of the quality, quantity, price (in- nical Barriers to Trade. The government normally cluding currency exchange rate and financial funds the local seminars and workshops and the re- terms), and the customs classification of goods to source persons are paid by the international donor be exported. Such inspections assure importers that agencies particularly the WTO, UNCTAD, and ITC. the goods they have ordered meet contractual spec- It is not possible to singularly tabulate the donor fi- ifications and quality standards, thereby reducing nancial input toward the SPS Agreement because possibilities for disputes once the goods arrive in the same department implements all WTO agree- Kenya. The inspections also prevent the import of ments without singling out funding for specific products that are considered health risks. agreements. The Commonwealth Secretariat re- All imports with an f.o.b value exceeding cently conducted a study on SPS and TBT for the US$5,000, except those exempted from preship- purpose of developing technical assistance pro- ment, require preshipment inspection and a clean grams for SPS and TBT, but the recommendations report of finding (CRF) must also accompany the of the study are yet to be implemented. imports into Kenya. An inspection agency in the Capacity building remains a top priority for country of importation issues an internal report Kenya if the country is going to participate effec- containing details of transactions as well as a secu- tively in meeting the WITO obligations and to rity label that is attached to the final invoice. The undertake the increasingly complicated tasks of security label confirms that the goods have been standardizing and regulating trade development. inspected and a CRF has been issued by SGS. Currently, there is a paucity of local analytical skills and expertise, resources and technical capacity in several areas pertaining to trade negotiations and Cegulapacit Bui eldngefor Standardsanthe preparation of proposals for negotiations at in- ternational organizations. The result is that Kenya Capacity-building efforts in standards have in the past is constrained from playing any significant role in focused on understanding the SPS and TBT agree- the process. In the past, the country has received ment by the National SPS/TBT subcommittee and technical and financial assistance from a number of creating awareness among stakeholders on the need organizations and donor countries to help build her for maintaining quality standards for the products if capacity in relation to trade-related standards and they have to be competitive in the export market. regulations. The matrix in Table 1.10 summarizes The SPS/TBT subcommittee comprises techni- some of the organizations that have been funded to cal representatives, usually two each from the pub- build capacity in areas of standards and regulations lic agencies involved in standards development for trade in Kenya. 30 Improving Market Access Through Standards Compliance: A Diagnostic and Road Map for Kenya Table 1.10 Capacity Building Efforts in Kenya Organization I Nature of Activities Funded Donor Status Kenya Bureau of I Promote standardization in industry and ISOComplete Standards (KEBS) commerce I ARSO Codes of practice CODEX Certification of products VvTO Quality control mark UNCTAD Training of personnel ITC Provision of equipment The Fresh Produce Set up Kenyan horticultural industry USAID Complete Exporters Association standards of Kenya (FPEAK) Prepare code of practice Contract and train horticultural farmers Training of personnel Provision of equipment Kenya Flower Council Set up flowers industry standards DFID Ongoing Prepare code of practice Contract and train floriculture farmers Training of personnel Provision of equipment MTI Promote standardization in business and I ISO Ongoing industry , ARSO Codes of practice CODEX Certification of products VWTO Quality control mark UNCTAD Training of personnel j ITC Provision of equipment Association of Better Set up organic farming standards DFID Land Husbandry Prepare code of practice Contract and train organic farming farmers Training of personnel Provision of equipment KEPHIS Quality control laboratory services EEC Ongoing Testing MRLs Quality control of all plant materials imported and exported Training of personnel Provision of equipment HCDA Set-up preshipment cooling facilities and Japanese Complete standards Government License horticultural exporters Prepare code of practice for horticultural exporters Training of personnel Provision of equipment I Source. Authors' compilation from Ministry of Trade and Industry (2002). Standards and Global Trade: A Voice for Africa The MTI has prepared a program that they would include low prices, high costs of production, weak like to have implemented with respect to standards management systems for cooperatives, and lack of capacity building. The focus is on capacity building credit for production. Approximately 95 percent of for institutions involved in standards development coffee produced in Kenya is exported. and implementation. In the public sector, the insti- Kenyan coffee plays a unique role in the world tutions identified include KEBS, MOTI, MOA, market. It is valued for its acidic blending and HCDA, KARI, KEPHIS, and EPC, while those in the is used in small quantities by many interna- private sector include production, manufacturing, tional roasters to improve the quality of their stan- and trade organizations such as FPEAK, KAM, and dard blends (MA&RD 1997). The washed (wet environmental and consumer lobby groups, as well processed) arabica coffee normally is more highly as small and medium enterprises. The capacity of all priced compared with unwashed or dry-processed the organizations to undertake their mandate with arabicas or robustas. The main demand for Kenyan respect to standards and regulations, past and ongo- coffee comes from blenders, who use its strong fla- ing programs as well as training needs will have to be vor to improve the quality of bulk black robusta analyzed. This will be the basis for determining fund- coffee. However, some Kenyan coffee is also used ing requirements, sources of funding, and time frame for gourmet consumer markets in which higher for implementing the standards and regulations. The prices are available. logistical support needed to strengthen the organiza- tions in terms of personnel will also need to be as- Coffee Grading. Kenya coffee standards are gazetted sessed. Recommendations from the MTI (NCWTO as KSO1-593 and are derived from ISO interna- Secretariat) are included in the action plan. tional standards as explained in section entitled "Capacity Building for Standards and Regulations Development. Nine separate grades are prepared Standards and Technical Regulations in for Kenyan coffee, namely, Action and Compliance Costs This section analyzes the application and estimated 1. AA consisting of largest size, normal shaped impact of standards, technical regulations, and re- beans; lated production practices. The main focus is on the 2. AB consisting of large, normal shaped beans; analysis of five case studies of commodities to in- 3. C consisting of small size, normal shaped beans; dicate the application of standards in the produc- 4. TT consisting of a light fraction from drawn from tion and marketing of the commodities and the AA and AB; problems and opportunities faced. 5. PB consisting of peaberry or round beans; 6. T consisting of very small beans and brokens; Selected Commodity Cases 7. E consisting of extra large or elephant beans); 8. UG consisting of ungraded beans; and The cases of coffee, fruits and vegetables, flowers, 9. Mbuni consisting of unwashed (dry processed) fish, and textiles are used to illustrate the status of coffee, usually UG. standards implementation in the country. The best quality of washed coffee on the basis of the Coffee. Coffee is the third most important export Kenyan classification is that belonging to the top six commodity from Kenya after tea and horticulture. classes (AA to T). These usually comprise about Farmers on both, small (cooperatives) and large 55 percent of the total crop. The remaining 45 per- holdings (estates or plantations) grow the crop. cent is sold as Miscellaneous catalogue and includes Small growers process and market their coffee the lower quality washed coffee and mbuni (dry through cooperative societies and account for processed coffee). The main determinants of coffee about 75.4 percent of the total area under coffee quality are the variety, environmental conditions, and produce about 60 percent of the total output. husbandry practices, and processing procedures. Currently, Kenya produces about 55,000 metric tons of coffee but this is a decline from the high Coffee Varieties and the Environment. The two 128,000 metric tons produced in 1987. The decline coffee varieties, Robusta and Arabica, are quali- in production is attributed to many factors, which tatively different. Robusta coffee usually has a 32 Improving Market Access Through Standards Compliance: A Diagnostic and Road Map for Kenya neutral, uninteresting flavor, regardless of the cul- tonnage basis, the costs are lower for highly man- tivation or processing methods. Arabicas have aged farms estimated at US$598 per ton compared such desirable qualities as aroma, flavor, and mild to US$1055 per ton for poorly managed farms. This acidity. These qualities are affected, not only by the is because the yields on better-managed farms are soil and climate, but also by the method of culti- high, estimated at 1,500 kg of clean coffee com- vation and processing. Favorable environmental pared to 400 kg per hectare on poorly managed conditions that ensure quality include reliable small farms. The main reasons for the high yields and well-distributed rainfall, and temperature, on estates when compared with small farms are which provide long growing periods with little risk the high level of input use and the ability to irri- from frost. gate coffee, which increases both coffee yields and coffee quality. Coffee Husbandry Practices. Crop husbandry prac- tices affect the yields, disease losses, and the flavor Processing. Primary processing is a critical factor in of the beans. The main contributors are the levels coffee quality. Coffee processing starts at the factory of fertilizer use and selectivity in picking. Low fer- level. Most of the coffee from Kenya undergoes what tilizer use tends to produce cleaner-tasting cher- is referred to as wet processing. This is a case in ries, and hand picking only the ripest cherries which the fresh fruits (cherry) are pulped to remove ensures maximum cup quality. The highest quality the outer skin and the beans are washed and soaked of Kenyan coffee beans tends to come from low- in water for 2-3 days to remove the pulp. This is an input smallholders who hand pick the cherries. important stage because it ensures that the beans However, the use of fertilizer increases yields and do not ferment together with the pulp that can ruin reduces disease losses; therefore, higher input users their flavor. Thereafter the beans are dried on open tend to obtain better average quality and higher racks before they are sent for milling. An alterna- yields. Use of agrochemicals and pruning also has tive procedure to wet processing is to dry the fruits an impact on yields through control of disease loss, in the sun, but this results in a much lower quality which also help improve average quality. of beans when the coffee is finally milled. Small The estimated costs of coffee production accord- farmers use the factories built by cooperative soci- ing to the level of husbandr,y practices and man- eties for this purpose while estates have their own agement are shown in Table 1.11. Most estates factories. achieve higher levels of husbandry practices while Estate factory processing costs average US$158 cooperative societies achieve low and medium lev- per ton of clean coffee with a conversion of 6.25:1 els of husbandry practices. The costs on estates from cherry to clean coffee beans. The average fac- estimated at US$897 per hectare are more than tory processing costs for cooperative societies are double those on low-management small farms es- about five times higher at about US$770 per ton, timated at about US$414 per hectare. However, on with an average conversion factor of 7:1. Because of Table 1.11 Cost of Coffee Production in U.S. Dollars Per Hectare Low Management Medium Management High Management Item Level Level Level Yield kg/ha 400 ' 750 1500 Input costs (herbicides, fungicides, insecticides, fertilizers etc) Kshs/ton 325 1 472.3 i 392.9 Labor (weeding, pruning, I picking, etc.) Kshs/ton 730.8 560.9 205.3 Total variable costs Kshs/ton 1055.8 905 598.2 Total variable costs per hectare 414.7 678.7 i 897.4 Source: Authors' compilation from Ministry of Agriculture and Rural Development. 33 Standards and Global Trade: A Voice for Africa weak management of many cooperative societies, brokers to sell coffee in the auction market and had factory processing of coffee from smallholders is a roasting plant for roasting, grinding, and bagging not properly undertaken and this results in low coffee for the local market. The CBK did not sell quality of the coffee when compared with coffee coffee in international markets directly but used from estates. coffee dealers or exporters, who were registered for that purpose. The Kenya Coffee Auctions (KCA), an Milling. The basic function of coffee milling is to organization established by the CBK, operated the remove the hull to create green coffee. The wet- auction market. processed beans are also polished. The coffee millers The overall organization worked particularly well also grade the coffee according to bean size, density with respect to standards setting, implementation, separation, color, and remove defects. The milling and maintenance in the industry; however, prob- of coffee and collection and transport of coffee lems related to low profitability and weak market- beans, along with associated grading and sorting ac- ing arrangements under the monopoly of the CBK tivities cost about US$100 per ton of clean coffee. contributed to the poor performance of the coffee The milled coffee is bagged according to the grades industry. This, together with the implementation of described earlier and sold at the auction markets liberalized market policies in Kenya has led to for the export markets. changes in the management of the coffee industry. With liberalization of the coffee industry, the Cof- Implementing Standards in the Coffee Industry. The fee Act was revised in 2001 and the CBK retained control on standards in the coffee industry has been only the regulatory functions for the industry. The for many years with the Coffee Board of Kenya commercial functions such as processing and mar- (CBK). The CBK was established under the Coffee keting were left to the private sector. However, the Act Cap 333 of the Laws of Kenya to play a regula- coffee processors, marketing agents, and millers tory role in the production, processing, marketing, must still register with the CBK. Farmers are at lib- and research in the coffee industry. erty to select their own processors, either within the In production, the CBK had area managers and cooperative societies, marketing agents, and millers field inspectors in every coffee-growing region of or from those who are registered with CBK. The the country, who, together with the extension staff marketing agents (to date only three have been reg- of the Ministry of Agriculture, provided advisory istered) have the mandate to collect coffee from fac- services to farmers. The advice included better pro- tories, and arrange for milling and marketing in the duction husbandry practices including weeding, auction market. crop nutrition, disease and pest control, and har- The impact of quality on Kenyan coffee is re- vestmg time. Because of their close contact with flected on the prices received. At the mternational farmers, the extension officers were able to solve the market, arabica coffee fetches higher prices (50 per- farmers' production problems. cent higher) than robusta coffee. Furthermore, it has The CBK also controlled licensing primary been seen that Kenyan coffee fetches premium prices coffee-processing factories and milling and also (about 20 percent higher than unwashed arabica monitored the performance of the factories and coffees) in the international market (CRF 1999). The millers. The Coffee Act required smallholders to be same report also indicates that large coffee growers members of a cooperative society to which they in Kenya receive higher payments for their coffee, must deliver their coffee for pulping. Each society partly because they are able to classify their coffee delivered the processed coffee to the miller and be- into the nine quality classes and sell it accordmgly, fore liberalization of the coffee subsector, there was while small growers who sell coffee through coop- only one registered miller, the Kenya Planters Co- eratives in which it is classified into only two classes, operative Union (KPCU). The KPCU was managed cherry one and two, receive lower payments. Thus by farmers but was supervised by the government the quality of coffee sold by farmers has an impor- through the Cooperatives Act. With hberalization tant impact on the payments they receive. of the coffee industry in 1998, private millers (four) have entered the industry. Industry Concerns. Policy reforms in the coffee Marketing of coffee at the auction market was sector allow the CBK to continue playing a lead- the responsibility of the CBK. The CBK appointed ing role in promoting Kenyan coffee in the world 34 Improving Market Access Through Standards Compliance: A Diagnostic and Road Map for Kenya market but the marketing agents, millers, and fac- and another estimated 0.5 million indirectly. The tory processors now play a leading role in main- quantities and value of exports of horticulture are taining standards as required by the market. The shown in Table 1.12. impact of these arrangements is yet to be known because the industry is in a transitional stage from Production of Fruits and Vegetables. The most im- control by the CBK to a liberalized market system. portant export vegetables are French beans, canned However, the industry players interviewed believe beans, snow peas, and Asian vegetables (okra, baby that liberalization of the industry-particularly corn, karella or bitter gourd, eggplant, chillies, and processing, milling, and marketing-is good for capsicums or peppers). Important fruit exports in- the industry. Quality control will be the responsi- clude avocados, mangos, passion fruit, and straw- bility of marketing agents who will be required to berries. Fruit and vegetable growers are grouped take a lead in advising farmers and factories on the into small, medium, and large growers. The Horti- quality requirements in the market and to provide cultural Crops Development Authority (HCDA) es- financial support for the maintenance of quality timates that 70 percent of production of vegetables and standards. The Kenya Planters Cooperative and 40 percent of production of fruit for export is Union (KPCU), which is the largest coffee milling from the small producers. and marketing agency, has taken a lead in solicit- The principal issue of standards in the produc- ing for credit locally and internationally to sup- tion of fruits and vegetables is the use of chemicals port farmers and factories. Because the organiza- for the control of pests and diseases, which attack tions are adjusting to a new legal framework, they the crops at any stage of production including will require technical support (financial and hu- post-harvest handling. Many disease-causing mi- man capacity) to deliver better services to farm- croorganisms and pests are favored by the tropical ers. This is necessary to help revive the coffee environmental conditions in Kenya. These mi- industry. croorganisms and pests infect plants and cause health damage of plants and plant products and Fruit and Vegetables. The horticultural industry therefore need to be controlled. The control of dis- (including fresh-cut flowers as well as fruits and eases and pests is achieved through a combination vegetables) is an important source of foreign ex- of factors such as good field sanitation and hygiene, change earnings and it is also an important source use of chemicals, resistant varieties, cultural prac- of domestic food with exports accounting for only tices, and mechanical means. 4 percent of the total production. In addition, it is Chemicals are usually the most effective means an important source of employment with the in- of controlling pests and disease, which leads to dustry employing about 2 million people directly higher yields, but unfortunately the chemicals are a Table 1.12 Exports of Horticultural Produce 1991-2000 Value of Horticultural Exports Volume of Horticultural Exports (USS million) tons Year Fruits Vegetables Cut Flowers Fruits Vegetables Cut Flowers _. -----------.__ . _ _ _ _ _ _ _ 1991 7.2 27.6 1 36.8 8367.8 25075.4 1 16405.0 1 1992 9.9 25.1 34.5 11233.0 23924.9 19806.0 1993 7.2 25.0 36.4 11608.1 38393.4 23645.7 1994 10.6 I 36.2 58.8 11591.0 i 26977.7 25121.1 1995 11.5 1 39.5 65.1 13866.0 27865.4 29373.5 1996 14.0 45.2 88.7 16869.4 31672.5 35212.2 1997 12.9 46.5 78.2 17454.7 29193.4 35853.0 1998 13.2 I 64.1 78.5 il 11352.1 35391.0 30221.4 1999 17.3 76.5 101.6 15595.2 44953.1 36919.3 2000 13.6 69.0 -_93.9 15415.8 43720.5 38756.7 Source: Authors' compilation from HCDA Export Statistics. 35 Standards and Global Trade: A Voice for Africa threat to human health (workers and consumers). farmers (small farmers) to produce fruits and veg- As a result safe use of chemicals focusing on the etables for export. This is important to enable the protection of workers involved in the spray of the large companies to maintain continuity of supply chemicals and control of chemical residues to pro- of the products to the markets. The companies tect consumers are important concerns. The use of provide the out-growers with seed and an assured the right chemicals, frequency of application and market outlet at an agreed-on price in advance. dosage applied for effective disease and pest control The farmers are paid after one week of delivery of but avoiding being harmful to workers and with the produce to the companies. However, in some minimum residual levels that can affect consumers, cases, contracted farmers default and fail to honor are critical requirements in production of fruits and their contracts to exporters and instead sell their vegetables. produce outside the contract resulting in huge The cost of production of various crops that losses to the contractors. This is a reflection of varies greatly among different farm categories for poor enforcement of contracts, which discourages selected exports of vegetables and fruits is shown in the support provided by large growers to small Table 1.13. The costs of production are highest for farmers. The HCDA addresses this problem dur- large farms (level III), which use higher levels of in- ing its extension programs by way of educating puts (chemicals and fertilizers) and better hus- small farmers of the importance and advantages bandry practices. The main cost elements are labor, of honoring contracts. which takes about 25-33 percent of total costs, ir- The HCDA has provided guidelines on the rec- rigation averages about 16 percent of total costs ommended levels of use of chemicals and fre- (but is not incurred for rain-fed agriculture), and quencies of use to meet internationally accepted chemicals (fertilizers and pesticides), which ac- technical standards. The FPEAK has also a Code count for 24-53 percent of the total costs. The cost of Conduct of the production of fruits and vegeta- components vary from crop to crop but the costs bles to meet standards required in the market as of chemicals usually account for the largest cost indicated in Box 1.5. component (about 30 percent) because of the need to protect vegetables and fruits against diseases Marketing of Fresh Vegetables and Fruits. The mar- and pests. keting of fruits and vegetables in Kenya falls under Large companies produce vegetables and fruits two categories, domestic marketing and export on their farms using sophisticated production marketing. The focus here is on export marketing techniques. Production relies heavily on irrigated because of the impact of international standards agriculture, use of approved chemicals and inte- associated with this marketing system. grated pest management, and environmentally The main export markets for fresh fruits and veg- friendly practices such as water and soil conserva- etables are Western Europe and the Middle East. tion. The companies also contract outgrower The United Kingdom is the largest export market Table 1.1 3 Average Cost of Production and Profits of Selected Vegetables and Fruits in the Main Producing Areas of Central Province, Kenya (USS/ha) Level of Production for Small and Medium Farms I =I II Vegetable Low Management Medium Management High Manaaement or Fruit Cost Profit Cost Profit Cost Profit _~~~~~~~~~- - - ; - ==- - - _ French beans 699.7 1 1223.3 I 826.7 r 1865.6 i 1005.9 2455.6 Snow peas 1291.3 1785.6 1410.4 i' 2692.2 j 1684.0 4469.9 Onion 503.8 778.2 621.4 ii 1301.7 749.5 1814.6 Avocados 897.4 1165.1 1346.2 l 2115.4 1794.9 2820.5 Passion fruits 456.4 365.4 J 687.2 523.1 911.5 716.7 Source: Authors' compilation from Ministry of Agriculture and Rural Development. 36 Improving Market Access Through Standards Compliance: A Diagnostic and Road Map for Kenya FPEAK has developed a code of practice cover- - Environmental awareness and responsible pes-. ing agricultural practices (including the use, han- ticide use dling, and storage of agrochemicals, traceability - Mandatory audit within one year, which costs and environmental practice) to help its members US$256 per year. in meeting the required standards in export mar- - Reaudit every six months, which costs US$256 kets on a voluntary basis. An external auditor, per year. the International Certification Services (SGS), - External audit every six months, which costs also conducts certification under the FPEAK about US$10,000 per year. code. An accredited exporter is allowed to use the FPEAK Eco-friendly logo on their letterheads, Gold Level: is based on overall responsibilities as packaging material, and produce. The certifica- above and documentation in addition to: tion is a mark that the produce from grower or exporter meets the required standards in the ex- - Land use impact assessment, minimum pesti- port market. FPEAK Code is divided into two lev- cide use and implement integrated pest man- els: namely, Silver and Gold. agement (IPM), minimum fertilizer use, and avoid contamination of water, soil conserva- Silver Level: Good agricultural practice (use of tion, water conservation, and non-pollution, pesticides as recommended) protection of flora and fauna, control of waste products, and environmental policy. - Workers welfare (housing, health, wages, and - Labor standards-Occupational health and so on). safety policy. in Europe. France, Germany, the Netherlands, and and labeling. These activities are labor intensive and Belgium are also significant markets. The market- require high sanitary and hygiene standards. The size ing system for fresh fruits and vegetables for export and sophistication of these activities depend on the is dominated by licensed exporters. They are more exporter's ability to invest in the necessary equip- than 200 licensed fresh produce exporters in Kenya. ment and management resources and its customer However, only 50 are consistently operational while base. Export pack houses have varying degrees of the oiher 150 exporters exploit favorable short- quality control programs. Most supermarkets re- term market conditions, entering and exiting the quire that all exporters who sell to them must have industry sporadically during the October-April a Hazard Analysis and Critical Control Point peak season. Ariiong these 50 active export firms, (HACCP) food safety management program. One 4 large firms dominate the export mafket. Ex- company estimated that to invest in a pack house to porters obtain produce from a variety of differ- meet these standards (HACCP management) costs ent types of producers using several types of US$375,000 dollars for a pack with a capacity of 20 transactions, namely, exporter-grower channel and tons. The exporters, who contract with small farm- exporter-agent or broker channel. ers, inspect the produce to enable them meet the re- Large companies have integrated production, pro- quired standards, particularly the use of approved cessing, prepackaging, exporting, and distribution of chemicals and clean up of the produce when deliv- their products. The harvested produce is first held on ered to centrally placed pack houses. houses or sheds on the farms (pack house). This is Small farmers export their produce through necessary to avoid destruction of the produce be- exporters of different types, which include produc- cause of high temperatures and to also sort, dean, tion contracts with large growers and exporter- grade, and package the produce ready for export. brokers. Some of the companies also add value to the pro- Production contracts (interlinked factor market duce by washing, trimming, packaging, bar-coding, contracts) are formal agreements to buy and sell 37 Standards and Global Trade: A Voice for Africa produce to larger growers. They are often referred spread of harmful insects to countries to which to as "outgrower schemes." This is most common Kenya exports fresh fruits and vegetables. The im- for fresh exported vegetables. Farmers are usually porting countries have prepared a list of chemicals, organized into groups of 15 to 30 members to fa- which are considered harmful to food safety and ciitate coordination of activities, technical assis- should not be used on fruits and vegetables for dis- tance, and supervision by large companies. The ease and pest control. Furthermore, most importing buyers have field officers who visit the farmers' countries have notified Kenya through the World fields on a regular basis to ensure quality control Trade Organizations (WTO) of the minimum chem- and proper use of inputs. ical residual levels allowed for various fresh vegeta- Exporter-broker channels are either exporter bles exported from Kenya. The European Union has agents or independent brokers. Exporter agents are also imposed a Zero Analytic Level of chemical paid a commission based on the volume of sales for residues for fresh vegetables, fruits, and flowers. providing certain services to exporters. These serv- The HCDA and the FPEAK provide information ices include identifying and recruiting farmers, to farmers on the required technical standards on communicating short-term information to farmers chemical use. The private sector through forward regarding exporter quantity and timing require- contract with farmers has also invested in support- ments, communicating information about expected ing small farmers to meet the required standards prices, informing the exporters about local supply through credit in inputs and extension services. The and competitive conditions, distributing packaging European Commission through the COLEACP materials to farmers, issuing payments to farmers, started a pro)ect known as Pesticide Initiative pro- and providing a grading shed where farmers deliver gram (PIP) to help ACP exporters comply with EU their crops and the exporter collects them. zero analytic MRL requirement. This program is Direct exporters sell produce purchased from implemented through FPEAK. The PIP focuses on producers to importers. The importers may sell information update and the database of EU regu- through two channels namely, wholesalers who lations on MRLs, good practice with regulations on service retail and food stores, and supermarkets MRLs, import tolerances based on Good Agricul- and food service outlets. Most of the large ex- tural Practices (GAP), and capacity building porters have a subsidiary for logistical services through farmer training programs on recom- including cold storage, handlmg, and shipping. In- mended pesticide use and crop production systems. dependent logistics companies provide these serv- Another important technical standard require- ices for small and medium exporters. Most of the ment for the export of fruits and vegetables is the medium and large exporters are involved in some pest risk analysis. Most countries require to know types of value-added activities, which include the status of pest risk analysis to help control the washing, trimming, packaging, bar coding, and spread of harmful pests from one country to an- labeling. The size and sophistication of these ac- other to protect plant and plant products' health. tivities depends on the exporter's ability to in- Pest risk analysis is undertaken by KEPHIS, which vest in the necessary equipment and management also advises growers and exporters accordingly. All resources and its customer base. importing countries have a list of pest risks, which must be adhered to before exports are made into Standards in Fruits and Vegetables. The Kenyan ex- their country. However, no comprehensive pest risk porters have to meet quality standards demanded analysis over a longer period currently exists in by the importing countries. The standards are di- Kenya. Besides, the country does have designated vided into two groups, technical and market- pest-free zones for fruits and vegetables and pest risk demanded standards. analysis is based on spot checks and controls dur- ing the production process. This is an area where the Technical Standards. Technical standards relate to country needs support in terms of trained person- the production and post-harvest handling of fruits nel and funding to undertake pest risk analysis. and vegetables and have a direct impact on the food safety of fruits and vegetables as well as on the health Market-Driven Standards. The standards for fruits of plants and plant products. The most important and vegetables for export from Kenya are determined standards relate to chemical use and the risk of the by the requirements in the consumer markets. These 38 Improving Market Access Through Standards Compliance: A Diagnostic and Road Map for Kenya standards include changing consumer tastes, and so- management systems at the packaging centers to cial and environmental concerns. Consumer tastes meet standards required in overseas markets. The relate to the needs of consumers in the export mar- produce is transported in refrigerated trucks to ket. For example, in response to consumer needs, su- maintain low temperatures. At the airport, the pro- permarkets m Europe have shifted from packaging duce is kept in cold store to avoid spoilage. The stor- vegetables in homogeneous forms to diverse produce age period can be up to two days depending on (e.g., onions, tomatoes, snow peas, and French beans arrangements for freight. Most exporters have in- in the same pack) as opposed to when the product vested in their own cold storage facilities at the is packaged individually. This has forced exporters to Cargo Village at Jomo Kenyatta International Air- change the packaging styles and also forced growers port (JKIA) while others lease from the larger grow- to diversify into production of many products in ers or facilities owned by the Kenya Airports Au- small quantities. Other consumer tastes include the thority. The large exporter growers have invested in size, shape, and maturity of products. The social and their own airfreight planes while others charter environmental concerns relate to the production en- freight aircraft for the purpose and others use gen- vironment for various products. Some consumers re- eral cargo aircraft. quire that labor standards such as protection of The initial capital investment costs for facilities workers against harmful chemicals, nonuse of child required to achieve international standards for ex- labor, and environmentally friendly production port of vegetables and fruits from the farm to the methods be used. airport are estimated at about US$1.2 million for a Market-driven standards are usually communi- daily capacity of 10 tons as shown in Table 1.14. cated to growers through the exporters and are not The operation costs per month for a 10-ton daily notified through the WTO system. FPEAK also capacity to ensure that the product meets the re- plays a leading role in communicating market stan- quired standards are estimated at about US$25,600. dards to growers and exporters. According to the Given the costs of investing in standards for the ex- firms that were interviewed, market-driven stan- port market, small farmers are not able to do it dards are more stringent and costly to comply with alone and are forced to rely on contracts with large when compared to technical standards. However, growers or exporters. market-driven standards are associated with a price premium because producers who are unable to Industry Concerns. The main concerns in the veg- meet the standards cannot sell in such markets or etable and fruits industry with respect to standards receive lower prices. The producers or exporters, are the ability to meet the MRL requirements and however, meet the costs of compliance. undertake pest risk analysis. Good knowledge and the ability to test for the levels of MRLs are required Compliance Costs. The procedures for maintaining to attain the required levels before the produce is standards for vegetables and fruits include invest- harvested for export. Most of the recommended ing in personnel to advise and inspect on the level chemicals and safety use guidelines are quite ex- of use of pesticides, grading and precooling facili- pensive to use and implement. Furthermore, costs ties at the production sites, refrigerated transporta- have to be incurred in employing qualified agron- tion, and cold storage at the port of export. omists to advise on the use of pesticides and in the Growers employ agricultural specialists (agrono- inspection of the levels of MRLs of the produce mists) on their farms to inspect the produce and before harvest. advise on quality including maintenance of zero Pest risk analysis is another important concern. level agrochemical residuals (MRLs). The cost of The failure for Kenya to have a pest risk analysis implementing this varies from grower to grower that covers a longer period is responsible for the re- according to the size of the farm. However, on an striction of Kenyan fresh produce of fruits, in par- average a farm of 50 hectares requires one agrono- ticular to South Africa and the United States. Both mist and three technicians whose monthly cost is countries require pest risk analysis over long peri- about US$2,100. ods of time before exports of fresh fruits and veg- Pregrading and cooling of the produce at the etables are made. The EU has also notified Kenya production zones is an important measure on qual- of the need for strict pest risk analysis for harm- ity control. Most growers have adopted HACCP ful pests, which are foreign in the EU and have 39 Standards and Global Trade: A Voice for Africa Table 1.14 Investment Costs of Maintaining Standards for Vegetables and Fruits for Export Item Dimensions Cost (US$ million) Precooling and grading shed at production center Building 70.4 m2 0.026 Refrigerator 4 units 0.031 Refrigerator diskettes 4 units 0.073 Suction chamber 4 units 0.100 Prefabricated pallets 28 m2 0.053 Standby generator 60 KVA 0.028 Fuel tank 1000 liters 0.032 Exhaust pipe 0.006 Trolley 60 0.022 Plastic crates 200 0.006 Working tables 650 m2 0.019 Subtotal 0.391 Refrigerated transport 2.5 ton trucks 5 trucks (2.5 ton) 0.436 Cold storage at airport Office block 325 m2 0.067 Cold store 704 m2 0.204 Chill room 260 m2 0.059 Work space and ablution 145 0.032 Perimeter fence 0.038 Generator 60 KVA 0.035 Subtotal 0.403 Grand total 1.229 Source Authors' compilation from Exporter Surveys proposed a detailed inspection of pests on fresh production is concentrated in only a few (about 75) produce to be undertaken before the produce is ex- large or medium flower operations. The 25 largest ported. Most growers consider this requirement to producers account for 75 percent of the total ex- be too strict because growers do not know about ports. The larger flower operations range in size the restricted pests. As a result, KEPHIS has re- from 20 to 100 hectares under production with a quested the EU to send inspectors to Kenya to help labor force of 250 to 6,000. Some of these enter- in the inspection of the produce to identify the re- prises supplement their own production with that stricted pests and advise accordingly. KEPHIS are purchased from small commercial growers. responsible for undertaking the pest risk analysis and they have reported that the main constraint is Flower Production. Flower production on large limited technical capacity and financial resources to farms is a highly sophisticated investment with fa- undertake the analysis.3 cilities and quality assurance systems to meet su- permarket requirements. Some of the flowers are Flowers. Flower growing is the leading horticul- annual crops that can be grown in open fields with ture export from Kenya. The flowers industry has relatively limited inputs (e.g., statice and al- three types of growers, namely large growers (com- strormeria); others require much more controlled panies), and medium and small growers. Presently, growing conditions, more purchased inputs (espe- there are 5000 farmers or enterprises growing cut cially agrochemicals) and more intensive field man- flowers for commercial purposes. However, export agement (e.g., roses and chrysanthemum). Such I Personal communication with the Managing Director of KEPHIS. Improving Market Access Through Standards Compliance: A Diagnostic and Road Map for Kenya flowers are grown in high investment structures Kingdom and SGS undertake the external audits to that require special production systems such as ensure that firms meet the standards for each class. production in green houses, drip irrigation, high Those that pass the audit are permitted to display fertilization, safe use of chemicals and computer- the KFC "Environmental Friendly" logo on all their controlled venting care. However, in all cases export products, packaging, and promotional material. markets require flowers to be produced according Farm audits are repeated every six months, and to the Good Agricultural Codes of Practice (GAP), those members that fail to maintain the necessary which require that the use of chemicals should not standards lose the right to use the KFC logo. The pose any measurable hazards to the health of the costs of being a member who adheres to the KFC consumer, farm workers, and the environment. So, Code of Practice is US$385 for joining and an flower growers are forced to produce flowers using annual subscription of US$8 per ton of flowers environmentally sound practices. Most of the larger exported. The costs of implementation of the Code operations hire professional managers, including of Practice by growers vary but the costs of audits expatriates to manage the farms to meet these stan- alone to attain a Silver or Gold standard are esti- dards including MRLs standards as is the case of mated at about US$25,640 per year. fruits and vegetables. The costs of flower production in Kenya are The Kenya flowers industry has always kept shown in Table 1.15. The analysis shows that the abreast with export requirements in production of costs of production of various flowers vary greatly. flowers through the efforts of the Kenya Flower The costs of flowers such as roses and carnations Council (KFC), which developed a Code of Prac- that are grown in high-investment structures and tice that helps growers meet the required standards require special attention are high as opposed to (see Box 1.6). flowers such as carthamus grown under field con- The KFC Code of Practice builds on international ditions. The average fixed costs are also shown in technical standards for flower production and mar- Table 1.16 and are estimated at about US$278,600 ket requirements such as those required by organ- for a 5-hectare investment. izations in the EU market (e.g., EUREP, MPS, and Below the large growers are several dozen small- British Retail Consortium). The Code of Practice to-medium commercial growers, each with be- has been revised five times, each time to take into tween 5 and 20 hectares under production. Some account changing market conditions. Reputable of the medium growers have as many as 100 em- companies such as Bureau Veritas of the United ployees. The small and medium growers collectively Silver Level: Based on good agricultural practice - Land use: environmental impact assessment prior to all main land use changes - Workers' welfare (abide by government labor _ Pesticides minimize uses and implement inte- requirements and Workers' Compensation Act grated pest management (IPM) Cap 236), housing, and protection against - Soil conservation: erosion control chemicals use - Water resources: pollution control - Environmental awareness - Protection of flora and fauna: wildlife and in- - Responsible pesticide usage digenous plant life - Mandatory audit within one year - Waste products: safe disposal of chemical and - Reaudit every six months organic waste - External audit of KFC every' six months - Environmental policy Gold Level: Builds on Silver Standard - Occupational health and safety policy - Reporting: environmental matters and docu- ment at regular intervals 41 Standards and Global Trade: A Voice for Africa Table 1.15 Variable Costs for Cut Flower Production (US$/season) Cost Carnation (item/crop) Roses Statice (spray) Bupleurum Solidago Carthamus Land preparation 1,400 160 ji 160 160 I 160 160 Planting materiala 53,250 702 43,860 1,600 20,880 526 Irrigation 500 1,053 1,580 526 1,053 526 Fertilizers 5,300 702 5,260 702 1,750 440 Pesticides 6,000 1,750 10,530 526 1,750 526 Labor 14,275 I: 4,210 15,790 3,509 7,900 2,175 Electricity - - 1,750 Packaging material 3,500 9,650 7,020 1,842 5,260 2,403 Transportation 4,000 1,750 10,530 526 1,750 526 Total 100,825 199,77 1i 94,730 9,391 42,253 7,282 a Includes royalty where applicable Source Thoen and others (2000) Table 1.1 6 Average Fixed Costs for Kenyan crop management, pesticide application, and qual- Cut Flowers ity control. Nevertheless, the requirements of the Cost Item Ct (US$) European market (product consistency, quality _________________ _ -_ -control, and compliance with health and safety re- Green house construction 50,000 l quirements) pose problems for exporters wishing Irrigation layout 5,000 to source from smallholders. Water pumps 2,500 Spray unit 1,300 l Flower Marketing. Production and marketing of Fertigation equipment 25,000 flowers is vertically integrated for large growers just Cold storagea 90,000 as in the case with fruits and vegetable growers. The Insulated trucka 105,000 flowers are harvested and put in precooling houses Total costs 1 278,800 on the farms for chilling, cleaning, sorting, gradsng, a These costs cover five hectares of cut flower production. and packaging ready for export after inspection by Source Authors' compilation from surveys. KEPHIS officers at the airport for some growers. Other growers transport chilled flowers to cold account for 10-15 percent of Kenya's total exports. stores at the airport where they are cleaned, sorted, In some cases, the growers export directly but be- graded, and packed for export after inspection by cause of intensified competition in the export mar- KEPHIS officers. Transportation from the farm to kets, many have shifted to supplying other firms the airport is in all cases done using refrigerated ve- (large growers) rather than shouldering the risks hicles unlike the case of vegetables or fruits in which and transaction costs associated with exporting. it is not mandatory. A few firms that export flow- In general, smallholders face problems in the pro- ers as well as vegetables and fruits use the same cold duction and marketing of cut flowers. They lack storage facilities for cooling the produce indicating credit, inputs, and technical capabilities and suffer an opportunity for shared facilities. from logistical constraints such as transport, Several firms have formed linkages with freight haulage, and cold storage facilities. Sometimes, the firms, importers, and agents in Europe and most growers organize themselves into groups to try and supply both the Dutch auctions and European overcome the constraints they face while some grow supermarkets. These growers provide the range and flowers on contract for large growers. The large volume required to fulfill their sales program. The growers provide finance and technical support in international market for cut flowers is concentrated the production and grading of the contracted flow- in the high-income countries of Northern America, ers. Both HCDA and KFC support the smallhold- Europe, and Asia. Europe is the largest market for ers through the provision of inputs, training on Kenyan flowers. 472 Improving Market Access Through Standards Compliance: A Diagnostic and Road Map for Kenya The Kenyan flower trade operates on a counter- and environmental dimensions of production. seasonal basis to the patterns of production in Product differentiation is consumer desires en- Western Europe. Kenya's exports are generally high- compassing greater variety both in terms of flower est during the November to May period, with spe- types and in terms of colors or other aspects of cific peaks in market demand associated with appearance. Product life cycle has become impor- Valentine's Day (February), Easter (March and tant because consumers are looking for new vari- April), and Christmas (December). Kenya's exports eties with different colors, shapes, and fragrance. are lowest between June and August because of the The Kenyan flowers industry has grown to keep availability of low-cost supplies within Europe. Sev- pace with changing consumer preferences and eral Kenyan growers and exporters pursue alterna- standards in terms of flower varieties, assortments, tive marketing arrangements-including direct and colors. Kenya currently produces more than supplies to supermarkets to achieve year-round 30 different types of flower varieties although the sales. industry is dependent on a few varieties for its profitability and only three top varieties-roses, Standards in the Flower Industry. Both technical statice, and alstroemeria-to maintain market and market-driven standards are factors that affect competitiveness. flower exports from Kenya. Consumers have also taken an increased interest Technical standards about flowers are similar to in environmental and social dimensions of flower those for fruits and vegetables, namely; minimum production, which include intensity of use of agro- residual levels (MRLs) for chemical use and pest chemicals, which raises concerns with respect to risk analysis. The MRL is an important considera- adverse effects on worker safety or water quality. tion in technical standards in the export market to The Netherlands has been on the forefront of a ensure that the undesirable harmful chemical movement to reduce the environmental impact of residues should not exceed the internationally ac- floricultural production and a number of initia- cepted levels. Thus, pesticide residue analysis is nec- tives such MPS, which focuses on environmental essary to determine the presence of MRLs before care in floriculture, has an impact on flower pro- harvesting for export. To avoid this problem, a min- duction in Kenya. Kenyan flower growers have also imum number of days are recommended that a responded to environmental and labor standards chemical can be applied before harvest. The num- and the KFC Code of Conduct specifies the pro- ber of days required vary with the type of chemi- cedures to be followed in flower production to cal used. This requirement is achieved by Kenyan meet these social and environmental standards. firms through investment in qualified agronomists The KFC allows firms to use their logo of certifi- who advise on the appropriate levels of the use of cation on exports as verification that the firm has pesticides and harvesting periods. adhered to recommended production, environ- Pest risk analysis is a particular problem for ex- ment, and labor standards. ports of flowers to Japan. One exporter indicated that they lost a consignment of flowers exported to Compliance Costs. Meeting international standards Japan because it was fumigated against pests. The for flowers is a costly investment. It requires huge new EU requirement of inspection against (non- investments in irrigation, electricity, cold storage, indigenous harmful pests in EU) is also considered precooling facllities, and refrigerated transport for a challenge to Kenyan growers. KEPHIS has made the purposes of meeting the high-quality standards a request to EU to send inspectors to Kenya to help required in terms of consistency, reliability of sup- in the identification of such pests. A similar request ply, traceability, and environmental and social stan- is being made by Kenyan growers to the United dards. The procedures for maintaining standards States and Japan. for flowers from the farm level to the export mar- Market-driven standards are very important ket are similar to those discussed for fruits and veg- in the flowers industry. These include consumer etables. The only difference is that flowers have to preferences and social and labor standards. Im- be chilled and kept at lower temperatures (3°C) portant consumer preferences that affect the sup- than for fruits or vegetables. plier of flowers from Kenya relate to product Growers employ agronomists to inspect the pro- differentiation, life cycle of particular varieties, duce and advise on quality including maintenance 43 Standards and Global Trade: A Voice for Africa of zero-level agrochemical residuals (MRLs). The ability to pay for royalties for new varieties devel- cost of implementing this varies from grower to oped by breeders are also significant. grower according to the size of the farm. One ex- pert alone can be paid up to US$6,000 per month. Fish and Fishery Products. The fisheries industry is The cost for investing in facilities for a 5-ton a vibrant part of the Kenya's economy earning US$96 capacity is the same as that required for a 10-ton million per annum. The industry is currently one of capacity for fruits and vegetables shown in Table the fastest growing nontraditional export products 1.14 or US$278,800 for a 5-hectare investment as in Kenya and generates both private and public ben- shown in Table 1.16. The operating costs are esti- efits. Production has increased tremendously since mated at about US$38,000 per month. As a result independence. Growth in fish export revenue has of the high expenses in investing in floriculture, risen from US$19 million in 1990 to about US$96 only large growers benefit most from the indus- million in 2000. Besides, it is an important source of try. Small growers benefit from the industry employment opportunities and food. through contracts with large growers; otherwise it The main sources of fish and fishery products are is not possible for them to meet the standards divided into marine (saltwater) and freshwater required for exports. (lakes and rivers). In the past years, aquaculture, es- pecially of tilapia, has been growing. The main Industry Concerns. Flowers contributed about 53 sources of fish are Lake Victoria and Lake Turkana, percent of the Kenya's estimated US$180 million an- and the Indian Ocean. nual earnings from the horticultural mdustry in 2001. The horticultural industry is the third most Marketing Structure of the Fisheries Industry in important foreign-exchange-earning industry for Kenya. The marketmg structure for fishery prod- Kenya and it is also an important source of employ- ucts in Kenya varies depending on whether the ment in the country. The threats to the industry are product is destined for export market or local con- exports ban, which may arise from noncompliance sumption. At the production level fishing is mainly to MRLs, environmental and labor standards, and artisanal, especially in Lake Victoria. There are a few pest risk analysis as required in the export markets. offshore trawlers off the coast of Mombasa dealing The large growers have made significant investments mainly with tuna and octopus. To encourage dis- in the industry as part of the efforts to meet the re- tribution of income to the local communities, fish- quired standards but small growers face problems be- ing in the lakes is limited to artisanal. The middle- cause of the huge investments required. The alter- men who sell it directly to the large processing native for small farmers is to produce flowers on factories purchase Nile perch directly from the fish- contract for the large growers who provide them with ermen. Currently there are 17 export-oriented fish the necessary support required for meeting the re- processing factories in Kenya. Fish destined to the quired standards. This, however, is not sustainable local market (Tilapia, Omena) is purchased from because the large growers tend to give priority to the fishermen by small middlemen (mainly their own production because it is only possible to women) who process (drying) or sell it directly to maintain high standards in production as a result of the final consumers or to other middlemen. Large total control of management. This is not possible on local processors (nonexport-oriented) mainly deal contracted small farms because large growers do not with the by-products such as mgongo-wazz (fish have total control on the production practices on skeleton), which is transformed into a variety of these farms. Thus small growers require support in products for human and animal consumption. production investments, which include equipment There is little vertical integration in the industry. and machinery and technical capacity to enable them produce flowers that meet required standards in the Main Export Markets. The main export destina- export markets. tions of Kenya fisheries products (which are 90 per- In general, the main concerns in the flowers in- cent Nile perch) are the European Union. This is dustry focus on the ability to meet the MRL re- mainly because the price offered is higher than quirements and pest risk analysis. The ability for that from other regions and transport cost to this the growers to meet the ever-changing consumer destination is lower because of its close proximity preferences through investments in research or the to the African continent. Other destinations include 44 Improving Market Access Through Standards Compliance: A Diagnostic and Road Map for Kenya North America, and the Far East. In the past, Kenya confusion and conflict in the enforcement of regu- has faced problems in fish exports to the main lations, especially when a particular market de- European market. There have been bans on fish ex- manded some action to be taken. At the industry ports to EU in 1997 and 1999 because of sanitary level, there was no organized group of actors (fish- and health requirements. The 1997 ban was on ac- ermen or processors); instead, fishermen and count of the presence of salmonella cholera in Lake processors operated independently. Victoria while the 1999 ban was because of the re- ported use of chemicals for harvesting fish in Lake Practices After the Ban on Fish Export in 2000. The Victoria and generally poor sanitary conditions prevailing practices for the industry before 2000 did along the fishing beaches. These experiences are not ensure that the sanitary and health standards elaborated in section entitled "Experience of required for the export market were met adequately Banned Products to Traditional Markets." and this is what contributed to the fish ban. As a result of the export ban, Kenya has developed stan- Sanitary and Health Requirements of the Export dards on fish based on Codex Stan 165 and EU Di- Markets. Because of health concerns, especially rective 91/493/EEC. The standards were legislated from consumers in the EU, fishery products from in 2000 under Legal Notice No. 10 as a supplement East Africa are among some of the heavily regulated to the Fisheries Act Cap. 378. This move was espe- food products on the market shelves today. This is cially aimed at responding to standards required in because of concerns regarding sanitary and health the EU market but they also apply for all fish prod- practices for fisheries in the region, particularly on ucts exported from Kenya. fisheries from Lake Victoria. The main sanitary re- According to the new regulations, the following quirements are to maintain high health standards requirements have been formulated. at the beaches where the fish is landed for cleaning, At the production level, the following must be sorting, and transport for processing and during observed: processing at the factory plants. The practices be- fore the ban of fish exports to EU in 2000 and those (a) The fishermen and fish handlers at the landing that were adopted subsequently are outlined in the beaches should be trained in basic (level 1) hy- following discussion to illustrate the standards giene and sanitary procedures. required for the export markets. (b) Fish at the landing beaches should be placed in sanitary containers with ice. Practices Before Ban on Fish Export in 2000. For a (c) Vehicles used for transporting fish to the mar- long time, facilities at the landing beaches were kets or processing plants should be insulated rudimentary and restricted to a covered area where (ice) and dust proof. fish were sold and in some cases a landing jetty was (d) Fish should be maintained at an unbroken cold built where the fish were sold. Thus the beaches chain from production to the market. lacked basic facilities (sanitary containers with ice or water for cleaning or chilling fish). The fish were At the processing level, the following must be ob- transported to processing plants for cleaning and served: packaging for the export markets. The sanitary con- ditions at the processing plants varied according to (a) A competent authority should inspect all estab- the capability of firms but most had a laboratory lishments intending to export fish. The EU also for chemical and microbiological analysis to ensure requires its inspectors to approve the processors that sanitary and health standards required by the and issue them with an EU export number. market were met. (b) The establishments should implement HACCP The basis of standards to be met and procedures and GMP principles both in their construction to be followed was outlined in the Fisheries Act Cap and routine operating procedures. 378. The Ministry of Health was responsible for (c) There should be regular and documented in- overseeing hygiene and sanitation in the industry, spections of the establishments by the country the Ministry of Trade and Industry was involved competent authorities. in trade issues while Ministry of Agriculture dealt (d) All personnel are expected to have a certificate with production aspects. This situation created of health and training in hygiene and sanitation. 45 Standards and Global Trade: A Voice for Africa At the marketing level, the following should be water; construction of landing jetties; modern- observed: ization of fish reception; and improvement of access roads. (a) A Health Export certificate should accompany The new developments in the fisheries industry every consignment for export. are expected to increase the exports in fish, partic- (b) There should be complete traceability of prod- ularly to the European Union (EU) market, which ucts right to the source. This is more impor- had shown a significant drop during the ban. For tant especially when tracing source of contam- example, the ban had a significant impact on Nile ination in a particular batch. perch exports to the EU causing a drop of 66 per- cent, a 24 percent drop in total fish exports from The Government of Kenya has established a Com- Kenya with a corresponding 32 percent decrease petent Authority for the inspection of fish standards. in value (Noor 2002). Although exports to other The Competent Authority is the Fisheries Depart- markets continued, the EU market is an important ment in the Ministry of Agriculture and Rural De- market because of its volumes and better prices velopment. The Department is principally respon- offered for Kenyan fish. sible for the development and conservation of fisheries, promotion and control of fish harvest- Compliance Costs for Standards in the Fisheries ing, trade on fish and fisheries products, fish qual- Industry. Fishing on Lake Victoria, which is the ity control services, issuance of fishing licences and main source of fish exports is largely undertaken export certificates, and enforcing hygiene regula- using by wooden boats with a crew of between two tions within the industry. and four fishermen. A small number of trawlers op- At the industry level, fish processors formed erate on the lake although this is illegal. Relatively AFIPEK, which is actively involved in a number of few boats are motorized but the type and size of activities that have made significant contributions nets used vary. The average investment cost in the to the fish sector. These are, among others: fishing gear (medium boats for four fishermen and nets) is about US$500. (a) Drafting and launch of the code of practice in An important investment in the fisheries industry, the fisheries industry (in progress); which is of concern in the standards for fish exports, (b) Testing, compliance and verification of the is the landmg beaches. The government has desig- quality control conditions at Lake Victoria; nated 10 landing beaches on Lake Victoria for de- (c) Rehabilitation of the fish landing beaches along velopment through community and stakeholder the shores of Lake Victoria; and participation. The improvements on the beaches are (d) Organization and participation of members divided into two phases. The first phase covering fenc- in international fish exhibitions and trade ing to improvement of the sorting sheds has been fairs. done while the second phase covering the other elements will follow. The estimated cost of developing The organization spends about US$2,500 annually beaches to meet the required standards is US$90,000 for monitoring and supporting sanitary and health per beach. Thus, the development of beaches on Lake measures at the Lake Victoria beaches. It also spends Victoria alone will require US$900,000. US$3,800 annually on training and advising proces- Fish processing is another area where high san- sors on better health standards in the processing itary and health standards are required. All fish of fish. processors are required to invest in laboratories As a result of the recent health concerns on fish to undertake chemical and microbiological analy- exports, the government has designated 10 land- sis as well as investing in processing facilities. ing beaches on Lake Victoria for development. With the new legislation on fisheries all proces- The landing beaches are being developed through sors are required to adhere to HACCP manage- community and stakeholder participation. The ment systems. Currently, all the 17 processing fac- developments include fencing; paved the recep- tories have achieved the HACCP criteria. The tion area; improvement of drainage system; pro- costs of investing in a 10-ton fish processing fac- visions of insulated fish boxes; improvement of tory are about US$962,800. Laboratory costs for the sorting sheds; provision of electricity and achieving HACCP standards are US$19,200. The 46 Improving Market Access Through Standards Compliance: A Diagnostic and Road Map for Kenya Table 1.1 7 Average Costs (Fixed and Variable) for a 1 0 ton Daily Processing Capacity of Fish Item Average Cost (US$) Fixed costs Factory buildings 350,000 Filleting equipment (stainless steels) 200,000 Temperature control equipment (Blaster and plate freezer and ice equipment) 180,000 Water treatment 12,000 Transportation trucks (6) 18,000 Subtotal 942,000 Variable costs/day Packaging materials 400 Labor 150 Other utilities 1,000 Subtotal 1,550 Laboratory costs Fixed lab equipment (weighing scales, autoclaves etc) 6,500 Equipment for microbiological test 3,200 Chemicals for microbiological tests 1,500 Equipment for physico-chemical tests 7,000 Chemical reagents for physico-chemical tests 1,000 Subtotal 19,200 Total 962,800 Source Authors' compilation from surveys overall costs for fish processing are shown in lated activities, particularly with respect to test- Table 1.17. ing and quality assurance and advising fishermen and processors. Industry Needs. The main concern in the fisheries industry is on how the recommended standards can Cotton Textile Industry. The cotton textile in- be met to avoid the bans on exports that were dustry starts with cotton production and ends imposed earlier. Accordmg to industry players with textile manufacturing. Currently, the coun- (processors that were interviewed, AFIPEK, and try produces only 2,000 tons of lint cotton annu- Department of Fisheries), the Kenyan fisheries ally but this is not adequate to meet domestic industry still needs needs of the textile industry, which is estimated at 20,000 tons annually. As a result, the country im- * Better implementation of hygiene and sanitary ports cotton lint, yearn, and synthetics for use in standards especially at the production level (beach the industry. landings). This is currently a problem because The cotton textile industry has gone through dif- there are no adequate funds to do so and the ferent phases of development since independence beaches have not been fully developed as planned. in 1963. Soon after independence, the government * Increased awareness of hygienic practices espe- supported development of the subsector in many cially on fish handling at the beaches during pro- ways. Farmers were provided with support in form cessing of seed, inputs, and advice to grow cotton. The gov- * Infrastructural development especially the roads ernment also helped farmers' cooperative societies to the beaches for better access to buy and invest in ginneries and instituted a mar- * Capacity building of the Competent Authority keting system through the Cotton Lint and Seed and association to be able to perform the stipu- Marketing Board (CLSMB), subsequently renamed Standards and Global Trade: A Voice for Africa the Cotton Board of Kenya (CBK) to market lint The garment industry, which uses the finished cotton and cotton seed. In addition, the govern- products of the textile industry is divided into ment invested in textile mills, which supplied the formal and informal sectors and faces a number of privately owned textile manufacturers. external and internal problems. Key external prob- In the above system of incentives, cotton produc- lems include legal and itlegal imports of substan- tion expanded gradually from about 13,600 tons dard products. Internal problems include low qual- in 1965 to about 39,300 tons in 1985. The textile ity of raw cotton, high costs of production, and industry also became the country's leading manu- consumer preferences for imported products. The facturing activity in both size and employment. most serious problem affecting the garment indus- However, by 1986, government support to the sub- try according to the industry actors is forward plan- sector, which was dependent on donor assistance, ning. Forward planning is vital for production, dwindled and the local cotton industry became quality control, and keeping up with fashion trends. noncompetitive because of inefficiencies in cotton Few manufacturers seem to be doing comprehen- production, ginning, and distribution. As a result, sive production or market research, which has led cotton production started to decrease and reached mills to use uncompetitive production techniques its lowest levels of 2,000 tons per year in 1995 and and technologies. Hardware technology used in to date the industry has not recovered. Kenya's textile industry is a mixture of old obsolete The decline in cotton production and the shift machinery and modern state of art equipment. from cotton to synthetics is explained by the inef- Poor market research has led to either overproduc- ficiencies in growing cotton, marketing, and gin- tion or duplication of products or both, and in- ning. Production constraints included delayed pay- ability to satisfy the dynamic consumer needs and ments to farmers, poor extension service, poor preferences. infrastructure, low quality but highly priced pesti- cides, poor management of ginneries, late deliver- Domestic and External Marketing of Textiles and ies of inputs, use of poor varieties of cotton, and Garments. Before import liberalization m 1993, inadequate research on improved varieties of cot- Kenya's textile industry was effectively protected. ton. Marketing problems included the high price of This led to a very successful domestic textile in- domestic cotton in 1980s compared with those dustry, which grew at a good pace. Concentrating prevailing in the international markets. This made on domestic markets, local manufacturers paid in- textile-exporting firms that used local cotton un- adequate attention to quality and pricing. However, competitive in world markets, hence the preference liberalization has enormously increased the impor- for either imported cotton or synthetics, which in- tation of textiles, particularly apparel fabric from creased dependence on import of raw materials for the Far East and readymade garments classified as the manufacture of textiles. "second hand or used." The manufacturers have The textile industry still remains the second therefore to compete with these imports in the largest manufacturing activity in Kenya after food domestic market resulting in the closure of some processing. There are about 60 textile mills pro- enterprises. ducing a total of 83 million square meters of fab- The introduction of export incentive schemes, ric, excluding blankets and knitted goods. All syn- such as Manufacturing under Bond (MUB) and Ex- thetic raw materials and dyes needed in the textile port Processing Zone (EPZ) has led to an increase industry are imported while polyesters are im- in textile exports. The products from MUB and EPZ ported as granules, which are heated and extruded factories are exported mainly to the United States, into fine threads for the production of synthetic United Kingdom, and COMESA countries. Exports yarns. It is estimated that about 6,000 tons of to the U.S. market have increased particularly be- dyestuff and 20,000 tons of plastic material are im- cause of the African Growth Opportunity Act ported into the country annually. Capacity utiliza- (AGOA). Kenya was among the first to meet the tion in the textile industry is not uniform and conditions required before obtaining market access ranges from 25 percent to 75 percent. Imports and to the United States in 2000. As a result, exports shortage of cotton and high production costs in re- from the EPZ alone to the United States doubled cent years have dramatically reduced the industry's from US$25 mllihon in 1999 to US$55 million in output. 2001. Investments in garment production also rose 48 Improving Market Access Through Standards Compliance: A Diagnostic and Road Map for Kenya five times from US$9 million to US$48 million dur- The estimated costs of cotton production are ing the same period. shown in Table 1.18. Pest control costs are among the highest components of cotton production ac- Standards in Cotton Textile Industry. The Kenyan counting for 29 percent of the total costs. Failure to standards for the cotton industry are outlined in the control pests can lead to 80 percent loss in yields. Cotton Act Cap 335 of the Laws of Kenya while Strategies to increase cotton yields and quality us- those for the textile and clothing industry are ing available cotton varieties are to control pests gazetted as KEBS standards. The required standards with minimal pesticide use in line with the current for textiles include resistance of textiles to attack by worldwide trend of using fewer pesticides. Inte- insects, resistance to microbiological deterioration, grated pest management is the strategy recom- and length (span length) and uniformity of cotton mended for this to happen but the level of use of fibers. these technologies Kenya is still low. The cotton lint produced in Kenya is consid- Farmers face problems and use sub-standard ered to be of low quality because of the use of poor- pesticides and seed because of unfavorable cotton- quality seed and poor husbandry practices. The buying schedules and practices and lack of credit. cottonseed supply system has been poor since the Local input suppliers to farmers rarely advise farm- liberalization of the cotton industry and the seed is ers on the required standards for pesticide and in- not certified; therefore its storage period and ger- put use. The government remains the main supplier mination level are not guaranteed according to of extension services to cotton farmers but only Kenyan standards. Storage period of less than 5 about 50 percent of the farmers are coverered and months and maintenance of moisture content at the remaining do not have access to information less than 10 percent are important determinants of from the Ministry of Agriculture and Rural Devel- seed quality. opment extension staff on better cotton production Weed and thinning are also important determi- practices. nants of cotton yield and quality. Clean fields give quality cotton lint while timely harvesting is impor- Ginning. Ginneries are the focal point of the cotton tant to avoid competition between weed and cotton. textile industry because the type of cotton fiber de- Timely harvesting is also important for the preser- pends on ginning in addition to the quality of cot- vation of fiber quality as field weathering weakens ton lint. The ginning process can affect significantly and discolors the fiber. In general, harvesting prac- the fiber length, uniformity and content of the seed tices among farmers are poor, because there are de- fragments, trash, and short fibers. The minimum lays in picking open cotton balls. Also, harvested cot- ginning technology required to give quality fiber is ton is stored in open piles on the ground, which a dryer or moisture restoration device and a feeder increases the chances of contamination with foreign to uniformly meter seed into a gin stand. Approxi- materials. The control of pests and disease is also an mately 50 percent of the ginneries meet the mini- important factor that affects the quality of cotton. mum requirements but the remaining lack drying Table 1.1 8 Average Cost for Cotton Production in Selected Provinces of Kenya (USS per hectore). Western Central Eastern Item Kenya Nyanza Rift Valley Kenya Kenya Coast Yield (kg/ha) 625 350 800 372.5 403.5 1 657.8 Land preparation 21.2 11.8 27.1 12.6 1 3.5 I, 22.1 Seed' 1.9 1.1 2.5 1.8 1.8 2.0 Labor 59.6 33.4 76.3 35.4 I1 38.2 63.6 Pesticides 55.8 31.2 71.4 33.1 e 35.7 58.4 Equipment 53.8 30.2 68.9 31.9 34.5 56.4 Total cost 192.3 107.7 246.2 114.8 123.7 i 202.5 Source: Ikiara and Ndiranga (2002). 469 Standards and Global Trade: A Voice for Africa and moisture restoration devices. So, the lint they (KNFJKA) supports the small and microtextile en- produce contains imperfections and lacks a smooth terprises among others. These are the organizations appearance, a quality that is required. The ginning that can be targeted to improve standards imple- outturn is also low and is estimated at about 33 per- mentation to facilitate improved trade of textiles cent. This leads to a loss in revenue and is attributed in Kenya. This would mclude targeting farmer to the low-quality lint. groups for improving production of quality of cot- ton lint, ginners for processing quality of lint, and Textiles Manufacturing. The local textile manufac- textile manufactures for quality of fabrics, yarns, turing industry supplies only 45 percent of the and garments. Kenyan textile market while imported new and used Currently, there is no national apex body that clothes account for 37 percent of the market. Im- coordinates cotton production and ginning since ported fabrics and clothing supplies take a large the CBK is not operational and thus institutional share of the market and this is attributed to the su- enforcement of standards within the cotton in- perior quality and style of the imported finished dustry is absent. The MA&RD is in the process of garments and fabrics relative to locally manufac- developing a regulatory framework for the cotton tured substitutes. However, local manufacturers industry but this is yet to be established. Thus a indicate that the standards enforcement on im- vacuum exists in coordinating standards in the ports is lax and that the quality of imported prod- cotton production-ginning chain. The textile in- ucts is low compared with that of locally produced dustry is well linked through KAM and the man- products. ufacturers are well informed about the stan- This indicates that standards implementation in dards needs of the industry, particularly for the the cotton textile industry remains a main issue of export market. An important problem within the concern in the country. industry is the enforcement of standards of im- Textile manufacturers have quality control labora- ported textiles by the government (Ministry of tories within their factories. These are used to ensure Trade and Industry and KBS). Large quantities of that the standards set by KEBs on the manufacture used and substandard textiles are imported into of textile materials are met. The garment factories Kenya and stakeholders complain that this has manufacture garments according to the quality spec- hurt the development of the cotton textile indus- ifications (design and blending of materials) given try because the imports create unfair competition by each buyer. with domestic products. Maintaining Standards in Cotton Textile Industry. Industry Needs. Principal concerns in the cotton Both the public and private sectors manage the cot- textile industry regarding standards relate to the ton textile, industry. The Ministry of Agriculture provision of quality seed to farmers, sustainable dis- and Rural Development provides advisory service ease and pests control methods for cotton produc- on cotton production through the Kenya Agricul- tion, investment in improved technology for spin- tural Research Institute (KARI) and the Cotton ning, and fabric manufacturing as well as for Board of Kenya (CBK). The Ministries of Trade and manufacture of garments. Industry (MTI) and Finance and Planning (MOFP) Poor-quality cottonseed is a major constraint to are involved in overseeing processing of raw mate- increased cotton production. The main source of rials and development of markets for finished cottonseed to farmers is the Kenya Agricultural Re- products. The private sector is involved through search Institute (KARI), which provides the foun- many bodies. The Kenya Cotton Ginners Associa- dation seed. In most cases, farmers use the seed tion (KCGA) supports ginners. The Kenya Associ- from the ginneries after the cotton has been ginned. ation of Manufacturers (KAM) supports interests This seed is often contaminated with disease and of textile manufactures. The Federation of Kenya this affects cotton production. A good cottonseed Employers (FKE) supports various employers in- development and distribution system that ensures volved in the textile industry. The Kenya Apparel provision of quality seed to farmers is required to Manufacturers Exporters Association (KAMEA) solve this problem. supports exporters of apparels and textiles. The Disease and pests are an important problem Kenya National Federation of Jua Kali Associations in cotton production. Currently, there is heavy 50 Improving Market Access Through Standards Compliance: A Diagnostic and Road Map for Kenya reliance on the use of chemicals to control pests and 9000 has also been adopted by a few of the larger diseases but the costs of doing so are quite high. manufacturing firms. Furthermore, heavy use of pesticides results in environmental problems causing a problem for Impact of the Adoption of Standards and manufactured textiles from such cotton in facing Technical Regulations on Economic market-driven standards. KARI has a program in developing disease- and pest-resistant varieties. The Opportunities of the Poor focus is on biotechnology research to help KARI The biggest challenge that has occurred in the adop- achieve this but this has yet to be realized because tion of standards on the economic status of the poor of financial constraints. in Kenya is best reflected in the horticulture indus- The textile industry is characterized by the use of try, particularly on smallholder producers. Many obsolete machinery and equipment. The concern is small growers of fruits, vegetables, and flowers face investments in new textile manufacturing technol- problems in meeting the standards required in the ogy for the production of quality textiles. This will European markets because of the high costs in in- require macroeconomic incentives such tax waivers vesting in production and marketing facilities to to attract investments into the sector. enable them to meet those standards. In general, Imports of substandard textiles (low quality and smallholders lack adequate credit, input, and techmn- used) into Kenya are an important problem. There cal capabilities, and suffer from logistical constraints is no adequate standards surveillance on such prod- such as transport, airfreight, and cold storage facili- ucts by the government. Thus, there is need to en- ties. This makes it difficult for them to meet the stan- force available standards to protect consumers and dards of the European market. As a result most of producers as well. the small farmers have been shut out from the pro- duction of horticultural crops except where they are contracted by large growers. Otherwise, most small Adoption of International Qualmts growers sell their produce in the domestic market where standards are not as stringent as those for the As outlined in section entitled "Kenya's Participa- export market but the prices received in the domes- tion in International Standards," Kenya is a member tic market are low. of many international organizations involved in Increasingly higher standards required by buyers standards setting, namely, CODEX, ISO, OIE, and in the export markets highlight the need for tight IPPC. The country has adopted many of the stan- coordination of the production of horticultural dards developed by these bodies. Some of the stan- crops and raise the question of what type of struc- dards that have been adopted include ISO TC 34 ture can meet these standards. The main concern is SC for Tea, ISO TC 34 SC 15 for coffee, and ISO regarding access to export markets by small pro- TC 120 for Hides and Skins and Leather. Others ducers given their seemingly limited ability to meet include: those standards. Several actors in the industry as- sert that a vertically integrated production channel * Code of Practice for hygiene in food and drinks is the appropriate structure that can provide the manufacturing performance necessary for the export markets. Ac- * Labeling of prepackaged foods cording to FPEAK, small farmers grow about 60 to * Code of Practice of handling, processing, and dis- 70 percent of the fruits and vegetables exported tribution of fish from Kenya. However, Dolan and Humphrey * Methods for microbiological examination of (2000) note that the share of small farm produc- foods tion in the fruits and vegetables export market * Code of hygiene practice for handling, process- declined throughout the 1990s. ing, storage, and placing on the market fish and The need to link smallholder farmers to the fishery products thriving horticultural producers cannot be overem- phasized because the production and commer- Firms in Kenya have also adopted the CODEX cialization of the high-valued crops such as fruits, measures for Hazard Analysis Critical Control Point vegetables, and flowers can be beneficial to small (HACCP) and IPPC measures for risk analysis. ISO farmers in several respects, namely increasing access 51 Standards and Global Trade: A Voice for Africa to cash income; increasing access to inputs on credit, machinery and equipment, technical capacity, and thereby improving their productivity; and increas- funds on credit. Contract farming is also practiced ing surpluses for household consumption, thus in the fruits and vegetables industries and is one of improving nutritional quality of their diet. However, the practices that benefits small growers in meeting Dolan and Humphrey (2000) have noted that to se- standards for export markets. The challenge in con- cure a continuous supply of commodities meeting tract farming, however, is the enforcement of con- high quality, environmental, and social standards, tracts, which when not implemented, leads to col- supermarket and their suppliers shy away from small lapse in use of the practice and thus lack of support exporters and smallholders and rely more on large to small growers. firms and large producers because control over stan- dards is more reliable and more costly. This means that the high standards required in export markets International Trade System and are margmahzzmg smallholders. This means that to promote the horticulture industry, more effort is This section reviews experiences with the imple- needed to support small farmers in meeting the mentation of international trade system standards requirements of the market. and meeting WTO obligations. Experience shows that small farmers can meet the stringent standards of the export markets with as- E sistance from exporters, trade associations such as xperience of Banned Products to FPEAK and KFC, NGOs, and donor organizations. Traditional Markets Through the outgrower schemes exporters are able An example of products that have been restricted to closely control and direct the production of to traditional markets on grounds of quality and smaltholder growers to ensure that they meet the safety is fish. During the past 12 years continued codes of practices and standards required by the business in the industry was hampered by bans exporters. A new system being developed for the imposed on it by the European Union market domestic market is to link local supermarkets with because of concerns for hygiene around the lake. small growers for fruits and vegetables. This pro- In 1994, there was repulsion of the East African gram, which is sponsored by USAID-Kenya, is in its fish following the Hutu massacre in Rwanda. In trial phase and its success has yet to be ascertained. 1997, Spain and Italy imposed a ban on Kenyan On a positive note, the required standards at ex- fish exports on the basis of the presence of Salmo- port markets have led to an improvement of the nella bacteria, which causes cholera in human be- welfare workers in the horticulture industry. For ings. As a result of this, a 13.1 percent drop in the example, the safety working conditions and envi- foreign exchange from the sector was experienced. ronmental health requirements in the European This was occasioned by a 33 percent drop in quan- markets have made the horticulture industry in tity of fish exported to the EU compared to 1996 Kenya through their organizations (e.g., FPEAK with quantities exported to Spain declining by and KFC) to have codes on labor safety and work- 86 percent. The 1996 export levels have not been ing requirements, working hours, and environ- attained to date. mental standards. This has led to improvements in In January 1998, the EU banned chilled fish im- the welfare of workers. Furthermore, the better hor- ports from East Africa and Mozambique because of ticultural production practices that are used reduce a cholera epidemic. The ban resulted in a 24 percent pollution of the environment. The large flower drop m the total quantity of fish exported from growers in particular are now investing more on Kenya, accompanied by a 32 percent drop in value farming methods that can reduce the use of pesti- of foreign exchange earnings from the sector. The cides and therefore a reduction in environmental most recent ban on the market was imposed in pollution. March 1999. This was occasioned by the reported use Small growers also benefit from contract farming of chemicals for fishing in Uganda. This ban resulted with large growers with the latter helping the for- in a 68 percent drop in total quantity of fish exports mer in meeting technical (e.g., quality and pesticide compared to 1998. After extensive inspections and free) and market (e.g., environmental and labor) analysis of both fish and water samples from Lake standards through the provision of services such as Victoria, the ban was lifted m November 2000. 52 Improving Market Access Through Standards Compliance: A Diagnostic and Road Map for Kenya Followmg a DG SANCO inspection visit by EU in was scattered over two authorities-Department of December 1998, Kenya was put on List II of third Fisheries in MA&RD and Ministry of Health. The countries entitled to export to EU member states on government of Kenya took more time to harmonize the basis of bilateral agreement. This is a three-year this into one competent authority (the Fisheries agreement, which is now in its second year. Department). Though the ban was temporarily The Kenya fish processing sector is plagued by lifted, Kenya is still on list II of the DG SANCO. various changes in hygiene and quality control stan- This means that fishery products from Kenya to EU dards. The standards set by the authorities have are subject to a bilateral agreement for 3 years dur- been changing over the years: the term "shifting the ing which the country's procedures of inspection goal post" best describes the changes. The "trigger" and implementation of measures to improve stan- for these changes in standards has been the nu- dards on fish must be harmonized to continue merous health scares from fish from Lake Victoria exporting. This period ends in 2003. in the last few years, namely Rwanda crisis effect,4 Salmonella (cholera) scare mainly in Spain and Value-added Exports Issues Pesticide scare in Uganda. These issues have put Lake Victoria on world fo- The case of processed fruits and vegetables shows cus resulting in fish from this lake being among the the restrictions that can occur with value-added most scrutinized food items on the international exports. market. The changing standards have resulted in The main export markets for processed fruits and significant overall improvement in quality control vegetables are Western Europe (Germany, United practices in factory operation. Kingdom, France, Belgium, and Italy) and to a lesser Though the recent EU ban on fish from Lake extent some African countries mainly belonging to Victoria was occasioned by use of pesticides for COMESA and EAC. Important processed products fishing in Uganda it was not immediately lifted in are canned pineapple, pineapple )uices, and con- the three East African states even after the problem centrates. An important actor in the industry is the was contained. This is because the EU used this oc- Del Monte Company now referred to as Cirio Del casion to reorganize the entire industry to comply Monte, which exports canned pineapples, juices, with the international standards. The lifting of the and concentrates. Del Monte is a vertically inte- ban was made subject to a country meeting four grated firm growing and processing pineapples on principal requirements: its plantation in Thika and is therefore in charge of maintaining standards from the production of * Establishment of a Competent Authority to test fruits, through processing and exporting. However, and approve fish for export; most exporters mainly process fruits or vegetables * Professional reorganization of the industry with and depend on the production of fruits from inde- respect to quality assurance; pendent growers. Thus, these exporters are involved * Adherence to hygiene and quality standards; and in maintaining the required standards at the pro- * Enforcement of appropriate legislation. cessing level while the farmers themselves under- take quality and standards at the farm level. In this Uganda and Tanzania had made significant case, the scrutiny of standards at the farm level is progress with regard to these conditions prior to not as stringent as it is at the processing level. the last EU inspection of the sector. Subsequently, The product standards that processors are re- their fish ban was lifted and the countries were quired to meet in the market relate to both techni- placed on list I of the DG SANCO of the EU, which cal and market-driven standards. Technical stan- means that there are no restrictions on their fish- dards include food safety and food hygiene ery products to EU. Kenya however, did not meet regulations. Market standards include ISO 9000 the stipulated standards, mainly because the indus- standards and HACCP management practices. Au- try structures were not in place at the time of in- dit firms such as SGS, CMI of United Kingdom, and spection. Although the country had regulations to SGF of Germany certify the products. The KEBS ensure the inspection of fish export, the mandate also certifies the products. According to some 4 This involved dumping of human dead bodies into Lake Victoria following massacre and killings in Rwanda. 53 Standards and Global Trade: A Voice for Africa processors the standards for canned fruits and veg- European aphid (Cernaria cypress); the timber must etables, for example, required in the export markets be treated before being allowed entry. A certificate are slightly higher than those required by KEBS for issued by an authorized officer of the exporting the domestic market. country must accompany fruit grown in all coun- tries. The certificate must indicate that a stated SPS Compliance percentage of the packages in the consignment have been examined and found to be free from As far as the transparency provisions of the SPS insect pests. Agreement are concerned, Kenya has achieved a high level of compliance with its obligations. En- quiry and notification points are well established onStrasunesIp and are functioning effectively.. So far, Kenya has made two notifications. One notification was in The most obvious problem associated with the SPS 1999 dealing with some 42 harmonized East African arrangements in Kenya for the implementation Standards, which included some aspects of the SPS process with regard to animal and plant health is obligations. The other is Kenya's ban on one-day that there is not one but three enquiry points as the chicks from Mauritius. Agreement requires, as mentioned earlier. The De- The case involving Kenya's ban on Imports oc- partment of Health Services for food safety, the curred in Aprd 2001 and it involved restrictions Department of Agriculture for plant health matters, on the import of day-old chicks from Mauritius and the Department of Veterinary Services for an- because of the alleged detection of avian enceph- imal health issues are all under the Ministry of Agri- alomyelitis in two shipments. This ban was later culture and Rural Development. Kenya's notifica- lifted after thorough investigations were carried out tion point is the Ministry of Trade and Industry. and the two consignments found were isolated. The The overlaps in implementation of the standards case is illustrated in Box 1.7. sometimes cause problems and there is need for Import prohibitions also apply to any plant- better coordination of the process of standards de- rooting medium that consists either wholly or in velopment, setting, and notification among the part of soil, whether or not it is attached to any three government bodies to avoid confusion and plant, and fruit grown in, or consigned from, coun- overlaps. tries where the Mediterranean fruit fly is common. Some countries such as the European Union, Imports of animals and animal products from Japan, and the United States have stringent sanitary countries with groups A and B diseases (according and phytosanitary requirements, which require to the classification of the International Office of stringent pest risk analysis (PRA) information. PRA Epizootics), and with bovine spongiform en- require personnel with adequate skills to under- cephalopathy (BSE) are also banned. Imports of take the analysis and regular upgrading, which is timber from Tanzania are restricted because of by itself very costly because of the numerous Kenya imposed an emergency ban on the im- templated various options for obtaining re- port of one-day old chicks from Mauritius os- dress, for example, (i) raising the matter wi-th tensibly because of its concern about the avian the SPS Committee (ii) seeking advice from the i encephalomyelitis disease. According to the secretariat of the OIE concerning the status of Mauritian authorities, their documents showed avian encephalomyelitis. Before the case weht that no risk assessment had been carried out, too far (to the dispute settlement body of the no testing had been conducted, and Kenya WTO), the two countries settled the matter made no notification of the measure to the diplomatically and Kenya consequently wit4S- 'WTO. The Mauritian authorities therefore con- drew the ban. 54 Improving Market Access Through Standards Compliance: A Diagnostic and Road Map for Kenya surveys that need to be carried out. Kenya has one farm at the same time rather than specializing not been able to have an elaborate PRA because of in one vegetable type. these constraints. There is need to deal with issues In the flowers industry, over 30 different types urgently. of flowers are grown because of consumer prefer- WTO members, (according to Article 4 on the ences and standards in terms of the varieties, as- equivalence of the WTO SPS Agreement), are re- sortments, and colors of flowers. Growers have also quired to accept the SPS measures of other coun- tended to specialize in different types of flowers de- tries as equivalent if the exporting country demon- pending on the ability to invest and the high value strates to the importing country that its measures as a result of higher standards required. For exam- achieve the importing members' appropriate level ple, large investors are putting emphasis on grow- of sanitary or phtosanitary protection. This means ing of roses and carnations and grow them under that there should be mutual recognition of the phy- intensive management systems (green houses) as tosanitary measures as long as they achieve an opposed to small growers who focus more on flow- appropriate level of protection required by both ers that can easily be grown under open field man- importing and exporting countries. The challenge agement practices. for Kenya usually is to demonstrate to most im- The high investments required in the flowers porting countries that the measures undertaken for industry (machinery, equipment, inputs and pack- Kenyan products, mainly flowers and fresh vegeta- aging), as well as the high standards required by bles and fruits, achieve the levels required. In most consumers and the associated high payoff, have led cases, the importing countries are requested to send to many international companies to invest in Kenya inspectors to Kenya to verify the SPS measures in the industry and therefore bring in skills and taken before the exports are made. techniques for quality assurance. Opportunities for Differentiation Experiences in Organic Farming and Marketing of Organic Products This section reviews examples of opportunities in which standards have been used by private firms to Agricultural produce can only be described as differentiate their products to achieve competitive an organic agricultural product after internation- advantage and experience with organic farming. ally recognized firms in the trade certify that no chemicals have been used in the crop at any stage Differentiation of Products of life from seed through processing to export. The firm will also certify that there was no genetic ma- The standard and technical requirements for hor- nipulation of the seed material and that the work- ticultural products are a good case in which the ing conditions and environment were fair to work- standards have helped to differentiate the range of ers and that no child labor (ILO standard) was used. products' development in Kenya. In the fruits and The International Federation of Organic Agri- vegetables industry, a wide range of products, which culture Movements (IFAOM) determines the inter- include avocados, mangoes, passion fruit, straw- national rules and standards of organic farming. berries, pineapples, French beans, canned beans, The IFAOM is a federation of about 600 organiza- okra, karella, snap beans, frozen beans, eggplant, tions in more than 110 countries. The membership and chillies are produced by various specialized is made up of producers, consumers, traders, re- methods targeting different consumer needs. Small- search, and certification organizations. The accred- holder farmers, for example, have tended to focus itation system for organically grown products is ad- on fruits and vegetables, which do not require in- ministered by International Organic Accreditation tensive management practices such as tree fruit Services, a subsidiary of IFOAM. crops. Large farms have focused on high value crops The EU legislation under EU Directive 2092/91 such as snap beans and canned beans that require has since 1991 covered the marketing of agricul- intensive field management practices. A new stan- tural products using the term organic ("biological" dard whereby supermarkets in Europe require a dif- and "natural"). The directive names specific terms ferent mix of vegetables in a pack has made small for the various languages and makes it mandatory. farmers diversify into growing many vegetables in Directive 2092/91 means no products other than 55 Standards and Global Trade: A Voice for Africa those produced and inspected in accordance with undertaking efforts for the certification of organic the directive may be marketed as organic or simi- products from Kenya. An important problem for lar ("biological" or "natural"). The directive im- Kenyan producers who wish to export to the EU is poses very extensive demands on regulations for that, to date, these organizations have not been able dealing with imports or exporters from Kenya and to obtain IFOAM accreditation. ABLH has devel- other developing countries. The most important oped standards for organic farming in Kenya and regulations mclude has requested accreditation from IFAOM.. It is funded by DFID to develop standards for organic (a) Countries that meet directive requirements farming and to try to certify temporarily some must be included in a list determined by the products in Kenya. commission. The production of goods im- ported shall be subject to the direction of in- spection by the body that is specified in the list. Plan o ctio Up to 1999, only five countries had been placed International standards play an important role in in- under this list: Argentina, Australia, Hungary, ternational trade with the advent of reductions in Israel, and Switzerland. tariff and nontariffs barriers to trade. This is because (b) The competent authority in the exporting failure to meet international standards for goods and country shall issue a certificate for each export to comply with the WTO SPS Agreement can inhibit consignment. The certificate shall state the market access to export markets. For Kenya, inter- method of production in accordance with a national standards are important because trade is an system, which is equivalent to that stipulated important contributor to GDP with merchandise by the EU Directive. trade contributing about 40 percent of the total GDP. (c) The country must have legislation covering the Agricultural commodities and agroprocessed prod- production and marketing of organic products. ucts dominate this trade. Thus noncompliance with Importer Derogation or "the back door" is an international standards for trade in goods affects the exception rule that was introduced because third performance of the Kenyan economy because they country imports were on the verge of totally have an impact on agriculture, which is the backbone stagnating. The rule implies that importers can of the economy. The sector contributes to about 25 be permitted to market organic products, which percent of the GDP, is the leading foreign exchange do not originate in the countries on the list, if earner, and an important source of employment and they can provide competent authorities m the food for the country. member state with evidence that the product Compliance with the provisions of the WTO SPS was produced in accordance with a system that and technical barriers to trade (TBT) agreements satisfies the demands of the EU directive. can facilitate or constrain trade and therefore affect the performance of the economy. In Kenya, the im- The cost for external certification of organic prod- pact will be felt more in the agricultural sector, par- ucts can be very high in developing countries. Lo- ticularly if they have a negative impact on trade of cal inspection bodies can help reduce these costs. the traditional and nontraditional commodities. In However, local bodies must gain international addition, the country has a diverse range of agri- recognition first, and this is a difficult process and cultural products whose standards vary but can often calls for assistance of expensive consultants. contribute significantly to economic growth if they The development of partnerships between an ac- can be compliant with international standards to credited inspection body and a local body can be a increase trade of the products. possible route to facilitate the growth of domestic There are four main issues related to standards, inspection bodies in developing countries. This which affect their role in international trade and in initiative can be extended to incorporate a regional Kenya's economic development. These are (a) stan- scheme such as one for the East African coun- dards setting in Kenya and compatibility with in- tries for accreditation and certification to expand ternational standards, (b) administration of the opportunities in organic farming. standards, (c) compliance with the standards, and The Kenya Institute for Organic farming (KIOF) (d) impact of standards in the development of dif- and Association for Land Husbandry (ABLH) are ferent sectors. 56 Improving Market Access Through Standards Compliance: A Diagnostic and Road Map for Kenya Standards Setting in Kenya and Conformity to (DVS), plant health (KEPHIS and PCPB), and International Standards Ministry of Health for food safety. Many public and private sector organizations are also involved The Kenya Bureau of Standards (KEBS) has the man- an th e sect ation s are als Somed date of developing standards in Kenya. However, in the implementation of the standards. Some of for conformity to international standards, the KEBS the problems encountered in the administration of works closely with Kenya Plant Inspectorate Services standards is poor coordination among the various (KEPHIS), Department of Veterinary Services actors and weak information flow regarding stan- (DVS), Ministry of Health (MoH), which are the dards among the various actors. Thus, there is need to strengthen the administration and implementa- contact or enquiry points for international stan- to standadsibotration and priva- dards for plant and animal health and food safety, tion of standards both at the public and private respectively. The private sector is also involved in sector levels. standards setting through participation in techni- cal committees. Most Kenyan standards are based Compliance on international standards set by Codex Alimen- Although Kenya has a reasonable institutional set- tarius Commission (CAC), Office of International up for standards development and administration, des Epizootes (OIE), and International Plant Pro- it faces constraints that make it difficult to com- tection Convention (IPPC). This is possible through ply fully with international obligations. These in- participation of Kenyan technical staff in some of clude implementation and production constraints. the meetings held by these organizations or use Implementation constraints include: of guidelines and procedures provided by the or- ganizations for setting internationally acceptable (a) Compliance of some of the domestic legisla- standards. tion with international standards. For example, Not all Kenyan standards conform to interna- standards for processed fruits and vegetables tionally accepted standards, partly because of con- provided for by KEBS Act are weaker than straints in financing attendance in international international standards. meetings by both the public and private sector (b) Weaknesses in export and import certification officials involved in standards setting. Thus, there systems. Examples include weaknesses in certi- is need to build human capacity for Kenya to be fying livestock products for export to European able to develop and set standards that conform to Union, Japanese, and U.S. markets and imports international standards. Furthermore, although the of textiles into the country. country has some capacity to define appropriate (c) Inadequate testing capabilities including inter- SPS measures, it has little capacity to carry out risk national accreditation for some laboratories in- analysis (associated with food safety, animals, plants volved in microbiology and chemical tests for and their products) in conformity with risk assess- foodstuffs. ment methodologies proposed by the relevant in- (d) Risk analysis and surveillance programs for ternational organizations. Potential exports (e.g., pests, diseases, chemical residues, food safety, beef, flowers, vegetables, and fruits) are restricted to and so on. markets because of significant disease or pests. Ad- (e) Control and eradication of pests, which have re- ditionally, because the plant and animal health in- stricted exports of beef products, for example. frastructure is deficient there is need for equipment and training to make international accreditation Production constraints include infrastructure weak- possible. nesses and different standard requirements for dif- ferent markets, which make it difficult for producers Administration of Standards and exporters to meet the international standards re- Different bodies undertake the administration and quirements. For example, the poor transportation implementation of standards in Kenya. In the pub- network, which leads to long transportation periods lic sector, the notifying agency for the WTO is the for fresh horticultural products from production to Ministry of Industry and Trade (Director of Exter- exporting points, necessitates investments in cooling nal Trade), enquiry points are Ministry of Agricul- vehicles for transportation of the produce and ture and Rural Development for animal health storage facilities at the ports of export to maintain 57 Standards and Global Trade: A Voice for Africa standards for fresh produce required in the export of chemicals use. An expert costs about US$2,000 markets. per month for a production capacity of 5 tons of Both implementation and production con- fruits and vegetables or 10 tons of flowers daily. In- straints need to be relaxed for standards to play an vestment costs for quality controls from the farm appropriate role in enhancing international trade. up to port of export for the same tonnage of fruits and vegetables or flowers, respectively, costs about US$123,000. Only large commercial farmers can af- Smpactofs StandCompliardsc DevelopmenttofsDiffer ford this kind of investment. For small growers to benefit, they wlll need to operate on a group basis Coffe Industry. The main concern in the coffee or be contracted by large growers. sector is the role that the new institutions (pro- cessing factories, marketing agents, and millers) Fisheries. The main concern in the fisheries in- that have developed as a result of liberalization of dustry is how to meet the recommended standards the industry, will play in maintaining standards as so that bans on exports that have been experienced required by the market. Because the organizations in the past can be avoided. The main concerns are: are adjusting to a new legal framework, they will re- quire technical support (financial and human ca- * Better implementation of hygiene and sanitary pacity) to deliver better services to the farmers. This standards, especially at the production level is necessary to help revive the coffee industry. (beach landings); The costs of compliance for this industry vary * Increased awareness of hygienic practices, espe- with the level of activity. At the production level, cially for fish handling at the beaches; farmers incur costs to improve coffee production. * Infrastructure development, especially the roads Annual coffee production costs, which include to the beaches for better access; methods that allow compliance with standards, * Capacity building for the Competent Authority range from US$600 to US$1,000 per hectare. Other and Fish Processors Association to be able to per- costs are incurred at the processmg levels ranging form its stipulated activities, particularly fisheries from US$158 to US$770 per ton of coffee for pro- testing and quality assurance, and advising fish- cessing and US$100 per ton for coffee milling. ermen and processors. Horticulture (Vegetables, Fruits, and Flowers). Compliance costs vary with the level of interven- The main concerns in the horticultural sector are tion. At the beach level, about US$90,000 are re- the ability to meet the MRL requirements, pest risk quired to develop the necessary infrastructure for analysis, and the ever-changing consumer prefer- each beach to maintain the required standards. ences. Attaining the MRLs required by producers However, since fishermen are spread out, funds will requires implementation of good agricultural prac- be required to develop the 10 designated beaches. tices (GAP) and the ability to test for the levels be- This amounts to US$900,000. At the processing fore the produce is harvested for export. This re- level, the costs of maintaining standards (HACCP) quires investment in GAP and human capacity at are estimated at about US$19,200 for each fish pro- the farm level. Pest risk analysis requires both hu- cessing firm. man and capital capacity within the public sector to provide information to the export markets that Cotton Textile. The main concerns in the cotton - is credible and to make producers aware of market textile industry are to improve cotton production requirements. The ever-changing consumer prefer- at the farm level through the provision of quality ences require producers to invest in research or to seed to farmers and sustainable disease and pests pay for royalties for new varieties developed by the control methods for cotton production; investment breeders. in improved technology for spinning and fabric The compliance costs required vary with the level manufacturing and the manufacture of garments. of intervention and type of crop grown. At farm Poor cotton practices are a hindrance to quality cot- level, farmers will require to invest in capacity to ton production. A good cottonseed development advise and inspect the produce for good agricul- and distribution system that ensures provision of tural practices, which include recommended levels quality seed to farmers is required to solve this 58 Improving Market Access Through Standards Compliance: A Diagnostic and Road Map for Kenya problem. Support is required by farmers to help in chains to facilitate better coordination of produc- disease and pests control. This support can be ex- tion and marketing of the products. The priority is tended to the ginneries for investments in better the small producers of horticulture, cotton, and cof- ginning technologies. Textile manufacturing tech- fee, and fishermen, respectively, and associations for nology is also constrained by use of obsolete ma- the production of the commodities. These projects chinery and equipment. The requirement is invest- will be useful in contributing toward poverty alle- ment in new textile manufacturing technology for viation in the rural areas as identified in Kenya's the production of quality textiles. Another issue of Poverty Reduction Strategy paper (PRSP 2002). concern is legislation to control imports of sub- Horticulture producers should be supported with standard textiles. An adequate legal framework and credit for inputs and investments for centrally enforcement of the laws is required. placed refrigerated pack houses for cooling, clean- The compliance costs for maintaining standards ing, and sorting out produce for both the domes- vary with each level of intervention. At the farm tic and export markets. Support is also required for level, the compliance costs relate to costs of pro- personnel (extension) to advise on good agricul- duction and vary from US$100 to US$200 per tural production practices. The cost of the program hectare. At the ginning and manufacturing levels, will vary with the number of farmers considered in costs of investing in ginning and manufacturing ca- the group. Based on information that small farm- pacity varies depending on the size of the factory. ers grow 5 hectares of horticultural crops on an av- Private investors are willing to invest if cotton pro- erage, about US$2,500 to US$6,500 can be ear- duction and supply are assured since there is a ready marked for individual producers while US$123,000 market for textiles made possible by AGOA and can be earmarked for central facilities to serve farm- ACP-EU agreements and regional integration blocs ers who produce at least 5 tons of vegetables and such as COMESA. fruits or 10 tons of flowers daily. This program can be built on USAID-Kenya's planned programs on horticulture, which are aimed at linking small pro- ducers to domestic supermarkets. The total cost of Following on the issues arising form the analysis, the project will vary with the number of regions se- three kinds of projects are possible, namely, com- lected. Initially, it can be implemented as a pilot modity or product production support projects, covering a few selected vegetable and fruits and private sector investments projects, and public sec- flower growing areas. Funds can be channeled to tor support projects. producers through farmers' organizations such as FPEAK and KFC or any other farmers' groups that Commodity Support Programs. The main con- may be established for this purpose. straints in the production and marketing of agri- Fishing programs should focus on the develop- cultural commodities considered in this analysis are ment of landing beaches particularly along Lake lack of technical knowledge and limited funding to Victoria. Ten beaches have been identified, which enable farmers, particularly small farmers, maintain require about US$90,000 each, to enable fishermen required standards during the production and mar- to meet the required standards. Currently, the gov- keting processes. Thus, commodity support pro- ernment of Kenya is involved in the development grams should target empowerment of producers to of the beaches but is constrained financially. This meet the required standards in the production and should be a project for all stakeholders (fishermen marketing of different commodities. The focus and processors) involved in the industry and can be should be on small producers who, on their own, built on the ongoing community-based activities are not able to invest in facilities to enable them to improve sanitary and hygiene standards at the meet international standards. The projects should landing beaches. The AFIPEK alone contributes be designed to support farmers as a group and on about US$2,500 annually to the program. Hence, a regional basis, targeting the constraints faced by any additional assistance will support this initiative. each industry such accessing export markets or fi- The cotton textile program should focus on nancing facilities required for achieving standards supporting small farmers in cotton production required in the markets. The programs should be through the provision of inputs for cotton produc- built on vertical linkages within the commodity tion and on KARI for the development of better 59 Standards and Global Trade: A Voice for Africa cotton varieties. This program should also focus on ments are about US$100,000 for horticultural crops farmer organization or groups and develop a mech- and US$900,000 for fish processing. anism of providing credit to farmers for cotton pro- duction but this should be linked to ginning facil- Public Support Projects. Some of the constraints ities. Based on information that most farmers grow faced in bridging the standards gap in Kenya relate 5 hectares of cotton, about US$2,500 to US$3,000 to standards development and implementation by will be required by an individual farmer. Credit public organizations. The constraints include lack should be extended to farmers in Eastern, Coast, of funds to attend international meetings for stan- North Eastern, and Nyanza provinces where cotton dards development, capacity to &fine appropriate is grown. Funds should also be made available for standards for the country and undertake risk analy- investing in ginneries to serve the groups or the sis in food safety, animals and plants and their private sector should be encouraged to invest in products, and implementation of standards. Thus, ginning capacity once increased cotton production public support programs should focus on support- is assured. ing public institutions in formulation, develop- The coffee program should focus on strengthen- ment, and implementation of standards in Kenya ing the farmers' organization in coffee processing. as well as making it possible for the country to com- This program can be built on the previous World ply with WTO SPS and TBT requirements. The pro- Bank project, which focused on funding farmers grams could be extended to providing information through cooperative societies for small improve- to producers and firms on international standards ments in the coffee sector. The components should requirements. The Ministry of Trade and Industry include funds for farmers as production credit, and has identified the required activities, which are out- for coffee societies for investment in processing lined as follows. factories. The Commonwealth Secretariat has shown an in- terest in capacity building for standards and under- Private Investment Projects. The growing of hor- took a study to identify the needs for the country. ticultural crops, particularly flowers, and process- However, the program has yet to be implemented. ing of fish are capital-intensive activities, whose ini- Other public programs funded by donors such as by tial investments can be prohibitive. However, these UNCTAD under JITAP currently focus on human activities offer good returns, which make them at- capacity building but on a short-term basis. These tractive to private investors. Thus, private invest- programs indude training personnel capable of ana- ments can target financing horticulture production lyzing implications of various WTO agreements and and fish processing on a large scale. The financial how to effectively participate in the international requirements vary but a minimum for new invest- negotiations of the agreements. Item __ US$ million 1. Internatiorqal standards-setting meetings and negotiation skills 0.49 2. Training 10 officers in risk analysis at KEPHIS 0.30 3. Risk analysis and research at KEPHIS 0.53 4. Upgrading laboratories at KEPHIS 0.85 5. Improve national SPS enquiry points 0.30 6. Preparation of standards-KEBS 0.13 7. Training officers on packaging-KEBS 0.03 8. Establish accreditation body for certification 0.25 9. Improve TBT enquiry point-KEBS 0.02 10. Improve metrology, radiation and other labs-KEBS 0.87 11. Training on standardization-KEBS 0.12 12. Upgrade testing and surveillance labs for DVS and fisheries 1.07 13. Information dissemination 1 0.16 Total 5.00 60 Improving Market Access Through Standards Compliance: A Diagnostic and Road Map for Kenya References Wagacha and 0. Abagi (Eds.), Kenya's Strategic Poli- cies for 21st Century. Macroeconomic and Sectoral Central Bank of Kenya (CBK), 1990-2000 Statistical Choices. Institute of Policy Analysis and Research Bulletin, Nairobi, Kenya. (IPAR), Nairobi. CRF. (Coffee Research Foundation) 1999. "Strategies to Mwega, F. M. 2000. "The GATT/WTO Agreements, Do- Enhance Coffee Production in Kenya." Unpublished mestic Trade Policies and External Market Access: The Technical Report. Ruiru, Kenya. Kenyan Case " Paper presented during AERC-KIPPRA Dolan, K., and J. Humphrey 2000. "Who gains from Workshop on WTO Agreements. September 11-12, the Boom in the African Fresh Vegetables Exports?" Nairobi Norwich- University of East Anglia School of National Cereals Produce Board (NCPB). 2002. Maize Development Studies. and Wheat Requirements. Unpublished Report. Ikiara, G. K., M. A. Juma, and 1. 0. Amadi. 1993. "Agri- Nairobi. cultural Decline, Politics and Structural Adjustment Noor, H. 2002. "Sanitary and Phtosanitary Measures in Kenya." In P. Gibbons ed. Social Change and Eco- and Their Impact on Kenya." Unpublished Paper pre- nomic Reform in Africa. Nordiska Africainstitute, pared for UNCTAD, Geneva Uppsala. Nyangito, H. 1999. "Agricultural Sector Performance in a Ikiara, M. and L Ndiranga 2002 Developing a Revival Changing Policy Environment." In Kimuyu P., M. Strategy for Kenyan Cotton-Textile Industry: A Value Wagacha and 0. Abagi (Eds.), "Kenya's Strategic Polh- Chain Approach. Unpublished Report Kenya Institute cies for 21st Century. Macroeconomic and Sectoral for Public Policy Research and Analysis (KIPPRA). Choices" Institute of Policy Analysis and Research Nairobi. (IPAR), Nairobi. ILO (International Labour Organization) 1999. "Kenya Nyangito, H. J. M. Omiti, G. A. Kodhek, and J. Nyoro. Meeting the Employment Challenges of the 21 st 2001. "Revitalizing Agricultural Productivity in Kenya. Century." ILO Regional Office, Addis Ababa, Ethopia. Paper presented during EAGER Workshop on Restart- Kenya, Republic of, 1982-2000 Economic Surveys. Min- ing Kenya's Economic Growth, Safari Park Hotel, istry of Planning and National Development. Central Nairobi, March 2001 Bureau of Statistics Nairobi. Thoen, R S. Jaffee, C. Dolan, and F Ba. 2000. "Equator- Kenya, Republic of, 1982-2000 Statistical Abstracts. ial Rose- The Kenyan-European Cut Flower Supply Ministry of Planning and National Development. Chain." Unpublished Report. Central Bureau of Statistics Nairobi. WTO World Trade Organization. 2000. Trade Policy 1986. "Economic Management for Renewed Review, Kenya 2000. WTO, Geneva. Growth." Sessional Paper No 1. Government Printer, World Bank. 1994. Adjustment in Africa. Reforms, Results Nairobi. and Road to Ahead. Washington D.C.: Oxford Univer- 1997 and 2002. Eight Development Plan, sity Press. 1997-2001 and 2002-2008. Government Printer, _ 2002a. World Bank Standards and Trade Database Nairobi. Washington D.C Kimuyu, P. 1999 "Structure and Perfromance of the 2002b. African Development Indicators. Manufacturing Sector in Kenya." In Kimuyu P., M. Washington D.C. 61 O( 0 V fn %O t n M n r O N IV, - O _ . 1 a, oN oi -X a o ofi r~ N 0s o O O \ 6 0\0- O 'tK \ cO ' p ~~ K '0 \0 v K 0- (N efN IvN - m (N KON V) 0\V-~r~K ~ ( rn (N %0 co I) V LU C\ OV N - (N o m o L/) I (N O L' Ci ;t oq "o C ~C ro I\ c n C sov r, _N - -o VI K( O 0 \0 0 N . \0 N 00to o Xo 0\ 10 0 rs Ch *n 00 C) 0 * - ri -i = 6 r-- r Xr O\ '0. m o oo K (r UN, oo o 0% I( .N ( N tI~ (NK ( N O K (~NC 0 '0 - K . \ N I ( Q%a I O(N - \ m m )o o N m O _ _ ) n X- O #A f0 Vn U sn 13 o oooooX_ ooX 0~~~~~~~~0 0.~~~~~~~~~~~~~~~ o ~~~~~ _L a. -o QV E= U-M u- Uc X un Ecou , X~~~~~~ c U o0 <, ~ . m , D m z X > x E3 Q -X CL ^ cx: oi :6 _ 0 L  rcoco0 N - '-4, I-, 1 a- % 0  0 0  _ o  V  I: E 0 0 64 BR1~..I Dii) G(I N14 (G- T H1-1 E the affected areas. Natural disas- ters worsen the situation of food ETA T Dinsecurity, both chronic and STANDARDS DIVI D temporary, that prevails in some parts of the country. The case studies show that, in A Case Study and Action Plan general, that all the sectors of the economy need to improve to be for Mozambique competitive. This improvement requires not only the application of standards but also invest- ments in technology and human resources. The analysis of the public institutions involved on the regulatory sys- OZAMBIQUE HAS UNEXPLOITED NATURAL tem and in the standards setting system, shows that RESOURCES AND ABUNDANT LABOR THAT they do not have appropriate infrastructure and give it enormous economic potential for overcom- they lack qualified personnel. Financing problems ing the present state of underdevelopment. Its are also an important constraint. However, the Di- unexploited and underutilized water and energy re- rective INNOQ 1, based on international rules, is a sources could meet Mozambique's domestic con- good basis for the development of the standardiza- sumption and development needs and still leave tion subsystem. The legal framework is not ade- surpluses for other countries. The country's geo- quate and needs to be updated or some new legis- graphical location makes it an ideal gateway for the lation and regulations need to be introduced. This transport of products to and from neighboring has started through the revision of some laws and countries, and facilitates the access of local im- technical regulations related to animal and plant porters and exporters to a large regional market of health. 200 million Southern African inhabitants. Indeed, The adoption of the ISO 9000 series of standard its transport infrastructure has been developed to is under way. Currently few firms implement them enable Mozambique to play a role as a supplier of because of a low level of awareness. APCER and services. SABS are providing certification services. Certified The lack of appropriate technology for small companies utilize accredited laboratories and cali- producers contributes to low yields, post-harvest bration services from South Africa, but the costs are losses, and low quality of the crop; these problems high. The HACCP system is being implemented in are associated with the lack of an appropriate trade a systematic way only in the fisheries export sub- network. Natural disasters strike the country almost sector. The country has established an interminis- every year and have caused destruction of crops, terial committee that deals with the implementa- the death of livestock, and damage to factories in tion of the SADC Trade Protocol and other matters 65 Standards and Global Trade: A Voice for Africa In the second phase, the authors conducted sev- eral interviews in relevant institutions and visited | Malawi | Niassa Nampula province where they collected informa- Zam\ e tion relevant to this study. The list of interviewees, other contacts, and references, is attached as Annex C. In a third phase, the authors analyzed the infor- mation and integrated it into this report, which is structured according to the country case study out- Man line defined by the project coordination. The outline of the study is as follows: An overview | Zimbabwe | 5 of macroeconomic conditions and performance is provided (in the section entitled "Economic Con- ditions and Performance") so as to contextualize _ n e the analysis of standards and technical regulations. FR _ _A This is followed by a summary on past, ongoing, and planned programs to refine legal arrangements Maputo Pro Ince and strengthen local capacities to implement trade promotion standards and technical regulations (in S 5waziland |lL?-Maputo City the section entitled "Provision of Development As- IRST sistance") and an analysis of trade performance (in the section entitled "Trade Performance and Out- look"), where specific case studies are developed. In related to trade policy. The country already has an the section entitled "Domestic Regulatory Struc- inquiry point nominated for the implementation of tures and Policies: Internal Market Barriers," the the TBT Agreement and is in the process of nomi- study reviews and assesses existing laws and regu- nating an enquiry point for the SPS Agreement. lations and determines the extent to which they are To improve the standards and regulatory system consistent with current international norms. Fi- and to ensure that it follows the internationally ap- nally, it determines the necessity of strengthening proved requirements and thus facilitates access to or reviewing the current legislation and the role markets of Mozambican export products it needs of related institutions. In the section entitled "Do- develop an appropriate regulatory system including mestic Standards Setting System," the study as- food safety issues, and effective control mechanisms sesses the country's organizational capacities and for import and export goods; develop an appropri- physical infrastructure to design and implement ate standards setting system including facilities for standards. The section entitled "Involvement in Re- training, metrology, accreditation, testing and cer- gional and International Standards Development" tification; strengthen the country's participation in analyzes the ways in which the country and its regional and international standards setting bodies; representatives have participated in the process of improve the response of the country on issues re- setting or revising standards and technical regula- lated to WTO, mainly SPS and TBT Agreement; tions at the international level. The section entitled support the development of selected sectors to "Private Sector Perspectives" provides an analysis of improve exports. the private sector followed by an analysis of the WTO and trade commitments (in the section enti- tled "WTO and Trade Commitments: Assessment of Implementation, Problems"). The report closes During the first phase of the project, the authors with an action plan based on the main conclusions identified the institutions to be surveyed and pre- (in the section entitled "Main Findings and Pro- pared an interview checklist. At the same time, the posed Action Plan"). The list of contacts and the sources of statistical data were selected and basic list of documentation reviewed are attached as an- documentation for the development of the project nexes to the study. Other annexes consist of other was collected and reviewed. references as mentioned in the text. 66 Bridging the Standards Divide: A Case Study and Action Plan for Mozambique Economic Conditions and Performance The country's geographical location makes it an General Information about the Country ideal gateway for the transport of products to and from neighboring countries, and facilitates the ac- Mozambique has an area of 799,380 square kilome- cess of local importers and exporters to a large ters and a population of about 17 million (2000); it regional market of 200 million Southern African in- is divided into 11 provinces. The country borders habitants. Indeed, its transport infrastructure has Tanzania, Malawi, Zambia, Zimbabwe, South Africa, been developed to enable Mozambique to play a and Swaziland, stretching 4,445 kilometers. The role as a supplier of services. , coastline is about 2,500 kilometers bordered by the The principal markets for Mozambique's exports Indian Ocean. The capital is Maputo and the official are Europe (mainly Spain and Portugal), North language is Portuguese. It is a member of the South- America (mainly the United States), and Asia ern African Development Community (SADC), the (mainly India and Japan). In Africa, the principal African Union (AU), the United Nations (UN), the destination is South Africa, which is Mozambique's World Trade Organisation (WTO), the World Bank second largest export market (Table 2.1). The coun- (WB), and the International Monetary Fund (IMF). try's main export products are primary agricultural Mozambique's population has grown by 42 percent commodities (cotton, cashew nuts, sugar, timber, during the past 20 years, to 17.2 million inhabitants and citrus) and fishery products. in 2000, compared to the 12.1 million registered in Domestic agroindustry consists mainly of the 1980 census. In 1997 the economically active pop- medium-scale processing of agricultural raw mate- ulation (EAP) was estimated to be 5.9 million, equiv- rials into primary commodities, and a small-scale alent to 69.7 percent of citizens aged 15 years or more, food-processing subsector. The remaining industrial with 81 percent active in agriculture. Women make transformation is undertaken within small family up the majority of the EAP (52 percent). The average units for their own consumption or local sales. Thus population growth rate is 2.26 percent per year (INE agroprocessing in Mozambique has not been able to 1997). Agriculture is the main economic activity, con- absorb the agricultural produce that is currently tributing 25 percent of gross domestic product grown in the country. This leads to the export of (GDP), while employing 80 percent of the labor force. basic raw materials with little value added, and to the Mozambique is one of Africa's low-income and dependence of the country on imports of final con- highly indebted countries-among the poorest in sumer (and even intermediate) agricultural goods. the world. The country has unexploited natural Natural disasters (floods, cyclones, and drought) resources and abundant labor that give it enor- strike the country almost every year and have mous economic potential for overcoming this state of caused destruction of crops, the death of livestock, underdevelopment. Its unexploited and underutilized and damage to factories in the affected areas. Nat- water and energy resources could meet Mozam- ural disasters worsen the situation of food insecu- bique's domestic consumption and development rity, both chronic and temporary, that prevails in needs and still leave surpluses for other countries. some parts of the country. Table 2.1 Values of Exports by Count,y of Destination (thousand US$) ______________ Il 1995 1996 1997 1998 1999 2000 Spain F 36.4A 1 47.6 42.6 36.6 34.5 39.1 Rep. South Africa 41 43.8. 40.2 42.5 71 54.6 USA 9.5 25.8 26.5 14.8 12.6 17.3 Zimbabwe 7.9 9.8 9.5 47.3 40.2 64.6 Portugal 14.6 1 7.5 10.6 19.1 24.5 42.4 India 4.5 26.8 13.3 16.2 32 17.9 Japan 24.8 1 17.2 19.3 12.8 11.6 15.7 Others 35.6 37.5 68.2 56.8 44.5 112.4 Total L 1 74.3 226 230.2 [ 246.1 270.9 364 Source: [NE (1996, 1999, 2000). 67 Standards and Global Trade: A Voice for Africa Human Development and Poverty Status early 1990s, thanks to the end of domestic and re- gional military conflicts and the pursuit (since the Mozambique is considered one of the poorest counl- tries in the world. According to the United Nations mid-1980s) of determined stabilization and struc- Development Programme (UNDP) indicators, its tural adjustment policies. Thus, while in 1992 (the HumanDevelopment Progrmex (UNDP) rindicators last year of war) the economy declined by 8.6 per- Human Development Index (HDI) rating in 1998 was 0.341, putting it in 168th place in a list of 174 cent, in the subsequent years up to 2001, it has countries. Mozambique has the lowest HDI rating grown at an average annual rate of 8 percent. The and the highest Human Poverty Index (HPI) rating year 2000 was a watershed year, as the economy was in the ADC egin. Ater heostecenurati stricken by the worst floods of the century and in001 the SADC rgIo. Aete the t reent udaev growth faltered to less than 2 percent, implying a (200) th UN DI uggets tat umandeveop- decline in real per capita GDP growth for the first ment in Mozambique, in addition to being one of the ' . . . ~~~~~time in the last 8-9 years (Table 2.2). worst, is declining. Thus, the international ranking of tienthlat89yrs(be2.) worst, is decinngThs,thiteratonlMost of this growth has come from the agricul- the country has worsened, after a slight recovery in tural sector. It is estimated that during 1992-2001 previous years. Now Mozambique is categorized as the agricultural sector (including animal husbandry the second poorest country in the world in terms of and forestry) has contributed, on average, 28 per- human development, cent of value-added GDP (with a peak of 30.5 per- cent in 1996 and a low of 24.1 percent in 1992). Thus, its weighted contribution to aggregate value- Aggregate and Sector Groth f alu-Aded added GDP during 1992-2001 is 2.4 percent, mean- Output and Demand ing that more than a quarter of the aggregate Following almost two decades of failed economic economic growth in Mozambique comes from the development, Mozambique resumed growth in the agricultural sector. Table 2.2 1992 and Average (1993-2001) Sectoral Growth and Shares of Value-Added GDP Average Average Shares Growth During During Contribution to Total Items 1992-2001 1992-2001 GDP Growth Total gross domestic product 100.0 7.8 - Total value added l 99.6 i 7.9 7.91 Agriculture and forestry 28.2 8.5 2.39 Fishing 3.5 255 0.09 Mining 0.3 14.2 0.04 Manufacturing 10.3 14.1 1.45 Electricity and water 1.5 47.3 0.72 Construction 6.6 16.4 1.08 Commerce and repair services 23.6 4.4 1.03 Restaurants and hotels 0.9 11.5 0.10 Transports and communications 8.5 10.3 0.88 Financial services 3.6 5.5 0.20 Real State rentals 3.7 3.6 0.13 Public administration and defense 3.2 4.2 'l 0.13 Education 1.4 7.8 0.11 Health 0.4 9.9 0.04 Other services 4.1 8.8 0.36 Import duties 2.2 1.4 0.03 Inputted financial intermediation services -1.8 15.5 -0.3 Source INE. Bridging the Standards Divide: A Case Study and Action Plan for Mozambique While this denotes a huge natural potential for goods and services. Without such links with the in- development, it also points up the weaknesses dustrial and final consumption sectors, agriculture and risks inherent in technologically backward faces constraints to the addition of value of its pro- agricultural activities, particularly when coupled duce, further undermining the effort to reduce with the vulnerability of the country to cyclical poverty and accelerate rural development. natural disasters. Thus, although producing only 28 It augurs well, however, that important infra- percent of the value added GDP, the agriculture- structure sectors such as electricity and water, con- based rural economy is source of income for 80 per- struction, transportation and communications, as cent of the country's population, who make up the well as education and health, are expanding rap- majority of the poorest and most vulnerable to idly. It is expected that this, coupled with further hunger, endemic diseases, and failures of social de- structural reforms, should lower transaction costs livery systems, and are out of reach of modern more and allow the expansion of services into transportation and communication. the countryside to support agriculture and rural Among goods or commodity-producing sectors, development. the agriculture sector is followed in importance by Despite the strong growth of the economy, there the manufacturing and mining industries. How- is still widespread poverty in Mozambique. Under- ever, because of its still low share in the economy, lying the deterioration of the human development mining has made a relatively minor contribution to indicators and poverty there are various factors, in- aggregate growth. On the other hand, during cluding a steady and substantial trend away from 1993-2001, manufacturing industry contributed private consumption. According to recent govern- 1.5 percent of the average aggregate value added ment and IMF data (IMF July 2002), the growth of GDP. Construction (1.1 percent), commerce and private consumption in Mozambique has declined repair services (1.0 percent) also contributed to the from 17.2 percent in 1996 to 4.6 percent in 1999 average aggregate GDP value. (Table 2.3). In 2000 and 2001 private consumption While representing a substantial share of total actually fell by 1.3 percent and 1.1 percent, respec- GDP, commerce and repair services are among the tively. While in the mid-1990s this trend was tilted more slowly expanding sectors. This has critical im- in favor of public consumption, it has more recently plications for agricultural and rural development been the basis for strong aggregate investment and poverty, as trade is a key service to link rural demand expenditures. This has increased its share 'and urban economies that allow the movement of of total demand GDP from an average of 21 percent Table 2.3 Annual Changes in GDP by Demand (percent) o Items | 1996 1997 1998 1999 2000 2001 Private consumption 17.2 7.1 5.9 4.7 z -1.3 -1.1 Public consumption -6. 3 21 21 9.7 1 7.4 4.4 Total investment _ -8.4 8.4 32.6 61.4 .-9.5 1 10.3 Export of goods and nonfactor service 22.8 ! 8.6 10.4 -1.4 30.9 65.2 Import of goods and nonfactor service 5 [ 11.1 8.4 40.4 -3.1 -9.7 Gross domestic product 7.1 I 11.1 12.6 7.5 1.6 13.9 Deflators Private consumption 42.3 8.8 2.6 0.6 15.4 8.2 Public consumption 38.2 15.1 10.7 18.4 6.6 8.8 Investment 23.7 5.8 4.6 3.8 20.3 1 16.4 Export 20.1 4.3 -1.2 8.4 5.3 ' 33.2 Import 26.6 4.4 -1.7 6.8 24.1 31.3 Gross domestic product 48.2 9.6 4.6 .729 11.3 Source: IMF Statistical Appendix (luly 2002). 69 Standards and Global Trade: A Voice for Africa in 1996-97 to 50 percent and 55 percent in 2000 the amount of certain crops that is informally sold and 2001, respectively. Government policy should in neighboring countries. For example, maize is ensure that this investment effort, which in recent sold in Malawi and Zambia, rice in South Africa, years has been mostly toward mega-pro)ects (in and beans in Malawi. addition to infrastructure rehabilitation and ex- Table 2.4 shows the evolution of the production pansion), reaches and helps to transform the agri- of the primary marketed agricultural commodities, cultural production and marketing system on including export crops, basic food crops, and in- which the livelihood of most of the people depends. dustrial inputs.' It becomes clear that marketed This also constitutes a substantial basis for the via- agricultural output of these commodities increased blity of the economy as it is still a source of most very rapidly up to 1998/99. In that year, the pro- of its traditional exports (as well as, potentially, the duction of export crops and basic food crops was nontraditional exports apart from the mega-project higher by 40 percent and 20 percent, respectively output). than in 1996/97, while that of "industrial crops" re- mained stationary. The performance in the follow- Agricultural Production and Trade. Mozambique ing year reflects the negative impact of the floods has high agriculture potential with 36 million of 2000. Nonetheless, by 2000/01 all major crop hectares of arable land. Agricultural production is groups had recovered strongly. The production of mainly represented by the family sector, with 2.5 export crops in 2000/01 was higher by 72 percent million households cultivating 3.5 million hectares. than in 1996/97, while that of basic food crops was There are small, medium, and large-scale commer- only 17 percent higher. The fastest growing subset cial farmers. in agricultural production since 1998/99 is that of The government program for 2000-2004 has "industrial inputs" In 2000/01, production of these identified agriculture as the basis for economic and commodities was more than ten times higher than social development. Mozambique's national agri- its previous level, fueled by the recovery in the pro- cultural policy objectives include food security, duction of tobacco and sunflower. sustainable economic development, reduction of In cases in which large companies are involved in unemployment, and reduction of absolute poverty. the processing and trading of some primary com- Strategies designed to implement the agricultural modity, for example, cotton, they provide farmers policy include the sustainable use of natural re- with materials, such as seeds, fertilizer and pesti- sources, expansion of production capacity, im- cides, and assure them a return on their crop. provement of productivity, and institutional and Overall, agricultural production in Mozambique human resources development. is recovering rapidly, particularly in regard to According to the national agriculture policy im- export crops and "industrial inputs" Food crop plementation strategy, quality improvement and production does not seem to be recovering as fast, the development of standards for products and pro- with the exception of beans and vegetables. duction are among the main priorities. Factors hampering the steady recovery in pro- Agricultural production of both food and export duction include lack of appropriate technology for crops comes from the peasant family sector and small-scale producers who often lack farming small and medium commercial farms. The princi- materials and store their crops using local tech- pal cash crops are cashew, sugarcane, tea, cotton, to- nology. This situation contributes to low yields, bacco, and timber. Maize, rice, beans, groundnut, post-harvest losses, and low crop quality. Poor copra, sorghum, cassava, millet, and citrus are also infrastructure, such as inadequate roads, grain among the more important products from agricul- stores, and warehouses affect agricultural output, re- ture. The total volume of food crops produced is flected in high costs and frequent bottlenecks in the higher than the total marketed, taking into account distribution of produce. Because natural disasters, the amount that is kept for family consumption and floods, droughts, and cyclones destroy thousands of ' This classification is as given in IMF (July 2002) Note, however, that the distinction between "export crops" and "industrial inputs" is somewhat arbitrary and not accurate. Most export crops are industrial inputs and most agriculture-based industrial inputs are also exported. 70 r, - c - -g- rn - 7 o - _ _O\ - n - if rm g N - m _ I v Z t I _ 6 c % 6 7 6 > 40 - P o o > N rn N _o \0 0\ _ % ro 0 00 o\ _ 0 rn o n o " OD V) C} \C 1£ _ , £ 0 00 IN rO 11 Cq _ ~ 0 c> Or _ mi In m 0 m N -W 0 % O oo m N OeO I~~~f ffi ,O_ _ m Inr U en - -- --- - - - -=\ - I - Ex 8co . 0 I ? o X _6 o 6m N 4 _ o6o o6 6 _ mi o _~ r, o O~~~~~ O ci4 ci cc0er rt 0r - - - 0 - 'c V0 -,~~~~~~~~~~~~~~~~~~~0 $ 0% 0 - e- - 0 r'c - - - 0 - ' (aC l~ ~~~ O 4 _ 0 06 "i 6 m 'o rN Cs O ~ C', a0 08 0 00 N rs ~ ~~~~~~~ N v o oN PSt N tN _ n ri \N 0 _ V O. -I c_ V I o o ! (N~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~CN o~~~~~C C; o C; ci o C o C) o _ o c, o a o o no. o o C; o 0 =-- - - - -- - - -- N EL c 2 '0 0 ._~~~~~~~~~~~~~~~ Co c c z ov t qo~~~~~~a Ln L ,_o ,NtNNms .o ,o ,o o ~~~~~~ u ~ ~ ~ . ~~ ~ 4- =- - ,c I___ - - - - - - - - * cc 0% o Standards and Global Trade: A Voice for Africa hectares of crops and stored food in the affected ar- with potential for generating a viable and promis- eas, the development and operation of an efficient ing rural agroindustry and exploring mechanisms early warning system and disaster management and to promote them (GPSCA 2002a). mitigation system is a critical component of the One of the premises of this study was the as- agricultural development effort. sumption that small and medium rural agroindus- Some programs under way are aimed at improv- tries could supply semiprocessed raw materials to ing the existing infrastructure and creating new larger agroindustries, supplying and diversifying infrastructure. The construction and rehabilitation the local consumer and foreign market. programs for tertiary roads (third phase) and the The study was based on the following products: Food Fund of World Food Programme (WFP), maize, cassava, sweet potato, rice, cashew (especially should be mentioned, m addition to research and the cashew apple), beans, fruit trees (particularly extension projects in rural areas. coconut palms), and oilseeds. Special attention was The main early warning structure is the Early given to the following provinces: Cabo Delgado, Warning Department in MADER, which gathers in- Nampula, Niassa, Zambezia, Sofala, and Inham- formation and publishes bulletins three times a bane (GPSCA 2002b, Muendane, C. 2002). month on the agro-meteorological situation, food This study identified 14 business plans (GPSCA balance sheets, crop areas planted, lost and har- 2002c), namely, vested yields and projected production, and analy- ses of vulnerability and food security. Since its * Desiccated coconut factories to be installed in creation, this department has received funding Zambezia and Inhambane; from FAO, as well as from the state budget. The * Production and promotion of charcoal from co- service currently relies on state funds, and the conut husks m Zambezia and Inhambane; budget allocation in 2000 was less than half of its * Products from coconut husks in Zambezia and requirements. MADER has submitted a new fund- Inhambane; ing proposal to FAO. Other systems for food secu- * Cashew apple spirit in Nampula, Zambezia, and rity early warning include Famine Early Warning Inhambane; System (FEWS)-USAID; SIMA-Agricultural * Cashew processing in Nampula, Sofala, Zambezia, Markets Information Systems; Vulnerability Assess- Inhambane, and Cabo Delgado (medium scale); ment and Mapping (VAM)-WFP; RESAL-EU; and * Cashew processing m Nampula, Sofala, Zambezia, the Market Management Assistance project (FAO Inhambane, and Cabo Delgado (small scale); and EU) in the MIC/National Directorate of Inter- * Dried fruit in Zambezia, Inhambane, and Sofala; nal Trade. The MSF-CIS-Doctors Without Bor- * Preparation of tangerine for export in Inhambane; ders-Consolidated Information System currently * Maize mills in Niassa and Zambezia; assists MADER. * Packaging and export of pulses in Niassa; These developments have major implications for * Processing of pigeon pea for export in Zambezia, the issues of standards and quality. In particular, Niassa, Nampula, and Cabo Delgado; quality is not a determining factor in the market- * Rice husking in Zambezia, Sofala, and Nampula; ing of products on the internal market, partly * Processing of sunflower seed in Sofala, Zambezia, because of the levels of poverty and the need to sat- Niassa, Nampula, and Cabo Delgado; and isfy basic requirements and partly because of lack * Extraction of castor oil in Nampula and Cabo of awareness. On the other hand, although tradi- Delgado. tional export products are well known and their market is secure, some appear to command lower The study further concluded that some agricultural foreign prices than would otherwise be the case, ap- products (such as coconut, beans, banana, and tan- parently because of poor quality. This has a nega- gerines) from the selected provinces could be sold tive impact on the income-generating potential of on the local market and exported-as long as the these crops for the farmers who grow them. products were cleaned, picked, and packaged- The Office for the Promotion of Commercial because there are external markets interested in Farming in the Ministry of Agriculture and Rural these products. Some of these and other products Development (GPSCA) conducted a study to eval- could also be transformed into new products by uate a group of preidentified agricultural products using new technologies, as in the case of charcoal 72 Bridging the Standards Divide: A Case Study and Action Plan for Mozambique Table 2.5 Production of Meat and Meat Products, Milk and Dairy Products, Eggs, and Animal Feed 1995 1997 1998 1999 2000 Cattleme~at (ton) ! 877.5, 843.7 1,012.6; 1,140.4i 1,350.4, 1,554 j Pork meaton):i 300.5 297.1 300.6 1 295.9 331.5 250.4 Rurninants (tonri) 90.1 ' 94.2' 110.3; 209.9 264.1 302.2 Poultry imeaf (ton) 3,731.0:' 5,965.2 5,090.1 4,622.9k 5,215.5 4,506.1 ~ ~ Milk (i0OcO liter) > 953.9! 880.7: 931.6 743.9,' 1,000.9 1,302.9 - Eggs-(dozen) '603,407 :362,272 854,306 429,197 548,237 299,127 Animal feed (ton) 7,290.0 23,053.1 26,472.7 23,515.5 21,608.3: 24,936.9 -sausa-es (kg) 762.5 3,957.8:! 41,000.0 29,535.0 49,313.7 Fresh milk h pasteurized. -(liter) '32,084 37,457 .2,082,943 446,849 1,602,862 0 Condensed sWeetenedl, I --^.hg nilk.(tior) 0 0 1,777 1,786 :: 1,840 1,712 RecoristitutedMnil:liter) 0 801 1,068,000 1,270,042 2,387,573 1,920,233 FlaMoredr.ilk-(lFter) 0 ' 0 0 0 353,787 456,939 Yogurt-(liter) 20,136 48,692 27,509 31,767 472,572 292,283 Ice cream '(kg) 0 0 0 623 154,250 42,220 Chocomilk-(liter) 0 0 0 299,488 i 176,096 98,611 -Butter (kg) 0 1,980 700 0 178,210 2,880 Cheese (kg) 0 1,825 1,200 17,517 I 83,330 19,540 Source DINAP/MADER, 2000 report made from coconut husks and dahl made from and eggs remained very low in 2000-1,303.000 pigeon pea. However, the study regarded most of liters and 299,127 dozen, respectively, representing these agroindustries as viable only if developed by 30 percent and 45 percent of production in 1995 self-financing entrepreneurs who already own (Table 2.5). infrastructure. With regard to animal health, there were out- breaks of foot and mouth disease in neighboring Livestock Production. Livestock production in countries, but the disease was not found in Mozam- Mozambique is characterized by rising numbers, bique because of vaccination campaigns along the except for pigs (owing to African swine fever) ac- borders and the introduction of geographical in- cording to the annual report of the National Di- formation systems (GIS). When diseases are rectorate of Livestock (DINAP) in 2000. Livestock detected, the animal health authorities prohibit promotion, particularly in the smallholder family cross-border trade of the infected species (live an- sector, has contributed to this increase, despite the imals, meat, or other products) in coordination floods that killed many animals. The livestock with other national and regional authorities. census of 2000 showed 519,778 head of cattle com- Beef, pork, mutton, chicken, turkey, fish, milk and pared to 292,826 in 1995; 1,655 dairy cows com- dairy products, eggs, animal feeds, and their com- pared to 1,753 in 1995; 758,011 goats compared to ponents were imported in 2000 (DINAP 2000). 392,781 in 1995; and 188,462 pigs compared to 203,750 in 1995 (DINAP 2000). Agroindustrial and Industrial Food Production. The production of meat totaled 1,554 tons of The agroindustry represented 18-29 percent of beef, 250.4 tons of pork, 302.2 tons of mutton and GDP during 1975-85. The main products of the goat, and 4,506 tons of chicken. This production food industry are beverages (notably beer and soft represents an increase of 15 percent in beef, goat, drinks), wheat flour and goods manufactured from and mutton, and a decrease of 13 percent and 24 wheat flour, brown sugar, vegetable oils, and soap. percent in chicken and pork, respectively, com- Other processed products are maize meal, con- pared to the output in 1999. Production of milk densed milk, liquid milk, and other dairy products. 73 Standards and Global Trade: A Voice for Africa Data for 1999 show that beer production is the Services have traditionally been an important largest food industry (74 X 106 liters), followed by component of Mozambique's external trade. Until wheat milling (114 x 103 tons), soft drinks (50 x the early 1980s, Mozambique enjoyed a positive 106 liters), raw sugar (42 X 103 tons) and oil prod- balance of trade in services (US$96.0 and US$56.0 ucts (15 X 103 tons) (MIC 2000). million in 1980 and 1981, respectively). In 1980 The milk processing industry includes the pro- transport revenue alone more than covered all ex- duction of fresh pasteurized milk (1,603,862 liters), ternal expenditure in tradeable services (includmg condensed milk (1,840 tons), reconstituted milk mterest payments). By contrast, in 2001 the coun- (2,387,573 liters), flavored milk (472,572 liters), try had a severe imbalance in this category of trade, ice cream (154,250 tons), chocolate milk (176,096 with a deficit of US$213.5 and US$363.1 million in liters), butter (178 tons), and cheese (983 tons). 2000 and 2001, respectively. In those years, trans- These figures show an increase m production in all port receipts could cover only 24.0 percent and 21.0 products, compared to output in the last five years percent of total expenditures in foreign tradeable (DINAP 2000). services excluding interest payments. Most of the existing plants in the agroindustrial The deterioration of the balance of trade in sector require rehabilitation. The factories located services during the 1970s and the early 1980s was in the rural areas, such as the cotton ginneries, the part of the overall economic decline as the com- sugar and tea factories, the rice husking plants, and mand regime faltered and the civil war worsened. the sawmills, were severely damaged during the war Nonetheless, beginning in the mid- 1980s with the that ended in 1992. signing of the Nkomati Agreement that aimed at Domestic production faces high costs because of cooling tensions between Mozambique and the such factors as high interest rates, customs tariffs, apartheid regime in South Africa, and as Zimbabwe transport costs, and so on, and has to compete with became independent and the mandatory sanctions lower priced imported products. The imported were lifted, the use of transport services started a products are often smuggled into the country and slow but steady recovery. This was interrupted in some pose a threat to public health. the mid-1990s, but has more recently resumed Some of the constraints in this sector are: strong growth. This has, however, been highly * obsolete technology and equipment; changeable, in large part because of problems af- * lack of skilled labor; fecting the neighboring countries using the serv- ices. In net terms, trade in transport services con- lnadequate o fm tivsca andcustomsrpolicies tinues to improve while income from labor services * lack of mncentives to industry; declines. * poor state of roads, means of transportation and Te othern storge fciliies The other traditional source of external income, storage facilities; prices and difficulty in acquiring quality namely workers' remittances, has not recovered as hackagigh on the local market; much. After showing significant instability over the packaging on the local market;years, receipts have declmed in value since 1998, * inadequate procedures and lack of standards and y while payments increased sharply (certainly re- technical regulations that allow improvements in the quality of production; and flecting an outflow of resources through foreign * low quality and/or high costs of raw materials. technical assistance). In net terms, workers' remit- tances have fallen from an average surplus of Foreign Trade and International US$35.0 million during the first half of the 1990s Financial Relations up to 1997, to a deficit of US$2.3 million in 2001. Capital account transactions in Mozambique are Table 2.6 shows the balance of payments of Mozam- simultaneously encouraged or restricted by law and bique. The overall balance of trade In goods has im- policy depending on their nature. Nonetheless, fi- proved substantially in recent years, with the deficit nancial liberalization and entry of foreign finan- declining from US$572.2 in 1998 to US$413.8 mil- cial institutions appear to have substantially eroded lion in 2001. However, this improvement is mainly the power of the controls, particularly of private because of the exports of MOZAL (the aluminum capital (short, medium, and long term). smelter plant in Maputo). Without MOZAL exports, Foreign direct investment is encouraged and it shows a decline. receives substantial fiscal incentives (border and 74 o t In 7 q ofi 0o oE r 'I' "s Ci o- Os un Xl Om r E Ni rs ' n % O I t o - xO tN) 0 N 0 N 0 ° il ° Ln 'I X - \ o e uN _ 6 Xr o r N V, o NOD 0C 0 . - I _ I I O > c 00 \_ V r \O N , C VI M q\ X _ ON ON_\ _ O\ t0 O 0 rl en - m N N \ _ N _ N n UC tX O , I -I - . I ___ .N \ n L \ N ; W ON N rs o r N N o N N o e \N-N r0Imen %O-- ° |_ ( N - N0a ' O.o 0 , -f N N.- X ? N N N r-4 N P,,0 aJ~~~ c _OX 4 o6 j K 4 w ri rm a\ X i 4 _o r- L om C> _ 0 I I I ____ 0 __--__===______-=-___-_______ _ , 0OOf0(i m es _ V o \0 N T _ N rY . \0 N r0 _ O_O a X 0£t tNe~Nu ONm \ ON N [\000co N C\\0 lN 00 - rn 0 00 \0 00 00 '.000 co Ld,N O / C; O tr ci K 0^ cX 0> < ; XOX O O O6 fu ° °- NON N0 %N ° \ - 0 -° 0. S _ * I I_ 0V . . .%. . ... . . . 0%\ 00 \O0 0 N'. Th 00 f( %0v 0% 0%u,P, - r r 6 r, n o 0%0%O6 to - 2', 3's3 - o n WV )W00 00 00C ' 00- (7% N rn ~~0\U, Ln N 0%\ kn N - n _- 00 ~ o \N N -n \NO7N -N Cd \%I I I I0 \ N- 0 00~~C0NTL~n %O N N,W) N .0 rn C\ m r0\ V 00 00 O'I0\ 0 \ (L) 0 -~d Q c n c. w n - r E CLi~ O ~ 0 b-t 0W( CU 0 U 00' (V w m o a -M ~V - C t- ', r0Jr tr, (() iL. -0 '.0 .- ~~~~~~~ 0 U- c $A w 0. w COL 0- E m 4~~~ F- N C~~~~~~~~~~~~~~~~~~ I- ~ ~ ~~ V )' I-rv6 C7~ ~ ~~~7 ' 10 t- e In rn "IN oo~ OR UN Il r sr V) ° a ON N N N m x 0 on vi n N rn v^n ca G\ W ; N - - N - I l - ,~ I~ I~ r! I -o I o oX v a s 0r _ o 0\ _ .N PN e O rn 00 r cn vn u\ vl cn \ ) x Ns-b 0 _; \O LD \N £ t \6 c1 ffi 1K os n sr es C:l _ n rs ON I oI I x ° N rn N N _ CS14N N I- NI m ~ ~ ~ ~ ~ I N O\ 8 4Os \ R S rI N. 4 m \.o -t 0 r- 19 00 CS4 1, tsS4 ID 00 r\ V 0s ~ ~ % N a\ 0\ In rn q- t -- -n - --- -- 1o\ 0 n 4 re 0m In c ON i 0 X o6 c ^ re I~ O' 0 t ~~n rm r C O N 0 r , re ' o sr N as o 0 oo 00 oo c> Ln rV N o e o 'n 2 I Vnw Os-C os rfi r< C; 6 I oN Ch V_ N .nSmm os ~ ~ ~ ~ 0 I\ CN cnm 00 X N tNr I N \ao ese n 0\ o o oo _ , o - r N cs r $< ; O c; O: rt j N o6 rs Srsm' c\ r N o 0 rq o \ _ \ v fN 'T rn m ¢ E _ D~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~I .Z E o a): E ° > t u 7> u¢ wo C o Q - m Z Z B C c N~~~~ r a) _0 Z D3 _ ) 'F C.om 6~~~~~~ Bridging the Standards Divide: A Case Study and Action Plan for Mozambique nonborder). This type of investment increased the United States, Mauritius, Spain, and Italy all ap- from an annual average of US$3.1 million in the pear on the lists of investors. Investments in food five-year period 1985-89 to US$24.8 million in and beverages, such as Coca-Cola, beer, milk, and 1990-95. This then increased more than fivefold dairy products account for some of the foreign in 1995-99. During the last five-years, foreign di- investment. Another example of recent foreign in- rect mvestment (FDI) in Mozambique averaged vestment is in the Mozambican mobile phone US$200.0 million per year, with a high in 1999 service. of more than US$380.0 million, then falling to The role of South Africa and Britain as sources US$182.0 in 2001. Most of this was related to mega- of investment increased because of their participa- projects, in particular MOZAL. tion in MOZAL, an aluminum smelting company. Unlike the steady growth of FDI, medium- MOZAL has annual production capacity of 250,000 and long-term borrowing has been very erratic. tons of primary aluminum. The main sharehold- Net long- and medium-term outflows averaged ers in MOZAL are Billiton (Gencor), the Indus- US$72.7 million and US$135.7 million per year be- trial Development Corporation (IDC) of South tween 1985-89 and 1990-94, respectively. This was Africa, Mitsubishi, and the Mozambican govern- reversed between 1995 and 1999, when net inflows ment. MOZAL has been responsible for investing reached an average of US$114.4 million per year. in such infrastructure as water and electricity However, this was only US$50.0 million in 1998. In supplies and a new wharf in the port of Matola. 2000 net inflows were only 60 percent of the level This project has served to attract other small- and in 1999, and in 2001 the country experienced a medium-size projects to Mozambique. long- and medium-term net outflow of US$182.6 Mozambican firms, mainly in construction and million. Compared to 1999 (and after experiencing engineering, have been heavily influenced by the a slight improvement in 2000), loan receipts in 2001 MOZAL pro)ect, which demanded higher quality of more than halved, while payments increased by products and services than were not normally ex- more than 60 percent. pected in Mozambique at that time. For example, Net short-term capital flows became substantial the Mozambican cement company, Cimentos de in the late 1990s. They represented the principal Mocambique, saw the need to speed up certifica- form of external portfolio adjustment in 1999 and tion of its products, making cement the first na- 2000, with outflows totaling US$31.0 million and tionally certified product. A linkage program was US$128.4 million, respectively. This suggests that as begun in which 25 suppliers of the company were the Mozambique financial system became more lib- identified and given assistance to improve their eralized and open to foreign entry, capital account quality. controls may have become increasingly ineffective. The other main upcoming projects include the During 1999-2001, long- and medium-term for- Temane and Pande Natural Gas Project, the Maputo eign borrowing, excluding that which was not re- Iron and Steel Project, the Corridor Sands Project, lated to big projects such as MOZAL, fell to around and the Mepanda Uncua Dam on the Zambezi 50 percent of its level in 1997-98. River. The country's development potential, its location National policy is generally favorable to the de- as a gateway to the other countries of SADC, agree- velopment of the transport sector. In addition to ments facilitating trade, and incentives for foreign the SADC Protocol on Transport, Communica- investment make Mozambique an attractive propo- tions, and Meteorology, Mozambique has bilateral sition for foreign investors. transport agreements with neighboring countries. In recent years, industry, agriculture, and tourism The most important feature of the agreements is have been the sectors with the highest volumes of the establishment of transport systems that offer investment. efficient, economical, and fully integrated infra- The Investment Promotion Centre (CPI), was es- structures and operations. tablished in 1984. CPI offers comprehensive serv- The most important surface transport system is ice in support of foreign investors wishing to invest the railway, which carries 77 percent of all freight anywhere in the country. (mamly working in the corridors linking to a neigh- Earlier, FDI came from South Africa, Britain, and boring country, not linking the north to the south Portugal, but now France, the Netherlands, China, of the country), followed by the road system with 77 Standards and Global Trade: A Voice for Africa 13 percent and the maritime system with 10 per- The development and implementation of the cent. Growth in freight transport has been erratic several programs and policies have had the support during the past five years (1995-99), and is heavily of donors and international development agencies. influenced by events in neighboring countries. It is noticeable, however, that even though quality and standardization issues are reflected in several Public Financ andFiscalPdocuments, these are not yet the subject of appro- priate development programs, neither at govern- The tax system in Mozambique includes direct taxes ment nor donor levels. This situation is related to levied on producers, indirect taxes levied on traders low production levels, and the main priority of and consumers, and customs duties levied on the most interventions is the creation of conditions to importers of goods and services. The direct taxes increase production and lower costs. are corporation tax that is levied on the firm's prof- To demonstrate the context of this study, we now its at 35 percent (Decree 68/98), complementary tax present the programs and policies directly related that is levied on other values and dividends, and in- to the topic under discussion. The details relating come tax that is levied on workers at rates of up to to agricultural and commercial policies are dealt 30 percent (Decree 3/87). Indirect taxation consists with in the sections that specifically concern these of valued added tax (VAT) of 17 percent and con- sub)ects. sumption tax, from which all cereals and their by- products are exempt. Transport services provided The Government Program for 2000-04. The gov- inside the country are subject to VAT, while trans- ernment has identified agriculture as the basis of port services to destinations outside the country economic and social development, with industry as and international transporters are exempt from one of the determining factors for economic VAT. The rate of customs duties is variable. For ex- growth. With regard to science and technology, pri- ample, it is 2.5 percent on maize imports plus 1 per- ority has been given to the development of a system cent for customs services levies. Maize exports are for the generation and dissemination of science and not taxed (Decree 30/99). The tax system increases technology not only as an input to teaching curric- the prices of agricultural and industrial products, ula, but also to finding solutions to the problems to the detriment of domestic products that ends up facing the country. with higher prices than imported products. Government policy aims at achieving sustainable agriculture in order to reach five specific objectives: National Programs andPolicies(a) poverty alleviation, (b) self reliance and security in basic foodstuffs, (c) supply of raw materials to The main objective of the national programs and domestic industry, (d) development of the cooper- policies is the reduction of the level of absolute ative and private smallholder family sector and the poverty. creation of jobs, and (e) improvement in the bal- The government program for 2000-04, as well ance of payments. as the programs and policies in agriculture, in- The government specified the objectives in the dustry, and trade refer to the need to increase the development of industry as: (a) promoting the quality of domestic production and to assure con- addition of value to agricultural, livestock, forestry, sumer protection through the development and mineral, and energy products, (b) reduction in application of appropriate standards and techni- foreign trade Imbalances, (c) increasing the supply cal regulations. of essential consumer goods to the population, and The promotion of agriculture and the resulting (d) helping to increase the supply of jobs. The pro- agroindustrial development are priorities on the grams further establish that industrial development various industrial and agricultural programs and should be associated with an improvement In the policies. The promotion and diversification of ex- quality of products to make them competitive in ports and the reduction of imports are reflected in foreign markets. the commercial strategy and policy. Assuming that trade is fundamental to the rela- The industrial and commercial policies consider tionship between the urban and the rural economy, the importance of developing the national quality and between Mozambique and other countries, the system according to international rules. activities to be undertaken are aimed at increasing 78 Bridging the Standards Divide: A Case Study and Action Plan for Mozambique agricultural and industrial production oriented accounts for 30 percent of the GDP, with the largest toward internal supply, increasing exports and contribution from the family smallholder sector reducing imports, the diversification of domestic that includes more than three million households. industry, the promotion of new industry and the The main aim of rural development is to increase development of small and micro firms. The devel- income-generating opportunities, particularly for opment of appropriate standards and technical the family smallholder sector, through the develop- regulations that will promote consumer, health ment of human capital and infrastructure. Agricul- and protection of the environment, is one of the tural extension programs will support the expan- priorities. sion of agricultural production. The policy of food The development of science and technology security is fundamental for the implementation of should be sustained by the expansion and im- PARPA. provement of education, with the aim of nurturing PARPA also places a high priority on agroindus- a scientific culture in society and a mentality di- tries and other types of manufacturing with labor- rected toward development, direct participation in intensive processes directed toward exports. This production, and the dissemination and utilization should expand the market for agricultural prod- of knowledge. ucts, and thus investment and jobs in agriculture and processing industries. Assuming that adequate Government Strategy and Plan of Action for macroeconomic and financial policies will create a Poverty Reduction in Mozambique. Eradicating suitable environment for private investment, devel- poverty is a high priority for Mozambique's gov- opment in these areas will require human resources ernment. The first attempt to define specific poli- and basic infrastructure services. cies resulted in the Poverty Reduction Strategy for Financial services must be suitable to meet the Mozambique (1995). In 2000 the government ap- needs of small producers. Simplification of legisla- proved its Plan of Action for the Reduction of tion and administrative procedures will be under- Absolute Poverty (2001-05)-PARPA. taken. Good governance wdl be necessary to facili- The PARPA is a medium-term programming tool tate private initiative and investment. in the public planning system related to the strat- egy and plan of action for the reduction of absolute Industrial Policy and Strategy. The objectives of poverty and the promotion of economic growth in the industrial policy and strategy approved in Au- Mozambique. Its preparation included consulta- gust 1997 (Resolution No. 23/97) are to support the tions involving sectors active in the planning and process of adding value to natural resources, to help programming process at central and district levels. improve the balance of trade, to work to meet basic This methodology has also been used to formulate needs, and to promote the development of labor- government policies and strategies and to make intensive technologies to implement the govern- them operational, such as the Economic and Social ment's program for 2000-04. Plan (PES), Integrated Sector Programmes (PSI), The food and agroindustries are the first priority Mid-Term Fiscal Scenario (CFMP) and the Three- in industrial policy, since they represent half of the year Public Investment Programme (PTIP). value of industrial production in the country, and The objective of PARPA 2001-05 is substantial because of their export potential and the fact that reduction in the levels of absolute poverty in they produce basic consumer goods. Mozambique, through measures to improve the The most important branches of industry are skills and opportunities of all Mozambicans and the those that supply the internal and export markets, poor in particular. The specific objective is to re- such as sugar and cotton; the export market, such duce the incidence of absolute poverty from 70 per- as cashew nuts, copra, and tea; and those produc- cent in 1977 to below 60 percent in 2005 and less ing import substitutes, such as cereals, fruits, veg- than 50 percent by the end of the decade. etables, beverages, mineral water, meat, and meat With more than 70 percent of the population by-products. living in the rural areas and a greater proportion Textile clothing and footwear industries are also depending on agriculture for their livelihood, agri- among the priorities as they have a traditional po- cultural and rural development are obvious prior- sition and weight within industry, employing a ities in the poverty reduction strategy. Agriculture large number of people. 79 Standards and Global Trade: A Voice for Africa The industrial policy and strategy define the tiveness and access to markets, either from con- guiding principles of industrial development re- sumer pressure, or from the perspective of placing lated to the role of the state and of the private sec- national products on external markets. tor, the reorganization of the business sector, the rehabilitation and modernization of industrial Provision of Development Assistance plants, the development of micro-, small- and medium-size firms, the role of the informal sec- Some projects with a foreign assistance component tor, the geographical decentralization of industry, have been implemented and others are being exe- the conservation of the environment, and regional cuted that have an impact on the development of integration. standardization and quality in the country. How- Mozambique's mdustrial development strategy ever, the assistance given until now did not focus indicates the principal vectors that will contribute on the development of the quality infrastructures, to the implementation of industrial policy. One of and so the support given to the private sector to the main guidelines for the strategy is the promo- improve quality is not matched with support to in- tion of quality to ensure the competitiveness of na- frastructure development, as needed. Thus the new tional production of goods and services both for investments have to contract foreign services (for internal and external markets. example, testing and calibration) sometimes at very The strategy refers, in particular, to the need to high cost. strengthen the National Institute for Standardiza- It has also been found that coordination among tion and Quality, under the Ministry of Industry donors is not very efficient, as is the case among the and Commerce (INNOQ) and to develop a na- institutions receiving support. The next section dis- tional quality system including the development of cusses some of the projects that relate to standards standards, the strengthening of laboratories, and and quality improvement. metrology and accreditation activities. SIDA Agreement-Assistance to INNOQ Implications for Issues of Standards and Quality Between 1997 and 1999, SIDA supported INNOQ The analyses of the data presented throughout this in its efforts to become a competent and sustain- section show that Mozambique is a country with able institution and a new program to support large agricultural and agroindustrial development quality infrastructure development was consid- capacities, with 70 percent of its population living ered. A consortium composed of the Portuguese in rural areas. However, in general, agricultural pro- Institute for Quality (IPQ) and Resource, a Crown duction is not enough for domestic consumption, Agents subsidiary company, was the executing and exports are based on traditionally exported agency for the SIDA assistance. The project fo- products. Quality is not yet perceived by the private cused on Standards Development, Quality Sys- sector as a priority, as a facilitator to external mar- tems for Companies, Standards and Quality ket access. Awareness, Information Services and Publica- It has been noticed, however, that in urban cen- tions, Subscription Schemes and Management ters consumer awareness has increased, and the first Systems. consumer protection associations have been created This was the only foreign assistance project to in recent years and have been applying some pres- Mozambique that had a specific component on sure toward the improvement of product and serv- standards, and it was developed with INNOQ. ice quality. By contrast, the economic environment Its activities were completed successfully. The pro- has a tendency to change and the development of gram included the following principal components: mega-projects associated with the application of the nine training courses with 580 participants, in- SADC Trade Protocol, has resulted in some com- cluding technicians, representing state firms and in- panies becoming concerned with quality-related stitutions, and teaching and research institutions; issues. awareness-raising activities involving some 400 par- Therefore, the situation is changing, and issues ticipants; assistance to six firms to develop quality related with quality improvement will become systems; strengthening of standardization activities indispensable mechanisms for increasing competi- through training for members of the technical 80 Bridging the Standards Divide: A Case Study and Action Plan for Mozambique committees; strengthening of the INNOQ docu- INNOQ is currently developing its quality policy mentation center and improvement of the INNOQ with the participation of the main stakeholders in financial management system (SIDA 2000. Final the country, SIDA and UNIDO. Report. Assistance to the National Institute of Stan- dardization and Quality). However, there were some difficulties because EnterpriseDevelopmentProject(PODE) human resources and physical infrastructure were PODE is an enterprise development project that not part of the project. aims to increase private sector participation in Following the previous project, a five-year economic growth. Its main ob)ectives are to im- program has been designed (National Quality Sys- prove private company access to, and use of, ex- tem Objectives-Next Steps). This program has the ternal services, thereby encouraging competition; following objectives: to facilitate access to finance; to increase possibil- ities for training, advice, capacity building and * to create a sound legislative basis for Mozam- links with investors and buyers; and to build ca- bique's standardization and certification systems; pacity in the Ministry of Industry and Commerce, * to develop programs and activities in support of the Investment Promotion Centre, and business these systems; and economic associations (PODE 2001. Pro)ect * to establish a quality control system through the Brochure). integration of existing facilities; PODE has four components: the Technical Train- * to provide basic training and upgrading of local ing Component (CAT), which has three subcom- staff in the field of standardization and quality ponents-the Business Competitiveness Office assurance; (GCE), the Training and Advice Office (GFA), and * to develop a national accreditation system within the Links Programme Office (GPL); the Finance a network of other nationally recognized systems; Component; the Capacity Building Component; * to develop and implement a National Metrology and the Social Component. Centre; PODE provides technical assistance to businesses * to develop standards information and training and offers training programs in financial and tech- centers to support the activities mentioned nical management. Under PODE some training has above. taken place and support has been given to enter- prises in the development of their quality systems. This program will seek to develop and deliver the For instance, PODE supported some companies following: that are suppliers of MOZAL to enable them to im- prove the quality of their goods and services. * a stronger legislative framework; * quality awareness in industry; UNIDO-ntegrated Industrial * implementation of quality management systems Development Programme and certification; * program of standards development/adoption; The program aims at providing support to the * development of a standards-related business in- government for the attainment of the country's formation center; industrial policy objectives and in facilitating * development of a quality-related management private sector development. In this context, the training center; program focuses on activities which (a) strengthen * establishment of a National Focal Point for the capacity and capabilities of the public and pri- Accreditation; vate sectors for effective policy development and * development of a national metrology center. implementation, as well as in establishing strategic alliances between the two sectors; (b) reduce the Based on the above-mentioned program, a strate- regional imbalance of industry through the devel- gic plan for quality has been developed. This plan, opment of adequate institutional support services whose main objective is the improvement of the for SME; (c) promote investment and technology quality infrastructure, is estimated to cost US$12 services for SME development, and (d) strengthen million. the capacity and capabilities for cleaner industrial 81 Standards and Global Trade: A Voice for Africa production and effective urban waste management, * Helping with the establishment and strengthen- quality management, and continuous performance ing of food control agencies; and improvement of industrial enterprises. * Setting up a food safety inspection service. Institutions that are to be supported are SME support institutions, investment and technology UNIDO and the Ministry of Industry and Trade institutions, environmental institutions, and qual- submitted the terms of reference for the imple- ity management or standards institutions. At the mentation for funding. sector level, the emphasis will be on food process- ing through the introduction of pilot demonstra- tion plants or common production facilities, with Programme-(PROAGRI) corresponding training and entrepreneurship de- velopment programs (UNIDO 1999). A five-year National Agricultural Development Under this program the following projects related Programme (PROAGRI) was launched in 1998, to standards were developed: with financial support from international organ- izations and governments. Its main goal was to * The "National Cleaner Production Centre" that ensure that public investment made in the agri- provides environmental consultancy services to cultural sector was planned and implemented Mozambican enterprises to reduce pollution and more efficiently. It was also intended to ensure increase productivity; that the mechanisms decided by the Ministry of * The establishment of a Business Advisory Centre Planning and Finance (MPF), for improved mon- (CADI) in the AIMO (The Mozambican Indus- itoring and evaluation of public expenditure, trial Association) building with INNOQ as one were effective, transparent, and well coordinated of the partners; with donor procedures. The Agriculture Policy * Support to the development of the quality policy; and the respective implementation strategies were * Support to install a pilot laboratory on metrol- drafted and approved before PROAGRI began ogy under an SADCMET project (also financed (Programa Nacional de Desenvolvimento Agrario by PTB, NML, and SABS and coordinated by the 1998a, 2003). regional coordinator of SADCMET); and PROAGRI'S immediate objective is to establish * A food processing and safety development pro- the institutional mechanisms for fundmg and pro- gram providing technical and managerial sup- viding agricultural services to the family sector, and port services to increase competitiveness and to creating capacity in the Ministry of Agriculture and establish a viable technical and entrepreneurial Rural Development (MADER) so that it can pro- base. vide effective and efficient public services in three main areas-institutional reform; strengthening As a result of this program, a proposal for "Assis- the capacity of, and developing, production support tance for a Food Action Plan for Improved Pro- services; and sustainable natural resource manage- cessing and Food Safety" was designed. The imme- ment. The program operates on the basis of a set diate work program proposed in the "Final of fundamental principles, namely to contribute to Technical Report" includes (UNIDO 2001b): poverty reduction; decentralize MADER functions; implement activities related to key functions; im- * Establishing and strengthening national food plement principles of good governance; give atten- control systems; tion to crop producers' access to land, inputs, and * Setting up a national food processing training markets; and take into account questions of gender, center; social and environmental sustainability. * Conducting workshops, seminars, and training The program has eight components: institu- courses; tional development, agricultural research, exten- * Strengthening laboratory analysis and food in- sion, support for agricultural production, livestock, spection capabilities; agricultural land, forests and wildlife, and irriga- * Providing training m all aspects of food control; tion. Each component has an action plan with tar- * Developing and publishing training manuals and gets, which is also based on specific basic principles texts; (PROAGRI 2002). 82 Bridging the Standards Divide: A Case Study and Action Plan for Mozambique Since it began, PROAGRI has been analyzed and participation of Mozambican exporters in interna- reviewed both by MADER and with the donors, tional trade fairs, exhibitions and trade missions. It looking at basic principles, actions to be taken and also identifies and recommends policies and other the allocation of funding. Some components of measures conducive to the promotion of exports PROAGRI include activities that relate to the de- from Mozambique. velopment of standards, technical regulations, and The Institute also has a Trade and Market In- codes of practice. formation Centre and a current database, con- taining relevant information on Mozambican ex- Trade Performance and Outlook porters, as well as on products that Mozambique can export. The country has taken various steps to promote and The IPEX statutes are under review to bring the encourage exports. This activity is part of: institution up to date in the new economic and busi- ness environment. It is thus expected that IPEX will * The government's 2000-04 five-year Program, take on a more active role in the advancement of approved by Resolution No. 4/2000 of 22 March, production destined for the export market and in which establishes that "in relation to foreign the creation of a business foundation for this pur- trade, one of the priority activities is to win pose. IPEX participates in various activities for the and consolidate new markets for export prod- development of exports, with emphasis on projects ucts, with emphasis on nontraditional products, that have been mentioned elsewhere in this doc- through better knowledge of foreign markets and ument (http://www.ipex.gov.mz and IPEX 1998. the quality of the products" and Direct6rio dos exportadora mocambicanos). * The Trade Policy and Strategy, approved by the Council of Ministers in Resolution No. 25/98 of Toward an Export Development Strategy in Mozam- 1 July, that establishes the increase and diversifi- bique. IPEX identified the need to formulate ex- cation of exports, particularly nontraditional port strategies for pilot sectors identified as having products and winning new markets for exports export potential. as priorities in foreign trade. Thus the International Trade Centre of UNCTAD/ WTO is providing assistance for the preparation of The Ministry of Industry and Trade is the body re- a project document for a study on "Wood Manufac- sponsible for trade policy. The ministry relies on turers with an Artisan Component." the National Directorate of Trade and the Export The objective of the project is to stimulate the de- Promotion Institute (IPEX) to put this policy into velopment of trade and the export of higher value practice. goods to be sourced from the rural areas, thus con- tributing to income and employment generation, Export Promotion and ultimately to the reduction of poverty. Export Promotion In the first phase, IPEX, together with relevant The Export Promotion Institute (IPEX). The Ex- private and public sector stakeholders, will be as- port Promotion Institute (IPEX) has administra- sisted in the formulation of an export strategy for tive and financial autonomy. It was set up in No- the pilot sector. During the second phase the project vember 1990 to spearhead the export promotion will support IPEX and the relevant partner institu- efforts of the Government of the Republic of tion in implementing the strategy. Mozambique. IPEX began its activities in April 1991 with the objective of promoting and coordi- nating the execution of policies to develop national Antiat foriDvlopmentDAn i exors African Agriculture (IDEAA) exports. Currently, IPEX offers technical assistance, The Initiative for Development and Equity in advice, and trade information to Mozambican African Agriculture (IDEAA) is a program funded exporters, promotes and publicizes the country's by the Rockefeller and Kellogg Foundations that exports abroad, undertakes market research and operates in six SADC countries, namely South studies on specific exportable products, assists Africa, Botswana, Lesotho, Malawi, Swaziland, and foreign buyers and organizes and coordinates the Mozambique. 83 Standards and Global Trade: A Voice for Africa This program was designed to strengthen insti- According to its terms of reference, the aim of the tutional transformation in the economic upstream task force is to analyze the market potential for agri- and downstream of high-value cash crops, pro- cultural products m local and foreign markets. moting these crops among smallholder farmers so The task force has identified seven products that they could direct their production more to the with potential for export: honey, beans, ginger, cas- market. sava, paprika, sweet corn, and banana. The South IDEAA Mozambique was created at a national African market is working to determine what are conference held in Maputo in February 2002. The the preferential tariffs and the size of the market for partners in this program are IPEX, IAC/CLUSA, these products, and then identifying those where it AFRICARE, the Provincial Directorates of Agri- is worth concentrating efforts. culture, and some farmers in the provinces where At the same time, quality specifications are being implementation is to begin. The conference par- identified, along with the sanitary and phytosani- ticipants decided that the cash crop to receive tary measures that could affect marketing of these IDEAA support should be oilseeds, with major em- products. phasis on sesame and sunflower. The main oilseeds Concerns regarding the general situation in rela- produced in the country have the following area tion to the trade protocol include the customs sys- distribution: tem, aspects of the customs tariffs, high interest rates, and weak transport and communications * Groundnut: Nampula, Inhambane, infrastructure. Manica * Sesame: Nampula, Zambezia, Preferential Mechanisms for Access to Markets. Manica Among the various mechanisms for preferential * Copra: Nampula, Zambezia, market access the following were identified in this Inhambane phase. * Sunflower: Nampula, Manica, Inhambane ACP (Africa, Caribbean, and Pacific) Group. Mozam- * Castor oil plant: Nampula bique signed the third Lome Convention in 1984, and became a member of ACP (Africa, Caribbean, Manica province was chosen for the start-up of the and Pacific) group. It benefited from favorable terms four-year program, with sunflower as the chosen of commercial relations, namely the export of prod- crop, which will be followed by sesame. ucts to the EU markets with the exemption from The program to be developed will include ac- customs duties. tivities to improve production, post-harvest man- agement and processing, and technical assistance Generalized System of Preferences (GSP). As a de- and technological support. The program is ex- veloping country, Mozambique also benefits from pected to expand to Nampula province in the sec- the Generalized System of Preferences (GSP) for ond phase. industrial and agricultural products. External Market Task Force. The National Di- The African Growth Opportunity Act (AGOA). The rectorate of Trade (DNC) in the Ministry of In- African Growth Opportunity Act (AGOA) opens dustry and Trade (MIC), the Office for the Pro- the American market to Mozambique in both motion of the Commercial Farming (GPSCA) of textile and agricultural products. Textiles and the Ministry of Agriculture and Rural Develop- fishery products were already approved for export ment (MADER), the Export Promotion Institute (http://agoa.gov). (IPEX), the National Institute for Standardisation and Quality (INNOQ) and the Confederation of Zambia, Malawi, Mozambique Growth Triangle Economic Associations of Mozambique (CTA), (ZMM-GT). As an initiative by the private sector constitute the External Market Task Force. The in Malawi, Mozambique, and Zambia, supported EC-Food Security Unit (FSU-EC) and the by the United Nations Development Programme MIC/FAO/EC Marketing Project, coordinated by (UNDP), the Zambia, Malawi, Mozambique MIC, support this group. Growth Triangle (ZMM-GT) was inaugurated in 84 Bridging the Standards Divide: A Case Study and Action Plan for Mozambique November 2000. It seeks to integrate market op- Other Facilitation Mechanisms for Trade portunities across transnational economic zones. Measures for the Protection of Intellectual Tt various Property Rights. The Department of Industrial TechenisAm Torad preerontool. Amongetaccessi the Property at the Ministry of Industry and Trade was mechanisms for Pr etil market ace is the created in 1995 and is responsible for the indus- SADCTrad Prooco detiledbelw. Oe ofthe trial property rights including trademarks, service main advantages of this Protocol is the establish- . . . i ment of a regional market that may attract foreign marks, patents, industrial designs, models, and so men ofa rgioal arkt tat ay ttrct oregn on. The Ministry of Culture is responsible for investment to Mozambique. It also represents a step opyrihts. toward liberalized international trade, through a copyrights. phased reduction and elimination of barriers to erty Organisation (WIPO) in 1996, the Paris Con- trad wihina tmefameof igh yers.Speial vention in 1997, and the Madrid Agreement in attention has been given to harmonization of stan- 1998. in adto, Moambie joined thePaent i dards an technial reguations.1998. In addition, Mozambique joined the Patent dards and technical regulations. Cooperation Treaty (PCT) in May 2000. Mozam- The S Creocobique is a member of the African Regional Indus- trial Property Organisation (ARIPO). * To further liberalize intraregional trade in goods trial Property CodenwastapprovedPby The Industrial Property Code was approved by and services on the basis of fair, mutually equi- Decree No. 18/99 in May 1999. This code establishes table, and beneficial trade arrangements, com- a special regime for industrial property rights and plemented by Protocols in other areas; obligations on the basis of the concession of patents * To ensure efficient production within SADC, for inventions and utility models, the registration reflecting the current and dynamic comparative of trademarks, designs, industrial models, and busi- advantages of its members; ness names, and the repression of the infringement * To contribute toward the improvement of the climate for domestic, cross-border, and foreign investment; Major Markets Summary of Internal and * To enhance economic development, diversifica- External Barriers tion, and industrialization in the region; * To establish a free trade area in the SADC Region. The main export crops are sugarcane, cotton, cashew, tea, tobacco, and timber. These crops and This protocol was signed on 24 August 1996. Three their processed products are negatively affected by countries in the region have not yet signed, namely international prices. This is aggravated by the lack Angola, Seychelles, and the Democratic Republic of subsidies, which could help during price reduc- of Congo. Mozambique ratified the Protocol on tion when production costs are higher for the same 28 December 1999, and it went into force on product from countries with protection policies for 25 January 2000, with implementation beginning production and trade. on 1 September 2000. The import and export analysis shows that there Each member state set up a task force to ensure was a reduction in the export of agrofood products the implementation of the protocol. A Protocol Im- from 52.1 percent in 1999 to 43 percent in 2000. plementation Unit was set up at the SADC head- Imports of the same group of products also de- quarters in Gaborone, Botswana. In Mozambique, creased from 21.2 percent in 1999 to 14.4 percent. an interministerial working group functions in the In 2000, citrus exports fell from 14.9 percent to 0.7 Ministry of Industry and Trade to deal with imple- percent (Table 2.7). For instance, citrus plantations, mentation of the SADC Trade Protocol. The group mainly for exports, have been removed and replaced has representatives from the private sector and by other fruit species. Production from the family INNOQ and began functioning in 1998. sector only supplies the domestic market. This protocol includes special agreements on tex- In 1999, cereals were the main imported agricul- tiles, clothing and sugar, which are contentious ar- ture product representing 9.9 percent of total im- eas in SADC. To facilitate trade, issues of standards ports. In 2000, however, it had fallen to 5.2 percent. and technical regulations are dealt with in detail in In the last three years some nontraditional com- the Protocol (see Annex C). modities have been exported, namely pigeon pea, 85 Standards and Global Trade: A Voice for Africa Table 2.7 Import and Export Values of Agro and Food Products Declared in 1999 and 2000 (thousand USS) Description Exports 1999 Imports 1999 Exports 2000 Imports 2000 Total productsI 270,893 685,234 363,962 1,162,270 Total agro food products 141,042 145,052 156,522 167,367 Subtotal live animals and their products 75,136 13,306 101,080 28,289 Fish, crustaceans,other seafood 74,768 ip 7,243 100,652 7,647 Live animals, meat, eggs, milk and their products 368 6,063 428 20,642 Subtotal plant products 49,198 I! 78,221 32,621 75,184 Live plants, edible vegetables, plants, roots and tubers 2,349 2,728 22,740 3,869 Fruits, coffee, tea and spices 40,481 578 2,666 3,538 Cereals 1,818 68,168 487 60,166 Milling products, malt, starches, oilseeds and seeds, gums and plant extracts 4,550 6,746 6,728 7,611 Subtotal animal fat and oils and waxes 5,492 21,602 1 3,747 12,407 Subtotal food, beverages and tobacco 11,216 31,923 19,074 51,487 Processed meat, seafood, cocoa, cereal, fruits and vegetable, and other food 60 7,737 15 | 17,388 Sugar and sugar products 5,506 14,628 4,324 12,233 Beverages, alcoholic drinks and vinegar 235 5,342 409 15,816 Food industry subproducts ' animal feed 2,828 fl 2,024 6,504 2,987 Tobacco and tobacco products 2,587 2,192 7,822 Ji 3,063 Source INE (1999, 2000) sesame seed, groundnut, and castor oil seed. They els, but were later forced into closure by the com- are produced by the family sector and the traders petion from higher prices offered for raw cashew receive support from some NGOs and firms to nuts by Indian importers, putting thousands of find foreign firms interested in these products. people out of work. Other factors included obso- Years ago such crops were exported, but during the lete machinery, aggravated by years of poor main- civil war, the abandonment of rural areas and ac- tenance, and the increasing cost of operations. To- cess problems interrupted production and ex- day the main cashew product exported is raw ports. Recovering the markets lost during that cashew instead of processed cashew. However, In- time, or conquering new markets is a challenge to dian prices for this commodity have since fallen. producers. The quality of the product has also decreased be- Cashew kernels were a main export product for cause of diseases of the cashew trees. Mozambican many years, but production fell during the 1980s. cashew kernels used to be well known in the U.S. The largest factories invested in modernization and and European markets, and although the quality of began to recover their production and export lev- some factories' production fell, others maintained Bridging the Standards Divide: A Case Study and Action Plan for Mozambique the international standards, as can be seen by the country began to import fruit, mainly from South few complaints received. Africa. Maize has been exported through the normal Most fruits and vegetables are produced by the commercial system, but when the prices in neigh- commercial and family sectors. They can contribute boring countries are more attractive, rural farmers to improving the national economy and also bring sell their maize directly, through cross-border trad- benefits to their producers, pickers and processors ing, especially in the northern provinces of the by generating income, health and nutrition. The country. private sector-individuals, companies, and associ- Cotton is also an important crop. During 1998 ations-owns the organized plantations that are and 2000 the production volume reached about cultivated semi-intensively or intensively. Family 100,000 tons, twice of the previous year because sector production means fruit trees and vegetables of favorable climatic conditions and the good fi- are planted and sown on family plots around the nancial situation of cotton ginneries, factors that home or in the fields, with minimal formal farm- declined in 2000. The quality of this product is ing operations. usually not very high because its production sys- It must be stressed that citrus, cashew, and co- tem lacks irrigation and uses a quality of seed that conut are species that are usually dealt with indi- produces a crop with short fibers. The classifica- vidually, given the economic importance of the tion departments in Mozambique have some or- fruits and by-products as exports and their use for ganizational problems and the buyers complain direct consumption and for processing as food or that the product they receive does not match the nonfood products. However, other fruit trees or classification given. This is apparently connected other crops are replacing the large citrus plantations to the need for training and supervision in the that once existed. Cashew is mainly grown in the classification offices (they are dependent on the family sector, with few organized plantations. The Cotton Institute-IAM). main coconut plantations belong to big agricultural companies, some of which also carry out industrial Major Problems in Standards for Market Access or commercial activities. We have decided to examine in more detail the The other fruits, such as mango, banana, papaya, fruits and vegetables, cashew, sugar, cotton, peanut, and pineapple, are also important domestically, and seeds subsectors, because already there are with most production aimed at the local market for plans for short-term action to increase and diver- consumption as fresh fruit. They contribute to fam- sify output in these subsectors to meet demand on ily income and to improving the general diet. Pro- the domestic market and to increase exports. duction is higher than consumption capacity as fresh fruit, and there is neither the knowledge nor The Case of Fruits and Vegetables in Mozam- tradition of home processing of by-products, which bique. General Information. Mozambique's cli- means that a significant proportion of the produce mate, soil, and topology allow the production of spoils. both tropical and temperate fruits and vegetables, Banana is an exception because although most for local consumption and for export. Long-term production is for fresh consumption in the local research on fruits and vegetables dates back many market, interest and opportunities to turn it into an years, and gene banks were installed in agricultural export product are increasing. But the lack of phy- research centers. Tested and approved cultivars were tosanitary treatment may cause quality problems disseminated and fruit tree cultivation was pro- that some producers (mainly small) are experienc- moted throughout the country. However, the re- ing when they try to export. search and fieldwork were interrupted because of No real data on the quantity of plants or species the general situation in Mozambique, and the con- and production of fruit and vegetables exist. An tinuity of information as well as some cultivars were Agricultural and Livestock Census 1999-2000 was lost, on account of lack of maintenance of the gene undertaken recently and some studies on fruit trees banks. and agroindustry at the provincial and national Mozambique used to export fruit, mainly citrus levels and FAO data also provide indications of and banana, but due to the war and population samples and estimates from different parts of the movements, the trees were abandoned, and the country. However, the figures vary, which may be 87 Standards and Global Trade: A Voice for Africa Table 2.8 Fruit Production in Mozambique (thousand ton) Fruit 1965 1970 1975 1980 1985 1990 1995 2000 Coconut Cocus nucifera 274 407 ll 400 450 400 420 438 300 Cashew Anacardium occidentale L. 136 184 .i 188 71 25 23 33 35 Citrus Citrus spp. 25 33.5 38.5 41 .5 40.5 48.5 34.7 29.5 Orange C. sinensis (L) Osbeck 12.5 17 20 22 20 26 15 1 3 Grapefruit and shaddock C. paradisi Macf. e C. grandis (L) Osbeck 11 15 I 17 16 15 17 15 13 Lemon and lime C lemon e C. limetoides I 1 1: 1 3 5 S 4.2 3.2 Mandarin C reticulata Blanco 0.5 0.5 l 0.5 0.5 0.5 0.5 0.5 0.3 Banana Musa cvs 25 34 60 65 70 85 83 59 Mango Mangifera indica L. 33 35 30 30 30 34 30 24 Pawpaw Carica papaya L. 20 32 35 38 40 45 41 31 Pineaple Ananas comosus (L) Merr. 17 18 1 2 13 13 15 15 13 Source FAO yearbooks because of the methodologies and criteria used and package imported juices and compotes, pickles, the areas covered by the surveys (Table 2.8). and chutneys. The fruit and vegetable products Indigenous species of edible fruit and vegetables available in the Mozambican market are mostly that grow naturally are much in demand by the imported. rural population for consumption and for use in In general, producers paid little attention to qual- traditional medicine, becoming the main source of ity and the few laws and regulations that are in force food in areas where drought prevents cultivation or in Mozambique related to food safety need to be destroys annual crops. Some of these products, such updated. The process of developing standards and as paprika and mushrooms, are being promoted codes of practice for these products is still embry- with a view to export. Mushroom picking has been onic, and must be speeded up, because the lack of encouraged and supported by NGOs in Manica and standards and codes of practice helping to guaran- Nampula provinces, because they can be considered tee quality and food safety in the different steps a biological product worth promoting, particularly along the fruit and vegetable food chain could be- for export. come a significant constraint in the development of Some of the existing processing plants were set agroindustry. up after the 1960s, when production overtook the The local raw materials have quality problems be- capacity of the fresh food and export markets. cause of the varieties chosen, which are not the most These plants processed fruit and vegetables such as suitable for industrialization, their location in dis- citrus, pineapple, papaya, tomato, pumpkin, and tant, scattered, and hard to reach areas, and the in- green beans, but ceased operations, mainly because adequate transport, cold storage, and handling con- of fall in production or lack of raw materials (in the ditions that contribute to product deterioration. case of citrus), and the high costs of raw materials National production of raw materials has not and other components that made the products benefited from incentives, either fiscal or credit, more expensive than similar imported products. thus raising the costs of production and conse- Most of the fruit and vegetable industrial pro- quently the prices of the finished products. cessing units are currently closed, and some facto- The technologies used by the active industrial ries have been dismantled. The companies that are units for adding value to, and transforming, fruits in operation prepare juices from concentrates or and vegetables, are based on manual operations. Bridging the Standards Divide: A Case Study and Action Plan for Mozambique Packaging is usually imported and is a problem that be respect for local consumer habits (in India needs to be addressed during the development of mangoes are considered a monsoon season fruit, this sector. and have a cooling effect). Mozambique could As domestic production is not enough, products promote exports to these countries if it develops from South Africa, Portugal, other European coun- and produces the cultivars that are most in de- tries, the United Arab Emirates and others supply mand and have the highest consumer acceptance the domestic market. Many of the imported prod- there. ucts enter the country illegally and are put on the Development of cultivars forms part of the fruit market with no control by the authorities respon- tree project proposal made by MADER in 1995, sible for inspection and quality control. Many of which planned to install a fruit tree seedlings pro- these products have no expiry dates shown, while duction center in Sofala province for distribution others have already expired, a situation that worries to the family sector. The 10-15-year strategy for both consumers and the local producers. developing citrus and other fruit crops that was pre- Food import policies do not differentiate be- pared in November 1987 also gave priority to tween products, with the same taxes applied to lo- rehabilitating existing orchards and promoting cal and imported products. Most imported prod- citrus and other fruit trees nationally. ucts are thus sold at prices below those of the The AGOA Programme, offers producers an op- domestic products. The domestic producers con- portumty to develop the production and export of sider the import system to be a barrier to the de- quality fruit and vegetables. Respect for the best velopment of a national industry. Illegal products practices to be defined will be essential, all the way also constitute a threat to public health. from the field to the packing stage. The possibility The analysis made by Technoserve in March of exporting dried fruit is also being considered 2001-"A Vision for the Fruit Industry in Mozam- within the AGOA framework. bique-Building a Globally Competitive Tropical The main constraint is probably the lack of Fruit Industry"-shows that Mozambique could be awareness of the market forces by the Mozambi- a key actor in tropical fruit production and export can producers, who, for many years have supplied at the global level within 10 years. The analysis con- products for centralized institutions, like the In- siders the need to restart the production and export stitute for Cereals. In addition, today the markets of high-quality bananas, and expand production are much more demanding and they impose qual- geographically. It also considers the introduction of ity standards based on high-technology produc- new products, namely mango, litchi and lime, for tion and packaging. Because Mozambican produc- regional, Middle Eastern, and Indian markets, the ers have been absent from international markets latter two with seasonal advantages. for many years, they are less aware of the increas- An earlier study done by Technoserve in January ing demands for better quality. More important 2001 on "Species Selection for the Middle Eastern still is the low technological level of agriculture, and Indian Markets for Mangoes and Citrus Fruits" usually rainfed, not mechanized, and with very lit- concluded that India, Pakistan, and the Middle East tle use of inputs, thus very little control of plant could be potential markets for certain cultivars of diseases that contribute to reducing the quality, es- mango (Alphonso) and citrus (easy peeling citrus), pecially of fruit. Usually the producers are not which are preferred by consumers in those coun- prepared, either because of the lack of funds or the tries, so long as they are available before or at the conditions to guarantee essential agricultural beginning of those countries' seasons for these practices, to buy the seeds of the varieties that the fruits. The season for fruit in Mozambique is from market wants. There should be a closer linkage be- September to March, while the fruit season in those tween the buyer and the producer, even some countries is from March to August, depending on credit facilities should be available to help improve the species and variety. For example, mangoes are Mozambican knowledge of the market and the in short supply in the Indian market from Septem- quality control systems. ber through to late February, while the season in Mozambique is from November to March. Institutions Involved. The Ministry of Agriculture In addition, the quality and packaging must be and Rural Development (MADER) is the state body improved (for the Middle East), and there must in charge of developing the fruit and vegetable 89 Standards and Global Trade: A Voice for Africa subsector. The Production Department of the programs for agriculture, and are distributed to DINA, which has a fruit-farming sector, is di- families affected by natural disasters. rectly responsible for overseeing its activities. Other departments of MADER, such as GPSCA, have Characterization of Some Mozambican Fruit Trees. promoted fruit and vegetable production and pro- (a) Citrus cultivation in Mozambique dates from cessing. A study of rural agroindustry, including the 1920s, the most common species being oranges, fruit and vegetables, is currently under way with the tangerines, lemons, and grapefruit, grown in com- aim of identifying the crops to be developed in mercial orchards that are ordered and use grafted some provinces and gathering information that trees. Most production was destined for fresh fruit could interest potential investors. exports. These orchards are concentrated in Ma- INIA is responsible for research, through its fruit puto and Manica provinces. There are also small tree sector, where work halted in 1992 but was re- informal orchards, using trees grown from seed, the cently reactivated. INIA is currently rehabilitating production of which is destined for the domestic the gene bank containing around 100 varieties of fresh fruit market in every province. These are mango at the Umbeluzi Agricultural Station, and mainly in Inhambane and Zambezia, with oranges plans to recuperate the collections of mango culti- and tangerines outnumbering (the tangerine vars and organize gene banks for other fruit species species cultivated in Inhambane is well known, and in different parts of the country. is only produced in that area) shaddock (Citrus The Ministry of Health is responsible for estab- grandis L) or pomelo. lishing and enforcing legislation related to food- Orange production represents 40-50 percent of stuffs. The Ministry of Industry and Trade, through total citrus production in Mozambique in the pe- the National Directorate of Industry, controls some riod from 1965 to 2000, followed by grapefruit and of the agroindustrial production. pomelo (35-45 percent), and lemon and lime (3-12 The Eduardo Mondlane University Agronomy percent). Though tangerine production is insignif- and Forestry Faculty has also carried out studies, icant at the national level, it has considerable weight written manuals, and organized training courses for in Inhambane and also in the southern markets, fruit farmers. particularly in Maputo City. INNOQ, the institution responsible for the de- Documentation shows that 6,180 tons of citrus velopment of Mozambican standards, defined were produced in 1960, concentrated in the south- fruit and juices as one of its priorities for the ern region (LOUMAR undated), rising to 144,000 preparation of Mozambican standards, and is in- tons in 1977 (MA 1997). In southern Mozambique volved in developing harmonizing standards for the Citrinos de Maputo state enterprise owned them, particularly on fruits and juices at the around 2,000 hectares of citrus groves until the regional level. 1980s, but by 1995, it had only 301 hectares (UTRE In 1995 the private sector created FRUTISUL- 1995) following privatization and parts being sold Southern Mozambique Fruit Growers Associa- off to different buyers, namely LOMACO, AGRO- tion-which is associated with FRUTIMEL Ltd. FARM, and Citrinos de Umbeluzi. LOMACO and FRUTISUL, the first fruit farmers' association of AGROFARM renewed part of their plantations and Inhambane, Gaza, and Maputo provinces, has or- continued to produce and export citrus. The ganized courses on fruit tree production and has LOMACO area has now been sold, Citrinos de Um- conducted studies on the commercial production beluzi has ceased production, and AGROFARM has of some trees. Its priorities are to support the fruit replaced some of the citrus with other species. In farmers, encourage them to form associations at central Mozambique citrus production reached provincial and national levels, and seek partner- 15,000 tons in Manica in 1984, of which 57 percent ships for promoting and developing fruit trees and was oranges, 34 percent grapefruit, and 9 percent supporting the producers (Associa,ao de Fruticul- lemons (CAIM 1991). The Citrinos de Manica agri- tores do Sul de Mocambique 1995). cultural company was privatized and sold to the Various NGOs are active in the sector, and have Joao Ferreira dos Santos group, which continues to distributed fruit tree seedlings and vegetable seed produce and export citrus. In the early 1990s the as part of their rural development programs. These Citrinos de Manica concession area was 4,500 items have also been included in the emergency hectares, with a total area planted with oranges and 90 Bridging the Standards Divide: A Case Study and Action Plan for Mozambique grapefruit of around 608 hectares (UTRE 1995). juice. It also produced 500 tons of compote, 450 Parts of this area are currently abandoned. tons of crystallized fruit, and 1,145 tons of sweets Export accounted for 60 percent of the total pro- and confectionery. Although national production duction. Citrus exports grew from the 1950s to the capacity of 6,000 tons per year was available, the early 1970s, growing from 4,000 to 10,000 tons. new line was expected to ensure continuous growth Oranges and grapefruit dominated exports, but of citrus production. In 1992 a new bottling line for tangerines and lemons also figured. The grapefruit juices reconstituted from fruit concentrates was in- surplus and some of the lemons that were unsuit- stalled in response to national development and able for export were distributed to social units and with the prospect of the emerging free market for used for animal feed. Initially the importers were citrus by-products. The citrus processing line was European countries, some Asian countries, and almost paralyzed for 10 years, processing a mere 50 some Southern African countries, but from the late tons of grapefruit per season so as to use the peel 1970s through the 1980s exports were mainly to the for crystallized fruit and jam. No use whatsoever Eastern European countries. The Joint enterprise was made of the grapefruit juice, because there was LOMACO alone exported around 2,000 tons per no local market for it. Orange production in the year, selling its produce to Swaziland in its last years south fell every year and could not supply the in- of activity. dustry. In 2000, the processing line only worked for Citrus processing includes fruit improvement 52 days. The best year was 1984, when the factory and preservation, and also its transformation into processed 4,300 tons of fruit, 3,000 tons of by-products. In the 1960s and 1970s, 14 citrus- grapefruit, and 1,300 tons of oranges. The natural packing centers were established in Maputo and grapefruit juice was sold to SOVIM, a company pro- Manica, where the fruit was cleaned, selected, and ducing wine and distilled drinks for the domestic packed-mostly for export. Only five centers are market. But this company, state-owned at the time, currently operational. was privatized, the equipment was dismantled, and The ports of Maputo and Beira have cold stor- the installations were turned into a supermarket for ages owned by the Maputo Produce Terminal Com- a South African company. LOUMAR is currently pany and managed by the South African company producing a small quantity of juice from imported CAPESPAN (formerly OUTSPAN) and a Zimbab- orange concentrate. wean company respectively, where citrus and other SUMOVIT was established in Chimoio, Manica perishable produce for export from South Africa province, in 1968, and had the capacity to process (Maputo) and Zimbabwe (Beira) are stored. The around 4,000 tons of citrus a year (oranges and Maputo Cargo Terminal (MCT) (formerly FRIGO), grapefruit), producing 178 tons of concentrates and which is managed by CAPESPAN, has cold storages 500,000 liters of juice in bulk. At the time the fac- in Matola that were built in the 1980s for conserv- tory was of great importance to local agriculture, ing export fruit and vegetables, because both given that two-thirds of national citrus production Mozambican and the South African produce is came from there. The factory's production fell exported through Maputo. steadily until 1981, when it ceased production be- Mozambique has two citrus processing units cause of management difficulties and the obsoles- located in Maputo and Chimoio, LOUMAR and cence of its machinery. In 1982 a new bottling line SUMOVIT, respectively. Both their fruit processing was acquired, but was not immediately installed. In lines are currently paralyzed for lack of raw mate- 1992 the state enterprise was privatized and bought rials. Until the early 1990s the production of these by LOUMAR Industries, taking the name Agro- factories represented 90 percent of the national fruit Industrial Company of Manica-CAIM, Ltd. At juice consumption, particularly in the south; the re- that time the factory was rehabilitated, and new maining 10 percent was imported or came from equipment was installed to produce concentrates small local producers. for export. The factory started production in 1997 LOUMAR Industries was established in 1964 to with the new equipment, and only worked for three produce crystallized fruit, using orange peel and years (during one year it was managed by the Joao pulp from other fruits. The production line in- Ferreira dos Santos group). All the concentrates stalled in 1995 had a capacity for transforming produced were wasted, because neither an external 14,000 tons of citrus into 6,000 liters of bottled nor a domestic market was found. This factory is 91 Standards and Global Trade: A Voice for Africa presently being handed over to Al Omran Agro In- (c) Pineapple (Ananas comusus L.): There are dustrial Ltd., which is currently working from plantations of the ananas variety of pineapple in Beira. Zambezia province and pineapple plantations in Another company that should be mentioned is Maputo province, representing around 115,000 Palmar Ltd., which used to produce citrus syrups tons of pineapple. Production is for fresh con- and tinned fruits and vegetables (compotes, jams), sumption, and there are no surpluses for supplying but currently only produces small quantities of industrial units. The Maputo pineapple plantation jams, which are sold in bulk at the factory gate. was owned by the SOMOPAL Company, which also (b) Mango (Mangifera rndica L.): There are some had a pineapple canning factory until the 1980s. It organized mango plantations in Manica province, is now owned by Bonifica-Cabana Co., but the unit with trees that were planted before 1975 but aban- has been dismantled. There is considerable family doned for many years. The mango is a fruit tree that sector production in Gaza, Inhambane, and grows throughout the country, scattered around the Zambezia provinces. rural areas close to people's homes and fields. The SOMOPAL, located in Matola, was the only fac- fruit is eaten fresh, and much is wasted because con- tory in Mozambique that processed pineapple, sumption is lower than production. producing tinned pineapple rings and chunks, In Mozambique most mango trees were planted compote, and jam. It also produced vegetables, in- from seed, which means that the quality of the fruit cluding tinned tomato puree, peeled tomatoes, and is extremely variable and often low. There are al- beans, and tropical fruit compotes and sweets. This most no organized orchards with grafted trees. The unit was operational until the 1980s, and received export of mangoes was tested in the 1970s, but did new pineapple processing equipment in 1990, but not last long. this was never installed. Later the company was pri- There was no industrial use of mangoes until vatized and it never worked again. three years ago. At the family level only a few people The international market prefers pineapples to know how to produce Juice, jam, and other pre- abacaxi for their flavor and because they are smaller. serves. During 1999/2000 a mango processing unit Frutisul believes there could be export possibilities. was established in Beira, in the central region, with (d) Coconut (Cocus nucifera): Coconuts grow an installed capacity to process 12,000 tons of along most of the Mozambican coastline, and mango per year. The factory is owned by Al Omran particularly in the Zambezia and Inhambane Agro Industrial, Ltd. Around 100 tons of mangoes provinces. They are grown by large agroindustrial were processed in 2000 and around 4,500 tons in units such as the Madal Group, the Zambezia Com- the first months of 2001, producing tinned pulp. It pany, Boror and others, which have huge organized was all exported to Dubai, where the company has coconut plantations, and also by the family sector its headquarters and the main factory for producing in small areas or with a few palms by their homes mango, pineapple, and orange juice and nectar. The and in their fields. In Zambezia, family sector pro- company is already engaged in the export market duction is estimated to represent 57 percent of the for mango and other fruit products, and is thus able total area occupied by coconut palms. to get the Mozambican products into the system. Coconut production grew steadily to reach The concentrate produced in Mozambique is mixed 450,000 tons in 1980. The decrease in production with concentrate from other countries where the since then is probably because of lower yields company has similar factories. With the aim of buy- from aging trees, harvesting green coconuts for ing the CAIM factory in Chimoio, Al Omran Agro consumption, and crop diseases, such as the yel- Industrial, Ltd. plans to transfer its production line lowing disease virus in the central and northern from Beira to Chimoio, to produce mango pulp plantations. from November to February and orange pulp from The main export product is copra. Coconuts, June to September. It also aims to process litchis in both green and mature, are also widely used for November and December and pineapples when food, for example, coconut water and the endocarp, production is restarted in Manica. There is also an which is eaten grated or used to extract coconut interest in producing tomato concentrate, taking milk. Palm juice is extracted from the tree and used advantage of an old concentrator in the factory that to produce vinegar and as a yeast and sweetener needs reconditioning. for breads and cakes. It can also be drunk fresh, 92 Bridging the Standards Divide: A Case Study and Action Plan for Mozambique fermented, or distilled. The copra is exported or "mafala'" the "macuAcua" (Strychnos spinosa LAM. processed to make coconut oil for soaps and other e Strychnos innocua DEL.) and the "tinziva" (Dial- by-products. Coir is the commercial name for rum schlechterr HARMS). the fiber extracted from the coconut mesocarp, and has multiple uses, such as making matting, uphol- Specific Features of Some Vegetables. Vegetable stery, paintbrushes, scrubbing brushes, and packing production is heavily conditioned by fresh con- material. Charcoal is obtained from the slow burn- sumption, given that the processing industry is ing of coconut shells. More recently, the trunks of quite small. Official statistics for vegetable produc- coconut palms have been transformed into planks tion are based on a sampling of producers, which and logs for building. Coconut oil was once a big means that real production is higher than the export but markets were lost during the war. Some figures provided in this report. factories buying copra to process oil have com- Out of 50,000-70,000 tons of vegetables per year, plaints about quality but there has been no tomatoes represent 20-40 percent. Production grew systematic approach to this problem, only a case- regularly up to 1996/97, and has since stablhzed by-case price discussion. at around 70,000 tons per year despite tomato (e) Other fruit trees: There is considerable fam- production having fallen from 1995/96 onward. ily and small-scale production of banana, papaya, Maputo and Gaza provinces are the largest pro- guava (Psidium guajava), avocado (Persea ameri- ducers of vegetables. Producer associations organ- cana), passion fruit (Passiflora edulis), and other ized by the General Union of Cooperatives and the fruits throughout Mozambique's ten provinces, National Union of Farmers and Cooperatives have which supplies the local markets. ensured production and supplied the markets in Temperate fruits such as apples, peaches, urban areas and consumption centers. damsons, plums, figs, and grapes are also grown and Commercial farmers produce vegetables in con- sold on the uplands of Niassa (north), Manica (cen- centrated areas, whereas the family sector owns ter) and Namaacha (south). Litchi production small plots in lowland areas together with other (Litchi chinensis) takes place in Nampula (north), crops. Peasant associations also play a significant Manica (center) and Maputo (south). role in vegetable production and marketing. Veg- Banana is produced throughout the country, in etable production (tomato, onions, greens, and plantations in Manica, Zambezia, Gaza, and Ma- fresh maize) has always been an important source puto provinces, by companies (Inacio de Sousa) of income for peasants in the city green belts and and other small- and medium-sized producers. in the Ch6kwe irrigation system. There is an Association of Maputo Banana Pro- In Gaza province the Ch6kwe area was a major ducers. Production is essentially for one's own producer both for immediate consumption and for consumption and the local market, while there has the industrial units in the area and in Maputo City. also been some export from Manica and Maputo The Chilembene area was part of the HORTIL to neighboring countries. South Africa, which was Company that was created in 1983, which was taken the main buyer of Mozambican bananas, devel- over by LOMACO in 1986. The factory for pro- oped its own research and production and has cessing tomatoes and other vegetables in Chflem- transitioned from being an importer to an ex- bene also has an area of 500 hectares for produc- porter. Most of the banana produced and pre- tion, watered by a gravity-feed system. The factory ferred in Mozambique (Cavendish) have physical and production area are currently up for sale. The characteristics that do not meet the requirements floods of 2000 partially destroyed the factory, of the international market, but have a flavor that though some machinery has been recovered. This makes them exportable. Annual banana produc- factory was established in 1960, and was rehabii- tion in Manica province is estimated at around tated by LOMACO in 1987. Before rehabilitation, 35,000 tons (Technoserve-Negrao,A. and Ruface, its tomato concentrate production line had a ca- C. undated). pacity of 990 tons per year, which later rose to 2,500 In addition to cultivated fruit, Mozambique has tons per year. The maximum production actually a tradition of gathering and eating fresh wild fruits, achieved was 1,800 tons per year. Production ca- in particular the marula (Sclerocarya caffra SOND.), pacity was 1,850 tons per year for peeled tomatoes, the "macanica" (Ziziphus mauritania LAM.), the 2,800 tons per year for tomato conserve and 1,750 93 Standards and Global Trade: A Voice for Africa tons per year for other vegetable preserves (Mosca increased knowledge on the requirements of exter- 1988). Of the 1,200 tons per year of tomatoes nal markets, and improve the quality of produce. processed up to 1990, around 300 tons supplied the AGOA provides an opportunity for exporting domestic market (local consumption capacity) and fruit and vegetables, particularly fresh fruit (and 850 tons were exported to Japan and Zimbabwe. especially banana and citrus) and their by-prod- LOMACO also has a production area in Ch6kwe. ucts, in particular, juices, dried fruit, and essential The two units (Choke and Chilembene) reached oils, which is why investments must be made in the production levels of 14,000 tons per year of fresh quality of these products. tomatoes. LOMACO promoted tomato cultivation by the family sector, distributing seedlings to the Recommendations for an Action Plan. The priority peasants who were then contractually obliged to actions identified for developing the fruit and veg- supply part of their produce back to the company. etables subsector are the following: These contracts were not observed because the producers obtained bigger profits faster by selling * To update the policies and strategies for fruit and their tomatoes on the market at the time of high- vegetables that were drawn up some years ago est demand. When the market was saturated, the and draft plans for developing fruit production. prices fell and the produce began to deteriorate, the * To speed the process of drafting standards and peasants would start selling to the factory. Ch6kwe codes of practice and revise or draft new laws and Chilembene, in particular, have good growing and technical regulations to support the differ- conditions for tomato cultivation. ent actors in the fruit and vegetable food chain, namely producers, processors, traders, and con- Conclusions. Fruit and vegetables are among the sumers, with a view to obtaining and maintain- priority agricultural products for development. ing quality and safe products, both for the do- This food group is widely produced and consumed mestic market and for export. These measures throughout the country, in both cities and the will help reduce losses during production, post- countryside, in addition to some items being on the harvest, and processing. list of export products. * To develop awareness campaigns and training The fruit growers' associations have given strong courses in good hygienic practices, HACCP, and support to restarting fruit and vegetable produc- on the application of standards as a way to im- tion, providmg information on the state of the prove quality, protect consumers, and to export. sector in terms of production and marketing, and * To continue work on studying the markets for disseminating decisions and measures taken for fruit, vegetables, and by-products in the region product development. and internationally, prioritizing the most sought- The institutions related to fruit and vegetables after species, which have not yet been analyzed, believe that it is essential to prepare an updated and updating previous studies. master plan and strategy for fruit trees in general * To reactivate the gene collections or banks so that and some species in particular. They also want to the most appropriate cultivars can be set up in improve the identification of potential markets at the agricultural stations and subsequently dis- regional and international levels, and draw up in- seminated and distributed for production. vestment plans for species that will be selected on * To support the organization of producers, proces- the basis of these market studies. sors, and other actors in fruit and vegetable pro- There is no awareness about the need to apply ducer associations, through which programs and good hygienic practices throughout the fruit and activities are usually more successful, being more vegetable chains and the HACCP system is not easily developed and implemented. known, with the result that the basic principles of * To promote agricultural production and renew quality are not applied. The institutions are not and replace plantations taking into account the aware of the need to participate and collaborate species (including wild species), the seasonalityof more actively with INNOQ in drafting Mozambi- the species, product characteristics, and the most can standards and codes of practice on fruit and appropriate production conditions for obtaining vegetables. This participation will certainly help quality products that are in demand on the in- speed up the development of standards, provide ternational and domestic markets. Rehabilitating 94 Bridging the Standards Divide: A Case Study and Action Plan for Mozambique and modernizing the fruit and vegetable indus- (before it started fermenting). The best alterna- try in order to process domestic raw material is tive for using the fruit is the installation of sim- also a priority. ple processing units in rural areas for the pro- • To organize annual fruit trade fairs in the main duction of )uice, accompanied by training of the fruit-growing cities and regions of the country, producers. Brazil's experiment in the production with the aim of promoting fruit cultivation by of clarified juice could be tried in Mozambique bringing together producers, consumers, re- through the creation of small enterprises in searchers, equipment makers, agroindustries, and cashew-growing areas, and the production of other interested parties; other fruit products, other than home-made fer- * To promote the participation of Mozambican mented and distilled cashew juice. In this way fruit in international fruit fairs and to make trade there would be a better use of the fruit, through contacts and arrange technical visits for contacts, consumption by all ages and the waste products exchanges of experiences and collecting infor- could be used in animal feed. mation on fruit production and processing tech- The nutshell was used in irrigation channels at niques and technologies; an experimental level, in a health project, to reduce * To prepare a plan and give technical training to the prevalence of certain common diseases in irri- fruit producers and technicians. gation areas. Estimates indicate that the current tree popula- The Case of the Cashew (Anacardium occidentale tion of the country is approximately 27.5 million L.) Sector in Mozambique. Cashew is generally trees, most of which are now in the smallholder sec- classified as a cash crop, instead of a fruit. tor; plantations accounted for roughly 6 million Cashew trees are distributed throughout the trees. Nampula province accounts for 37 percent of Mozambican coast, being more concentrated in the the total tree population, Inhambane has 26 per- Nampula (main production area), Inhambane, and cent, and Gaza province has 14 percent. Survey- Zambezia provinces. Cashew production comes based estimates of the total tree stock are somewhat mainly from the peasant sector (95 percent of pro- different. These suggest a total tree stock close to 60 duction), where it is mixed with other trees and million (mature) trees, of which 38 percent is in crops. Cashew nut is one of the main export prod- Nampula, 30 percent in Inhambane, and 14 percent ucts from the agricultural sector. in Gaza (World Bank 2001). Cashew nut processing in Mozambique includes There are some organized commercial cashew the use of four components: the kernel (28-30 per- plantations in Maputo and Nampula. Since the cent of the cashew nut's weight) for consumption 1980s there has been a decrease in the yields of and exportation; the cashew nut shell liquid (CNSL, cashew trees because of their aging and the occur- which represents 48-50 percent of the cashew nut rence of diseases, mainly powdery mildew (Oidium weight) used for a variety of industrial purposes anacardii Noach) and pests (Helopeltis spp.) that at- such as brake lining, varnish, lacquer, insecticides, tack the new leaves and flowers not allowing them and medicine; the raw shell as a substitute for char- to develop, rendering affected cashew trees as non- coal in some industrial plants (despite corrosion fruit-producing. Since the mid-1990s some activi- problems caused by CNSL); and the cashew apple ties have been undertaken to increase cashew or false fruit (90-92 percent of the total weight), production through phytosanitary programs to which is consumed either as fruit itself or processed treat the trees, cashew renovation, and production into juice and jams and into fermented and distilled of grafted seedlings resistant to oidium. drinks (cashew alcohol). In 1972, Mozambique was listed as the first world Tests were made in 1990 on juice extraction and producer of cashew nut and the second world ker- concentration in one of the industrial plants, nel producer. According to the former Secretariat through a project financed by UNIDO, with pos- of State of Cashew (SEC), in 1972, 220,000 tons itive results. However, it was observed that trees were marketed by Mozambique, which was 48 per- belonging to different people were spread out cent of the world cashew nut production. Gradu- over great distances, and the distance between the ally, the production decreased until the 1990s trees and the factories was too vast to allow col- because of the civil war and the economic and lection and processing of the fruit within 24 hours political situation in Mozambique, with leadership 95 Standards and Global Trade: A Voice for Africa Table 2.9 Cashew Nut Marketing and Export 199 96 gl 66,510 35,320 2 27,700 1,863.4 310" 1996/97 43,325 16,680 25,283 4,500 1,384< 1997/98 51,716 31,105 25,099 3,910 " 162 2 58,721 30,391 16,300 4,888.3 , 1084 52,608 28,537 2,401.99 20Ol 52,088 27,845 6,276 3,174.19 0s . | . 65,000 24,400 946.06 ,0" Source. INCAJU passing to a group of other producers in the world The major constraints for cashew production, ranking of cashew producers. The production and processing, and exports in Mozambique as indi- marketing has been increasing since 1990, particu- cated by Bawden and others (2001) are: larly after 1995 (Table 2.9). In 1972, there were 14 processing factories with * At the production level, insufficient expansion of a total capacity of 150,000 tons per year, represent- output, low productivity and poor quality go ing one-third of the total exports. In 1991 only eight hand in hand. This is the result of low produc- factories operated and processed 24,000 tons. A se- tivity potential because of enforced neglect dur- rious change in the cashew sector in recent years is ing the civil war, the declining health of the na- the closure of processing plants, one of the most tional cashew grove as trees age, and susceptibility labor-intensive industries in the country, with to pests and diseases like Oidium anarcadium and about 20,000 people working in cashew factories. Helopeltis. Now only small and medium plants, are in opera- * The unavailability of enough improved planting tion processing 5,000 tons per year. material to help improve yields and provide dis- Cashew production was always considered an im- ease resistance, and the low rate of replacement portant branch of agriculture, and there was always of cashew trees in general which is insufficient a specific state institution dealing with this crop, for maintaming the national grove at its current first the Secretariat of State of Cashew, and from size given the natural rate of tree death. 1997, the public Institute for the Promotion of * Limited farmer investment in husbandry given Cashew (INCAJU). This Institute, under the Min- unstable markets, inconsistent policy, and the fact istry of Agriculture and Rural Development, was set that labor demands for cashew husbandry com- up in 1997 to promote the planting of cashew and pete with the labor requirements for staple food other fruit trees and the cashew processing indus- crops. try (see the section entitled "Institute for the Pro- * The low quality of harvested cashews because of motion of Cashew (INCAJU)" the tendency for early harvesting from trees re- The main legislation on cashew is the Cashew sulting in the sale of immature nuts, and inade- Act, establishing that the Council of Ministers must quate drying which causes excessive humidity in formulate a policy on the promotion of cashew cashew lots. This is caused in part by the heavy production and processing, and make the regula- competition for cashew among traders, as well tions on cashew nut marketing, establishing the as in some cases by the fact that some cashew procedures and conditions for cashew nut market- trees are owned communally (but whose har- ing, and set the annual surcharge on the export of vest is not regulated) by villages, resulting in unprocessed cashew nuts. competition for the harvest and early harvesting There is a cashew processors' association at na- and sale. tional level, the Cashew Industrial Association (AICAJU) and an exporters' association in Nam- The processing industry has faced overwhelming pula province, the Commercial, Industrial and challenges in recent years. Chief among these is the Agricultural Association of Nampula (ACIANA). difficulty in acquiring sufficient raw material. Most 96 Bridging the Standards Divide: A Case Study and Action Plan for Mozambique of the cashew processing plants in Mozambique are program has already assisted 53,644 households currently closed. Those that are still operating use with 1,150,415 treated plants. mostly manual technology, which produces the best The ordium control program is included in the quality kernel, and is able to process efficiently at INCAJU budget, from state and several external relatively low scales of operation in spite of its labor funds, and is regarded as one of the main tasks of intensity. The domestic industry has the capacity to this institution. The program has been very suc- process 80 thousand metric tons per year, but must cessful because the trees in the areas where cashew compete with exporters of raw nuts to India be- trees were treated are growing better and produc- cause annual domestic production averages only mg more and better fruit. Cost recovery for the 40-45 thousand metric tons. Other challenges fac- treatment from the owners of the trees is under ing the cashew processing industry include low study with a view to making the program self- quality of incoming raw material (it is estimated sustaining. It will be necessary to train the cashew that between 12 percent and 36 percent of nuts tree owners to identify the disease, maintain the processed are discarded as rotten, diseased, or im- treatment routine and take appropriate care with mature) and difficulty in achieving the necessary the chemicals. volume for efficient production and marketing. A plant multiplication program aims to produce The exporters also face quality and quantity con- 1,200,000 grafted seedlings in 2001/02. The pro- straints that limit the expansion and value of their gram produced 633,382 grafted seedlings in sales. In general, Mozambique's nut exports are 1999/2000 and 1,106,317 in 2000/01. There is need graded with low quality, in mixed-quality batches, to improve the distribution system before the plant- lowering the price. ing season and broaden the education campaign in Mozambique currently lacks a grading system for the family sector on the benefits and care of grafted raw nuts at the domestic level. This is felt to be a seedlings. major impediment to the development of the in- Involvement of the private sector and NGOs in dustry. Specifically, the lack of a grading system is the cashew subsector is encouraged through out- felt to depress producer incentives to invest in pro- sourcing programs to improve assistance to cashew ducing quality nuts, to increase acquisition (trans- tree owners, to enhance production, and to increase action) costs for traders, processors and exporters, cashew marketing. and to hurt the reputation and value of nuts It can already be observed that more producers exported from Mozambique. are aware of the different problems that affect Other problems to be taken into consideration cashew trees, including pests and diseases, and relate to the climate changes in the last few years, therefore more trees are treated. Moreover, peasant causing changes in the production cycle, increase farmers are prepared to accept changes to improve of pests and diseases, reduction of yields, and nut their situation. The yields have increased from 2-4 quality. For instance, in the present season, there kilograms to 12-14 kilograms per tree in treated was cashew fruit in some areas of the southern trees. provinces as late as in March, which is quite The marketing of cashew nuts starts every August unusual. The uncontrolled use of fire to burn in the north and later in the south. The total mar- vegetation and make hunting easier frequently keted cashew nut decreased from 58,721 tons in destroys numerous cashew trees. Some cashew- 1998/99 to 51,894 tons in 1999/00, because of low growing areas were abandoned when the popula- production and problems related to marketing and tion moved because of war and natural disasters. prices. The intervention of INCAJU contributed to To overcome the main constraints on agricultural the increase of marketed production to 53,613 in production, INCAJU is promoting the following 2000/01, and an estimated 65,000 tons in 2001/02 activities, as set out in the Cashew Master Plan, to (Table 2.9). achieve 100,000 tons by 2004. Cashew processing was replaced by exports of A program to control the oidium disease was unprocessed cashew nuts. As mentioned above, started in the agricultural season of 1999/2000 for there were 14 factories employing about 20,000 benefiting a large area and a large number of tree people. Most of the large factories have closed and owners. For 2001/2002 it was intended to achieve the small and medium units process only 10,000 2,500,000 cashew trees under oidium control. The tons per year in five provinces, plus 5,000 tons 97 Standards and Global Trade: A Voice for Africa that are manually processed in three of these The results of INCAJU efforts, with the collabo- provinces. ration of NGOs, producers, traders, processors, and Regarding cashew processing and export, the im- exporters may be considered satisfactory, with in- porters set the price of exported cashews, based on creased production and marketing, more selected their specifications and the international or their nuts and better product quality, trained producers, own country's grading system. Because Mozam- and more and better coordination among different bique has only the rudiments of a grading system players. in place and no accredited laboratories, the ex- The specifications applied in 2001/02 were shown porters cannot negotiate with the importers on the to be a useful tool for the recovery strategy of the quality of the export batches controlled by them or cashew industry, by more careful selection of nuts the low price offered. according to the grades with benefits in marketing In November 2000 INCAJU established a grad- prices to the producers and traders. The application ing system for the 2000/01 season, differentiating of specifications is the beginnig of the learning producers and traders. For producers three sizes process involving different cashew players in im- were set, using the number of nuts per kilogram. plementing them and improving selection proce- For traders, processors, and exporters four types dures by grades. were set, based on yield, moisture content, presence More specific standards for the production and of impurities, immature and damaged nuts, num- processing of cashew and the code of practice for the ber of nuts per kilogram. Marketing of natural im- sector must be drafted as soon as possible. The main mature nuts, mixed with other objects or cooked stakeholders should be involved in the discussion of was not allowed. Moisture must be reduced to the the standards so that implementation is broad and set levels by a solar drying process and packaging successful, using public awareness campaigns and has to use bags with a specific material. The sped- specific training programs. It represents an incentive fication includes the application of additional value to use better production and post-harvest technolo- as a bonus to higher grade nuts and penalizes low- gies with a consequent reduction in losses. grade nuts with a discount (Normas de Comercial- The improvement of the grading system will con- izacAo da Castanha de Caju para a Campanha tribute toward ensuring a better product for local 2001/2002). cashew nut industry, reducing the processing losses The outcome of applying the specification may and increasing the quality and quantity of cashew be considered positive. Many peasants offered kernel exports. The supply of better raw material and better and more selected nuts, receiving better the reduction of production costs may act as an in- prices than they would for a mixed batch; the centive to more investment in the cashew industry. traders were also able to buy different grades at cor- responding prices. It is an important improvement The Case of the Sugar Sector in Mozambique. in product quality because there are more and more Mozambique's sugar sector comprises six sugar fac- informal traders and processors that export nuts tories with sugarcane plantations covering a total of and kernels directly to neighboring countries, and 52,800 hectares in the south and center of the coun- are not dependent of the formal export system to try. There are two units in the south and four units India and other countries. in the center, with size ranging from 5,000 hectares INNOQ is currently working with INCAJU, the at Buzi to 13,000 hectares in Marromeu. All the private sector, and other stakeholders on the plantations have irrigation systems, mainly sprin- development of standards for cashew kernels and kler systems, which cover 60 percent of the total cashew nuts and a code of practice for cashew area. production. All the units have factories, with a total milling capacity of 23,760 tons per day of sugarcane, giving Conclusions and Recommendations. The develop- a maximum annual capacity of 428,000 tons of ment of cashew production is important to the sugar. Cane processing began m Mozambique in economic development in Mozambique. Cashew 1908 (Buzi). The war that ended in 1992 halted is one of the main export products and hundreds agricultural and industrial production in four units, of thousands of people depend on it for their and caused it to fall in the other two units. Sugar livelihoods. production, which had reached 325,051 tons in 98 Bridging the Standards Divide: A Case Study and Action Plan for Mozambique 1972, fell to 16,289 tons in 1986. Production grew The sugar sector's main problem is smuggling again to 31,700 tons in 1990, thanks to external from Zimbabwe, Malawi, and Swaziland, estimated funding, but dropped again to 13,224 tons because at 60,000-80,000 tons per year (a calculation based of the drought and the closure of one factory. on the volume of sugar produced, imports in- Another consequence of the collapse in production spected, estimates of domestic consumption, export was the reduction of the labor force from 45,000 volumes, and factory stocks). Considering that this workers at the beginning of the 1970s to 17,377 sugar is sold at prices below the domestic costs of in 1999 (5,859 permanent and 11,518 seasonal production, the factories are the main victims of workers). this situation. Other problems are related to the Sugar exports fell and imports increased over the shortage of specialized workers and the slowness of years, as shown in the Table 2.7. fiscal procedures (INA 2000). The rehabilitation of the sugar sector forms part The Mozambican Association of Sugar Producers of the agriculture program, which considers sugar- (APAMO) has played a key role in presenting pro- cane to be one of the priority crops. It has the ducer concerns and proposals for solutions to the advantages of lower prices than those of the inter- government. national market, private foreign investment poten- The agreements on sugar at the SADC level tial, knowledge and practice of production and should be mentioned, in addition to the protective processing, and being a crop that is hardly affected measures applied by the customs. At the February by climatic changes. 2001 negotiating round the subcommittee on sugar The sugar sector modernization and rehabilita- decided to create a Committee Secretariat, working tion program is expected to bring domestic eco- groups on cooperation, and a Federation of Sugar nomic growth, Job creation, improvement in the Producers to create mechanisms that will facilitate trade balance, and the creation of local entrepre- links among the members and harmonize decisions neurs. The strategy includes restructuring and taken by each of the countries. privatizing of the companies and protecting the in- Raw sugar has been exported following the tech- ternal market in relation to prices on the interna- nical specifications requested by their importers tional market, as other producer countries have There has been no rejection of sugar export be- done. Given the fact that international prices are cause of lack of compliance with sanitary and less than production costs and are variable, these phytosanitary (SPS) measures and other quality protective measures are an attraction for investors specifications. Sugar is a priority product in the and will enable national production to compete on Mozambican standardization program, given the the market. Measures will have to be implemented importance of the export potential and the need to in conformity with the program of the World Trade harmonize sugar standards in the SADC region. Organization (WTO) to reduce imports and import levels, and by taking into account the European The Case of Cotton in Mozambique. Cotton is Union (EU) and the World Bank (WB) systems of important for the Mozambican economy, as it is quotas and subsidies. one of the three main export products, along with Within the SADC, where many countries are fish and seafood and cashew nuts. It is the only fiber sugar producers, production is generally higher produced locally, while others are imported for than consumption. In 1998 production was 4,825 textile manufacturing, and it is a raw material for tons while 2,976 tons were consumed. By contrast, the oil and soap industries. the sugar industry in the countries of the region is This crop is grown mainly in the northern highly competitive and efficient by international provinces of Nampula and Cabo Delgado but is also standards. Mozambique has the advantage of geo- produced in the central and southern provinces, graphical location, but the main disadvantage of by about 250,000 households (family sector), rep- being vulnerable to sugar imports. resenting 75 percent of the total production and, With the rehabilitation program, sugar produc- in some areas, by 10 companies with concessions tion has increased, gomg from 50.7 tons in 1999 to given by the Mozambican government through 136.7 tons in 2001. It is hoped that production will contracts, employing about 25,000 workers. These rise to 286.4 tons in 2002, and will increase to 400 economic operators are classified into six groups, tons by 2005. namely family sector, nonautonomous producers, Standards and Global Trade: A Voice for Africa Table 2.10 Cotton Production by Sector (ton) | Season l- Private Sector Family Sector Total 1991/92 19,481 15,154 34,635 1992/93 22,879 24,127 47,006 1993/94 17,080 29,244 46,324 1994/95 17,249 35,757 53,006 1995/96 17,837 32,670 50,507 1996/97 15,635 58,365 74,000 1997/98 11,600 79,488 91,088 1998/99 14,139 102,577 116,716 1999/2000 2,719 32,646 35,365 2000/2001 6,677 64,371 71,048 2001/2002 - 5,500 64,500 l 70,000 Source IAM. autonomous producers, concessionaires, ginners, government, national and international institu- local traders, and lint exporters (Tables 2.10, 2.11). tions, promoting awareness and dialogue among Peak cotton production occurred in 1973 with them so as to reduce their problems, setting mini- 144,000 tons and the worst season was in 1985, mum prices and assessing the export opportunities, when only 5,000 tons were produced, because of the assuring cotton classification in their laboratories armed conflict that halted the production of cot- and issuing origin and quality certificates. ton when the population was displaced from the There is also the Mozambican Cotton Association cotton-growing regions and infrastructure was de- of producers, processors, and traders, working in stroyed, and also because of management problems coordination with IAM to improve the cotton sub- in the firms. sector. NGOs are also important players in funding The cotton sector falls under the Mozambique and giving technical assistance to extension and Cotton Institute (IAM) of the Ministry of Agricul- training programs and supporting the creation and ture and Rural Development, created m 1991. This strengthening of farmer organisations. Institute has a key role in cotton development, do- The companies have been replacing direct pro- ing research and assisting the production and mar- duction in large areas by supplying inputs on credit keting systems. IAM maintains and improves the to small farmers of their designated areas, giving linkage between producers and processors, with technical assistance and buying their production. Table 2.11 Cotton Production and Export (ton) Season ] Seed Cotton Production Lint Production Lint Export 1991/92 34,635 15,426 11,815 1992/93 47,006 15,754 1 3,990 1993/94 46,324 15,700 13,990 1994/95 53,006 17,400 1 7,000 1995/96 50,507 16,311 1 3,759 1996/97 74,000 25,147 23,500 1997/98 91,088 31,007 28,204 1998/99 116,716 35,677 34,472 1999/2000 35,365 12,200 11,593 2000/2001 71,048 24,300 17,600 2001/2002 70,000 23,000 23,000 Source. IAM Bridging the Standards Divide: A Case Study and Action Plan for Mozambique Farmers must pay back the assistance by selling the and natural disasters cause lower cotton produc- company their crop with subtraction of their debts tion5 yields, and quality. (Coughlin 200 1). Private cotton traders recently en- Producers and purchasers want improvements in tered the business, purchasing seed cotton from the quality of cotton. Harvesting and storage con- farmers and selling it where it is more convenient. ditions at community level and conventional ware- Some major constraints of the cotton subsector houses are controlled to avoid cotton deterioration. that need mention are: degeneration and low yields A step forward is the fact that more and more of cotton varieties used for more than a decade, producers and purchasers are taking into consider- influencing production yields and product quality; ation the product quality and the requirements to poor road infrastructures and other resources, get more production and better product quality. including inputs, production zones; reduction of There are only buying prices for two grades (first production areas by companies that were using bet- and second) of gross seed cotton to producers, ap- ter and more advanced technology; limited capac- plicable in mobile and fixed rural markets, set every ity to assist small farmers and delivery of immedi- year by MADER and the National Commission for ate response to their needs; low level of farmer Salaries and Prices. Second-grade cotton seed is of- education reducing their capacity to work through ten classified as first grade, benefiting the farmers associations and groups, and increasing their needs and traders but causing technical problems in the in technical assistance; obsolete equipment in gins, ginneries, affecting cottbn seed separation and cot- most of them old, with low productivity, frequent ton processing, resulting in poor quality lint. breakdown, and using old technology; financial There are 25 ginning mills, but only 14 are work- constraints that hamper investment by the private ing (two of them new), and the other 11 are closed. companies that would assure a more efficient and Grading of cotton lint for export is based on the effective service to the farmers and to their own ar- quality of the cotton (color, cleanliness, strength) eas; deterioration and paralysis of classification and the length of the lint. The grading system used rooms and laboratory equipment and tools (Baw- in Mozambique dates back to the Portuguese colo- den and others 2001; MADER 1998). nial period. It classifies cotton lint into eight grades: In addition, the agricultural and agroindustrial extra, one, two, three, four, five, sLx and inferior, enterprises are facing financial problems, with neg- while cotton lint length varies between 1 5/32" and ative influences from the international markets, 1". This classification differs from the U.S. cotton particularly the policy of subsidies that protects the grading with about 40 different grades. Grading has cotton producers in developed countries. Such sub- been done based on visual and manual inspection sidies do not exist in Mozambique. Local produc- and the equipment that can automatically grade ers regard the recent U.S. farm bill as one of the cotton is not available because of its high cost. Many constraints to Mozambican cotton exports. The low buyers complain about the poor grading of returns resulting from high production costs and Mozambican cotton and they often have to reclas- the absence of subsidies, compared with the export sify the cotton from Mozambique to reflect inter- prices, affects producer development and access to national standards (Bawden and others 2001). new and better technologies. The decline of inter- The comparison of the classification in eight grades national cotton fiber prices also negatively affects for Mozambican cotton fiber with the intemational the Mozambican cotton subsector. Climate changes grades is: ~50;_tI3 m7Id ZIZ ig7 Typem VI E- l | Striet good brdinary y inferir NrStricfGood ordinary 101 Standards and Global Trade: A Voice for Africa The quality of Mozambican cotton fiber is still Because of the general poor quality of Mozam- low and this is the main reason why it is sold at bican cotton and the absence of a better graded a lower price. The ginning outrun (cotton lint or product, 75 percent of Mozambican cotton falls seed cotton production) was 32-35 percent in the into Grades 3 to 4 with cotton length ranging be- last decade, compared to an average of 42 percent tween 1 1/8" and 1 1/16". Therefore, it usually in other African countries (Lemaitre P and fetches much lower prices than the Cotlook Index CIRAD 2001). A price (Bawden and others 2001). Total Lint Length Potion t ~~~~~~~~~~~~~~~~Production Grade 1 5/32" 1 1/8' 1 3/32" 1 1/6" 1 1/32" 1" S/C ('000 kg) /% Extra 7.8 1.7,' 9.5 0 One 418.5 211.4 13.6 i 643.4 2 Two 18.4 1,251.6 3,543.9 774.7 5,588.6 18 Three 8.2 3,437.0 4,858.8 7,263.4 15,567.5 50 Four 1,727.6 922.3 4,689.5 1.7 7,341.0 24 Five 0.818 158.1 i' 474.8 594.0 226.6 1,454.3 5 Six 1l ' l'l 321.2 30.0 50.2 401.4 I Inferior 0.915 i 0.915 0 Total 26.6 6,843.3 9,696.3 13,537.0 625.8 276.8 0 91 S 31,006.6 100 L_ __ ___ 310 _ _ I L- ______ The Cotton Institute has plans to increase the the cost of tests on cotton bales in the family sec- number of cotton grades to 11 instead of the 8 cur- tor (about 25 cents (US) per bale). The firms do rently used. not pay directly for the quality control done by IAM The cotton subsector assessment (2001) refers to because they pay the institute 2 percent to 3.5 per- the challenge of updating the lint-classifying system cent of the value of exports (the decree provides for to meet the market demand as one of the prospects a rate of 5 percent, but this was reduced because of for a better valuation of the cotton products. For the high costs the firms face for inputs). lint classification the trash content, color, and lint Cotton cultivation, marketing, and export are characteristics (staple length, staple strength, ma- better regulated than other crops. Besides the reg- turity, and fineness) and micronaire readings are ulations on cotton (Ministerial Diploma No. 91/94 measured. However, features previously considered of 29 June, Ministry of Agriculture and its rectifi- secondary are currently important and may result cation of 27 July), other legislation deals with the in a lower price, such as length uniformity, content establishment of the Mozambique Cotton Institute of short fibers, contamination with organic and (Decree No. 7/91 of 23 April, Council of Minis- inorganic material, and others. These features are ters), the establishment of the principles for cotton measurable. The modern method of lint classifica- production, marketing, and processing (Decree tion with the high volume instrument (HVI) does No.8/91 of 23 Aprl, Council of Ministers) and the not exist yet in Mozambique. internal regulations of the Mozambique Cotton In- The Mozambique Cotton Institute is responsible stitute (Ministerial Diploma No. 77/2001 of 23 for lint classification. However it lacks resources to May, Ministry of Agriculture) and its legal frame- fulfil the demand. Its four classification rooms are work, the Strategy for Cotton Development (In- not enough and the laboratories lack instruments ternal Resolution No. 15/98 of 22 September, and reagents, with the result that the classification Councl of Ministers). rooms and laboratories are unable to achieve a de- sirable quality control of cotton lnt for domestic and Conclusions international marketing (Bawden and others 2001). The costs of compliance with quality standards * There are good prospects for more cotton pro- for cotton lint are still insignificant and include only duction for export and the local textile industry. 102 Bridging the Standards Divide: A Case Study and Action Plan for Mozambique * Cotton quality is still poor and combined agri- The crop area in the last five years is estimated to cultural, industrial, and training and extension be between 150,000 and 440,000 hectares, with a activities are required to improve it. production of 100,000-270,000 tons. The marketed * Low prices offered for Mozambican lint may be peanut production during the same period was be- overcome through improvements in cotton clas- tween 18,000 and 27,000 tons, which means that a sification rooms and laboratories. considerable part of the harvest of small farmers is * The weakness of grading and lint classification for their own consumption (roasted or cooked with hampers the evaluation of cotton in accordance or without the shell, peanut flour for baby food, with international standards, which would im- peanut mdlk, other products), kept for seed, and prove cotton prices. processed into cooking oil. * The Mozambican authorities are very keen to im- The volume of unmonitored peanut export or prove conditions and find mechanisms that Import is estimated to be significant and held to increase the value of Mozambican cotton. IAM specific quality standards. There are potential for- is interested in updating lint classification and mal regional and international markets for peanut the classification facilities, to meet the market that require aflatoxin limits that are often below the demand, as recommended by Lemaitre P and average content in local products. CIRAD (2001). However, the mycotoxin problem is affecting * HVI probably is not the best short-term alterna- peanut consumers and, therefore, export opportu- tive, since the cotton laboratories may not have nities. Consumer's exposure is one of the main the necessary space, trained staff and mainte- causes of hepatic diseases and the exports are re- nance systems (months ago IAM submitted a jected because of high aflatoxin contamination. proposal for laboratory equipment, including Through agriculture research and extension pro- HVI, but it was not accepted by the funding grams, some effort has been made with better va- agency). rieties and production methods that may reduce the aflatoxin contamination. Very little has been done Recommendations for an Action Plan. For the de- with regard to testing and using decontamination velopment of the cotton subsector it is crucial to methods in storage facilities. consider the following activities: At the health level, some studies have shown that hepatic diseases are more often observed in areas * Improvement of conditions and basic equipment where peanut is a staple food, such as in the Maputo and tools for the cotton classification rooms and province. Some medical researchers are studying laboratories; this relationship, working with agronomists and * Review of the cotton grades and lint classification; nutritionists. Clinical data indicate that in Maputo * Preparation and implementation of a training there are fewer cases than before, raising the ques- program for the new staff to be recruited for tion of whether this is the result of better varieties, manual and visual lint classification, given that better agricultural practices, the consumption of the more experienced workers are retiring or better peanut, less peanut consumption or because leaving the classification rooms and laboratories infected consumers go to traditional doctors in- for other activities; stead of hospitals. * Implementation of an extension or training Only a few laboratories in Mozambique analyze program to train producers, traders, processors, aflatoxins-LNHAA analyzes cereals and grains extension workers, and technicians on cotton and their products and milk, mainly from the Ma- grades and lint classification, and the require- puto area. The INIVE laboratory analyzes aflatox- ments for obtaining good-quality products and ins only in animal feed produced in Maputo. The the benefits and losses of good and bad cotton laboratories of the Faculties of Agronomy and quality. Forestry Engineering, Veterinary Medicine, Medi- cine and Science (Biology Department) at the Ed- The Case of Peanut (Arachis hypogaea) in uardo Mondlane University study the microbiology Mozambique. Peanuts are cultivated in all of pests and diseases. The hospital laboratories provinces, by small farmers, and it is part of the sta- perform blood and urine analysis. The INIA labo- ple diet in some regions, particularly in the south. ratories have the space and technicians to start 103 Standards and Global Trade: A Voice for Africa mycotoxin analysis. The SGS company, at the re- humans and animals to mycotoxins the following quest of potential exporters and importers, sends activities should be undertaken: samples to its regional laboratory in South Africa. These three institutions analyze very few samples * To organize a mycotoxins working group to pre- (less than 1OO samples per year) of products from pare a national program on mycotoxins; very specific areas. A representative sample from * To promote meetings and seminars and train- peanut fields and storage facilities may give a bet- ing programs, mainly at the provincial and ter picture of aflatoxin contamination, but such a district level, to disseminate information and sample does not exist at this time. Nevertheless, in- data on mycotoxins and preventive methods, ternational researchers confirm that Mozambique oriented to producers, traders, processors, ex- is one of the countries with the highest rate of afla- porters, technicians, consumers, and decision toxin and other mycotoxin contamination. makers; In Mozambique, aflatoxins are the best or the * To prepare and carry out risk assessment, in- only known mycotoxin and peanut the only con- volving a multidisciplinary study to update and taminated commodity. Other mycotoxins in other obtain information on the degree of occurrence, products such as maize and oilseeds may be a pri- assessment of exposure to aflatoxins and other mary concern, as it is in neighboring and other mycotoxins, particularly in peanuts and peanut countries in the world. products for consumption and for export; There are no specific technical regulations on * To understand the international standards and mycotoxins in Mozambique; international stan- how they can be reached, while taking account of dards, mainly Codex Almentarius is taken as a ref- the SPS measures required by countries that erence to evaluate food safety. might import Mozambican products; To organise the national laboratory network, Conclusions. Peanut may be considered a common planning the methods, areas to cover, and prod- crop all over the country and in some regions it is ucts to be analyzed by each of them. To equip the a staple food. laboratories that will work on mycotoxins and There is the trend toward the increase of pro- train the laboratory technicians; duction and opportunities for exporting, local pro- * To test and disseminate decontamination meth- cessing (packed roasted peanuts, cooking oil and ods in conventional warehouses and traditional other products-peanut butter is not a common storage facilities; product in Mozambique) and direct consumption * To develop partnerships with regional and as snacks and in cooked foods. international institutions, laboratories and, re- There is a need to control the results, in terms searchers to improve and develop specific assis- of aflatoxin contamination, of introducing new tance programs on mycotoxin issues. varieties and agronomic practices in the field and in storage facilities. This information is crucial The Case of Seed Production and Imports in to understand the degree of occurrence and the ex- Mozambique. Given that the availability and qual- posure of people and animals to mycotoxins, up- ity of seeds are fundamental to increasing agricul- dating the health situation of peanut consumers tural and agroindustrial production, the descrip- and other products contaminated with aflatoxins. tion of this subsector is presented in more detail, With this information, more adequate measures including the studies and projects that have been and programs may be prepared and implemented developed in this area at the national and regional to improve food safety and human health. levels. Because of the important role of seeds in There is a need to know the international stan- agriculture, several regulations regarding produc- dards better and adjust the quality of Mozambican tion, import, export, and trade are in force in products to required safety levels for the domestic Mozambique. market and exports. The National Seed Service of the National Direc- torate of Agriculture is the state body that regulates Recommendations for an Action Plan. In order to and monitors the importation, production, mar- update the existing information on the contamina- keting, and export of seeds. This service has focused tion of agriculture products and the exposure of more on monitoring imported material and on the 104 Bridging the Standards Divide: A Case Study and Action Plan for Mozambique promotion of domestic seed production. Since Seed importers are required to comply with the there are no seed exports, its work in this area has Seed Import Regulations, the objectives which are been limited. to ensure the importation of good quality seeds of A consultative and advisory body, the "National varieties adapted to the different ecological zones, Seed Committee" was created in MADER and to discourage the imposition of seed imports when should give its opinion on seed supply plans, the the country is producing sufficient quantities of ac- national list of varieties and legislation on seeds, ceptable quality, to coordinate and support the or- among other subjects. ganizations that import seeds, and to establish the A medium-term Strategy of the Seed Subsector basis for a more effective control of seed imports. (1997-2001) was produced in December 1997 to These regulations indicate the conditions, specifi- assist the development of SNS activities, in the cations of quality, licenses, and system of coordi- context of PROAGRI, and bringing up to date the nation for the importation of seeds. The Orange strategy set out for 1987-1995. The aims of this gov- International Seed Lot Certificate, the Field In- ernment strategy were: improvement and strength- spection Certificate, and the Phytosanitary Certifi- ening of the public seed service in terms of coordi- cate must be presented. nation, agronomic research, and the improvement The regulations on the production, trade, quality of plants, seed production, and the propagation of control, and certification of seeds cover licensing vegetative material for planting; the establishment of producers, seed improvers, importers and ex- of favorable conditions for the import and export porters of seeds; quality control with the required of seeds; promotion of participation by the private documents, mechanisms of control, inspection and sector in the production and distribution of farm supervision of production, improvement, distribu- inputs, including seeds; the informal production of tion, sale, import, and export of seeds; the duties seeds, the dissemination of information, with par- and obligations of inspectors and supervisors; ticipation by NGOs; and certification and quality indication of tariffs; and penalties. control. The priority areas for intervention in the There are new provisions in the current regula- seed subsector are indicated, with descriptions of tions, particularly with regard to genetically modi- subprograms and subcomponents, their activities fied varieties (GMO). Genetically modified vari- and implementation mechanisms, and the esti- eties must not be imported and a declaration from mated budgets. the appropriate authorities of the exporting coun- The SNS prepared Procedures for the Evalua- try to this effect is required to confirm that the seed tion and Registration of Varieties in the Official is not a genetically modified variety. List (22 November 2000). For new seed varieties Mozambique does not yet have the equipment to to be introduced and included in the National List test if varieties are GMO. However, where necessary of Varieties, whether they are produced in the the country can use the existing facilities in South country or abroad and are intended for use in Africa or overseas services provided by firms such Mozambique, from the public or private sector, as SGS. The purpose of the declaration of origin is they must be tested and submitted for the same to ensure that suppliers do not send GMO if the type of evaluation. New varieties must be sub- seed is intended for agricultural production. mitted to prerelease comparative testing of two Seed exports require authorization, and for that types to be conducted by the SNS in at least two purpose information is needed on the species and years or seasons. Widely used traditional and lo- variety, quantities, where they may be inspected, cal varieties can be included in the national list their destination, and required certification. They by means of a very clear identification after they must meet field and laboratory standards for certi- have been properly tested. The document con- fied seed and be properly packaged. tains the procedures for including new varieties A list of 79 species and varieties, their common and performing tests; the rights of the improver; and botanical names, the weight of a lot, category provisional measures for the approval and regis- of seed, field standards (isolation, percentage of tration of varieties; a model request for inclusion atypical plants and number of inspections), and of a new variety; and information about the laboratory standards (percentage of purity, per- botanical characteristics and agronomic value of centage of germination and percentage of humid- different species. ity), is appended to these regulations. 105 Standards and Global Trade: A Voice for Africa Some studies related to legislation on seeds were of new varieties among the countries of the carried out. They are: southern African region, and seed legislation needs to be harmonized at the regional level. (a) "Harmonization of Seed Policies and Regula- New laws and regulations were proposed, no- tions in Eastern Africa Project." tably a national seed policy, a seed law, regula- The Project was implemented m a pilot phase tions on the classification of seeds, models for in Kenya, Tanzania, and Uganda from Septem- seed multiplication in a certification scheme, ber 1999. This project was aimed at supporting testing varieties and procedures for testing. countries in establishing a regional market, cre- (d) "Status and Opportunity of Mozambique's ating a seed industry in the region that would Seed Sector Study." be viable and efficient, harmonizing policies and In the context of the World Bank's Sub- legislation on seeds in the countries involved, Saharan Africa Seed Initiative (SSASI), a study and establishing a fast and efficient regional was made of the status and opportunity of quality control system. Mozambique's seed sector, a regional strategy (b) SADC "Regional Seed Security Network Project." was drawn up to improve the national seed dis- The idea of creating this seed security network tribution system and to facilitate the flow of emerged from a meeting on seeds at Mbabane seeds and varieties among the countries of the in Swaziland in 1994 and was further developed region, which measures have been shown to at meetings in Maseru in Lesotho in 1997 and contribute toward better competition and an Kadoma in Zimbabwe in 1999. The project was increase in the supply of good quality seed. launched in July 2001 in Pretoria and is in the Some recommendations were presented, in- first phase of year one. The purpose of the proj- cluding the strengthening of the supply of ect is to create a database and develop activities emergency seed. related to training and harmonization of seed (e) "Characterization of the Current Situation in production, legislation, and marketing. the Seed Sector in Mozambique study." (c) "Assessment of the Requirements for Establish- This study, conducted by Freire and Banze ing a Seed Regulatory System in Mozambique (April 2001), describes the situation in the seed Study." sector before and after independence, namely Dr. D. Keetch conducted this study for the the existing infrastructure, its location and ca- IFDC in March 2001, in the context of the pacity, and who owned it. It presents statistical "Mozambique Agricultural Input Market data on the production of certified seeds and Strengthening Project," funded by USAID. Its seeds in general, both in total and by crop. It objectives were to: summarizes the strategies and legislation on seeds in Mozambique and describes the system * Evaluate the current situation relating to seed of seed quality control and certification, the legislation in Mozambique; research and improvement program of new va- * Draft seed laws and regulations that are not rieties, the formal and informal systems of pro- included in the current seed regulatory sys- duction and distribution of seeds, imports and tem but which are necessary to complete im- exports of seeds, with general and species- plementation and make it function more specific statistical data, and the actors in the efficiently; seed chain. It gives a list of existing projects for * Submit a report on the implementation of the local production of seeds and the institu- the regulatory system that includes imple- tions that finance and operate locally with ex- mentation methodology, recommendations tension programs. It provides information on on technical assistance, training and equip- the production capacity of crops, seed security, ment needs, a schedule and budget and; and the conservation of phytogenetic re- * Support the National Seed Organisation of sources. It does a SWOT (strengths, weak- South Africa. nesses, opportunities, and threats) analysis of the sector and presents the conclusions and The recommendations of the study are aimed recommendations at the national seed seminar at facilitating the development and distribution held in March 2001. 106 Bridging the Standards Divide: A Case Study and Action Plan for Mozambique The main findings and conclusions relate to and to establish standards that will help producers problems of quality control of imported seeds and to succeed in their efforts. to seed distribution mechanisms. To allow the implementation of the above poli- cies several consultation mechanisms between the Conclusions. The seed regulations have contributed private sector and government were established to better seed supply from other countries, in with the objective of permitting discussion of the terms of adequate varieties, good quality seeds that main constraints and identifying ways to solve are free of pests and diseases. They positively influ- them. Offices to support the private sector and to ence seed production and multiplication, as well as allow the private sector to participate in the main crop production in general. While the regulations decisions were created in the Ministry of Industry were being drawn up, some international and re- and Trade, and the Ministry of Agriculture and gional institutions gave their collaborative support, Rural Development; and the Higher Technical which facilitated the intended regional harmonisa- Council for Customs (CSTA) created as an advi- tion of seed regulations. The seed control proce- sory body. To allow discussions related to the la- dures should be specially designed for emergency bor and employment policies, an advisory body, situations to avoid delays of seed imports and dis- the Labor Consultative Council (CCT), was cre- tribution in affected areas. ated. Partnerships were also created among gov- ernment, private sector organizations, NGOs, civil Domestic Regulatory Structures and society and donors, with the aim of contributing Policies: Internal Market Barriers to the sound development of the Mozambican The Mozambican regulatory system includes sev- economy. A brief analysis of the institutions responsible eral ministries and institutions that are responsi- forte applic of the various pespofile ble for different functions related to the develop- ment and application of laws and technical islation shows that institutional capacity has in- regulations. creased in recent years. With regard to research It should be noted that Mozambican legislation institutions, the establishment of a Ministry of Sci- relating to agricultural and food products, as well ence and Technology will assist the development of as hygiene and sanitary aspects, generally includes research capacity in the country, while MADER is the procedures for importation, domestic con- reorganizing its own research institutions, and su- sumption, and exportation. In general the legisla- pervision activities in some ministries are being tion is not protective, giving the same treatment to improved. domestically produced and imported goods. However, in general, there is a lack of sufficient Export products in general follow the standards human, material, and financial resources, thereby and technical regulations requested by the im- preventing rapid institutional development. porters. The fisheries sector is the only one that has an HACCP system to assure compliance with food Principal Institutions and Legislation safety requirements. In Mozambique there are three types of legislative Introduction documents-laws, decrees, and ministerial diplo- mas (MD). Laws are passed by the parliament of The various main national policies (the Govern- Mozambique and typically address primary social ment Programme for 2000-2004, PARPA, the in- and political issues, such as taxes, civil rights, pub- dustrial policy and strategy, the trade policy and lic health, defense, and education. Decrees are strategy, and the agriculture policy and strategy) passed by the Council of Ministers and typically ad- have the common objective of creating an eco- dress issues such as budgets, public security, social nomic environment that will allow the develop- discipline, labor, or the details of a law. Ministerial ment of agriculture so as to eradicate poverty, as Diplomas deal with specific issues that are the re- well as to foster an environment for market-based sponsibiity of a particular ministry or ministries. agricultural development that will increase and di- One or more ministries may approve an MD, de- versify exports. Furthermore, these policies recog- pending on the extent of their mutual involve- nize the need to improve the quality of products ment. Regulations are drawn up and included in an 107 Standards and Global Trade: A Voice for Africa MD. An MD usually consists of only one or two Ministry of Health (MISAU). The Ministry of paragraphs setting out what will be regulated, why, Health (MISAU) is responsible for the establish- and by which mmistry or ministries. Regulations ment of specifications and for the control of most within the MD are structured in chapters, sec- of the foodstuffs produced and imported into tions, and articles and may include annexes and Mozambique. appendices. The Department of Environmental Health There are few laws in force relating to hygiene, (DHA) of the MISAU is the state body that regu- sanitary and phytosanitary standards, imports, pro- lates and monitors health and hygiene relating to duction, commercial exploitation and export of food, water and sanitation, health relating to inter- foodstuffs and agricultural, livestock, forestry, and national borders, in industry and of workers, and fishery by-products. What basically exist are tech- conducts medical examinations. nical regulations that are the responsibility of With regard to health, there is only one law, the certain institutions, with regard to the preparation, "Crimes Against Public Health in the Context of execution, and control of their application, and Food Hygiene, Act" (Law No. 8/82 of 23 June, which coordinate with other institutions linked to Standing Commission of the People's Assembly). the relevant legislation. This is the basic law for the control of foodstuffs in Most of the laws how in force were enacted before the country, the application of which covers all the 1980s and are now being brought up-to-date in sectors that directly or indirectly relate to food- line with technical and technological developments, stuffs, including the consumers. institutional changes, and variations in prices. This The technical regulations and other legal provi- is happening mainly in what concerns regulations sions in force relate to hygiene and sanitary re- issued by the Ministry of Agriculture and Rural De- quirements for establishments dealing with food velopment, namely related to cashew, seeds, pesti- products, to workers' health and hygiene, to the cides, tobacco, and fertilizers. However, in most sanitary control of imported food products, and to cases there is need to develop the standards that will the list of additives. support the regulations. Legislation related to food The regulations on imported foodstuffs, (Minis- safety that was developed by the Ministry of Health, terial Diploma No. 80/87 of 1 July, MISAU), specify also needs to be updated. the conditions and procedures for the importation However, the efforts being made are not yet of foodstuffs, namely specifications of the identity enough, and awareness about quality issues in gen- and quality of the foodstuff, inspection and quality eral is still quite rudimentary. The institutional testing, certificates, supervision, infestation, inor- infrastructure is weak, and there is a lack of trained ganic contaminants, and microtoxins. The regula- people, while the legislation and the level of devel- tions establish that the standards to be applied on opment of standards are not enough. Furthermore, the importation of foodstuffs must be according to there are very few standards and technical regula- those established by Codex Alimentarius. These tions related to specific products. The production regulations also indicate that the inspection and level is low and there is a lack of awareness con- quality testing at the place of origin of all imported cerning how the application of standards and foodstuffs is mandatory, by entities with recognized quality principles could benefit the producer. As capacities or accredited to carry out this work, at producers also face the problems described in the expense of the buyer. Section 4, the priority is to increase production: but Legislation on food hygiene is compiled in a col- improving quality is not yet among the priorities. lection prepared by the DHA. The main legislation Some laws and technical regulations are de- is described in Annex A. In general the legislation scribed in more detail in Annex A because they have on health needs to be updated. a strong link with the subject of this study, and can The DHA has prepared a Manual of Inspection help toward a better understanding of the Mozam- on food hygiene, based on the Codex Alimentar- bican legal framework. ius, which served as a working and training tool This section presents in more detail the main in- for health inspectors. This manual includes a pro- stitutions and related legislation. Strengths and file and job description of the inspectors, proce- weaknesses related to the subject of this section are dures for sampling, and inspecting food and prem- also analyzed. ises, some of the main cycles of food production, 108 Bridging the Standards Divide: A Case Study and Action Plan for Mozambique characteristics of some raw materials and of food- for planting and multiplication, the quarantine of stuffs produced in the country, and the code of plants, and field inspections. practice on food hygiene of the Codex. This DSV prepares the list of chemical products The health inspectors are directly linked to the registered in this country and updates it every two Centre for Environmental Health and Medical Ex- years. The registration of each product is valid for aminations (CHAEM), which is the health body five years. To date 553 products have been regis- that conducts medical examinations, issues official tered, including insecticides, herbicides, fungicides, health certificates, and inspects factories and acaricides, rodenticides, avicides, animal dips, mol- shops. luscicides, and nematicides. The National Laboratory for Water and Food DSV supervises the application of the pesticide Hygiene (LNHAA) is the official national lab- regulation (Ministerial Diploma No. 88/87 of 29 oratory that tests the quality of water, food, and July. Ministry of Health and Ministry of Agricul- drugs, and issues test reports. LNHAA has regional ture), aimed at disciplining and controlling the reg- and provincial laboratories. Work developed by istration, importation, production, packaging, la- LNHAA is based on Codex and WHO standards. beling, storage, marketing and sale, and transport Regarding water analysis a standard for drinking and elimination of pesticides and related chemi- water was developed based on CODEX and WHO, cals. In addition to a toxicological classification, the and this standard is being utilized and analyzed in upper limits of residues tolerated in food, their one of the Standardisation Technical Committees inspection and penalties are specified. so that it is as updated and approved as a Mozam- New technical regulations on pesticides are being bican Standard. approved and these will repeal the regulations ap- The DHA is the point of contact for the Codex proved in 1987. These provide for a technical advi- Alimentarius. It has participated in the annual sory committee on pesticides, seeds, and fertilizers meetings of the organization and has contributed to be created to make recommendations to the Min- to the preparation of the technical specifications. istry of Agriculture and Rural Development on It has no financial resources to cover the produc- questions relating to agricultural pesticides and re- tion of publicity materials, or to organize meetings lated veterinary and public health chemicals, for and other events to publicise information or raise normal and for emergency situations. awareness about the Codex Alimentarius. The de- The DSV also supervises the application of the partment also has few technicians, which adds to Regulations on Phytosanitary Inspections and Plant the problems already mentioned. Quarantine (Ministerial Diploma No. 134/92 of 2 Other difficulties relate to funds to replace bro- September, Ministry of Agriculture). The purpose ken or outdated equipment and machinery in the of these regulations, covering plants, plant prod- National Laboratory for Water and Food Hygiene ucts, and agricultural products, and the means of to improve its capacity and rate of response to cultivation, packaging, and transporting them, is to requests for laboratory tests. prevent the introduction and spread of harmful or- ganisms, especially from things in quarantine, to Ministry of Agriculture and Rural Development control pests and diseases, to supervise and control (MADER). The Ministry of Agriculture and Rural fields, forestry plantations, nurseries and places for Development (MADER) has several functions and storing and selling plants, and plant health control responsibilities related to the setting and control of of imports and exports. the application of technical regulations related to A representative of the DSV has participated in agricultural products. Under MADER there are sev- International Plant Protection Convention (IPPC) eral directorates, departments and institutions that meetings but has exercised no influence on the set- are analyzed in this section together with the related ting of standards. legislation. National Seed Service (SNS). The National Seed The Department of Plant Health (DSV). The De- Service (SNS) of the DINA is the state body that partment of Plant Health (DSV) of the National regulates and monitors the importation, produc- Directorate of Agriculture (DINA) is the body that tion, marketing, and export of seeds. This serv- deals with the quality of seeds and vegetable matter ice has focused more on monitoring imported 109 Standards and Global Trade: A Voice for Africa material and on the promotion of domestic seed tion because there is no commercial export of production. Since there are no seed exports, its animal products. work in this area has been limited. In 2001, DINAP prepared technical regulations Legislation on seeds in Mozambique has been un- on animal health, on livestock branding, and on in- der review since 1995 to bring it up to date in the dustrial pig-farming zones, which are all in the concepts and procedures relating to production, process of being approved. Technical regulations are improvement, trade, import and export, quality currently under preparation for meat inspection, control of seeds, and for the creation of bodies to the construction and licensing of abattoirs and manage and monitor the seed system. In addition slaughterhouses, on milk and dairy products, and to the published legislation, there is a seed subsec- for the Veterinary Medicines Act. Most of the leg- tor strategy paper and other policy documents from islation, regulations, and technical specifications in the SNS. force were written between the 1960s and 1975. The main legislation on seeds is "Norms for the They need to be brought up to date, in line with Production and Trade of Seeds', (Decree No. 41/94 technical and technological advances, institutional of 20 September, Council of Ministers). This decree modifications, and changes in prices. is regarded as the basic law on seeds. DINAP technicians may apply sanitary measures The "Regulations on the Production, Trade, Qual- where these are justified. In the case of imports ity Control and Certification of Seeds," (Ministerial and the domestic market, sanitary control follows Diploma No. 184/2001 of 19 December, Ministry of international standards. Agriculture and Rural Development), complements This department is concerned with the welfare of the Norms on the Production and Trade of Seeds, live animals being imported or in transit to other approved by Decree No. 41/94 of 20 September, the countries in the region. Livestock inspectors at bor- Regulations on Seed Imports, Ministerial Diploma der posts or in police stations carry out health No. 95/91 of 7 August and the National List of Va- checks. DINAP representatives have participated in rieties, Dispatch from the Minister of Agriculture regional meetings of SADC, the Office Interna- and Fisheries on 17 August 1995. tional des Epizooties (OIE) and the World Trade Seed imports are governed by the Regulations on Organization (WTO). Seed Imports, Ministerial Diploma No. 95/91 of 7 August and there are new provisions in the current The National Directorate of Forestry and Wildlife regulations, particularly with regard to genetically (DNFFB). The National Directorate of Forestry and modified varieties (GMO). Genetically modified Wildlife (DNFFB), regulates and supervises sub- varieties must not be imported and a declaration jects related to forestry and wildlife. from the appropriate authorities of the exporting The Forestry and Wildlife Act (Law No. 10/99 of country to this effect is required to confirm that the 7 July, Assembly of the Republic), establishes the seed is not a genetically modified variety. principles and basic norms for the protection, con- Other documents required are the Orange In- servation, and sustainable use of forestry and ternational Seed Lot Certificate (or in authorized wildlife resources. This law contains the classifica- cases a certificate of integrity) and the plant tion of the forestry and wildlife stock, the forms of health certificate. Seed exports require authoriza- protection of resources, the conditions and rules for tion and for that purpose information is needed forestry exploitation and hunting, for the replace- on the species and variety, on the quantities, ment of these resources, forestry and wildlife man- where they may be inspected, their destination, agement and supervision. For the export of forest and certificates. They must meet field and labo- and wildlife products, the law covers the promotion ratory standards for certified seed and be prop- of the processing industry to increase the export of erly packaged. manufactured goods. Regulations are currently being prepared for the National Directorate of Livestock (DINAP). The Na- application of the Forestry and Wildlife Act, and to tional Directorate of Livestock (DINAP) regulates harmonize it with the Land and the Environment and supervises the quality of production and the Acts. processing of animal products. DINAP is currently With regard to forests, a study was conducted more focused on imports and domestic consump- recently on forestry certification that is based on the 110 Bridging the Standards Divide: A Case Study and Action Plan for Mozambique establishment of standards and codes of good prac- ing national standards for cashew nuts and ker- tice. Forestry certification provides information on nels and a code of best practice for the process- the management practices used in a given forestry ing of nuts. unit and the attribution of a certificate to the for- est or product gives the consumer assurance that it Mozambique Cotton Institute (IAM). The Mozam- comes from a forest that is managed according to bique Cotton Institute (IAM) was established in the established requirements. 1991 (Decree No. 7/91 of 23 April, Council of Min- isters), to develop and supervise the cultivation, Institute for the Promotion of Cashew (INCAJU). marketing, processing and export of cotton; to de- The public institute INCAJU, under the Ministry of velop research and experimentation in cotton cul- Agriculture and Rural Development, was set up in tivation; promote compliance with technical stan- 1997 (Decree No. 43/97 of 23 December) to pro- dards for soil conservation, and the correct use of mote the planting of cashew and other fruit trees agricultural chemicals to protect the environment. and the cashew processing industry. INCAJU mon- The LAM is responsible for the application of the itors the regulations for commercial and industrial Decree No. 8/91 of 23 April, Council of Ministers, licensing in force since 1998 (Decree Nos. 43/98 and which updates the legal framework for the cultiva- 44/98 of 9 September) for the submission of pro- tion, marketing, and industrialization of cotton in posals for commercial and industrial licensing of Mozambique and revokes Decree No. 45179 of 5 businesses in cashew. August 1963. INCAJU oversees the application and control of This decree gives the Mozambique Cotton the Cashew Act passed in November 1999 (Law No. Institute the responsibility for the promotion and 13/99 of 1 November, Assembly of the Republic), supervision of cotton cultivation and technical and which establishes that the Council of Ministers must financial assistance to the growers. It specifies the formulate a policy on the promotion of cashew pro- procedures for marketing seed cotton, for the gin- duction and processing, with the aum of recovering ning and baling operations in cotton gins, for the the stock of cashew trees by providing incentives to marketing and export of baled cotton, as well as for organizations to become involved in the planting of penalties. and research into cashew trees, the technological The IAM is also responsible for the application development and economic and financial recovery and control of the regulations on cotton cultiva- of existing cashew processing firms, and the creation tion (Ministerial Diploma No. 91/94 of 29 June, of industries to use cashew by-products. Ministry of Agriculture), which specify who are the INCAJU also oversees the application of the reg- economic operators and the concessions for cotton ulations on cashew nut marketing of 1999 (Decree production, their registration, and the procedures No. 86/99 of 23 November, Council of Ministers). for growing cotton and marketing seed cotton and These regulations establish the procedures and cotton fiber. Some technical aspects regarding the conditions for cashew nut marketing and set the an- characteristics of the soil, crop operations, ginning, nual surcharge on the export of unprocessed and phytosanitary control are indicated. cashew nuts. Marketing specifications for cashew nuts in the Research Institutions Under MADER. There are 2000/2001 season were drawn up and published in other institutions under MADER that while not di- August 2001, giving marketing procedures and rectly related to the regulatory system, play a role parameters and ranges for the classification for pro- in research and also undertake some testing; a brief ducers, pickers, and traders of cashew nuts (pri- reference to these institutions is given below: mary level), and for traders, processing factories, and exporters (secondary level), and the influence (a) Livestock Production Institute (IPA). of these on prices of the product. The Livestock Production Institute was set The recommended prices for cashew nuts and up in 1988 to develop research in the areas of cashew kernels are set and published by the cus- animal feeding (natural pasture, fodder, and toms service. by-products) and nutrition, reproduction, and INCAJU participates in the Technical Commit- artificial insemination, species improvement tee on Standardisation that is currently develop- and selection, livestock production systems, 111 Standards and Global Trade: A Voice for Africa and the production of meat, milk and other The responsibility for the control of the applica- animal products. tion of these laws falls under the Fisheries Inspec- (b) National Sugar Institute (INA). tion Department (DIP). The National Sugar Institute under the Min- Under the Ministry of Fisheries there are re- istry of Agriculture and Rural Development search institutions described in the case of the fish- was set up in 1977 with the aim of promoting eries sector in Mozambique. The Fisheries Re- the production and processing of sugarcane. search Insti'tute (IIP) was established in 1988 (c) NationalVeterinary Research Institute (INIVE). (Ministerial Diploma No. 75/88 of 18 May, Na- The National Veterinary Research Institute is tional Planning Commission) and restructured in a public institution that was created in 1987 1998 (Decree No. 63/98 of 24 November, Council (Mmisterial Diploma 161/87 of 30 December) of Ministers) to make an inventory, evaluate and from institutions that had been set up in 1908 scientifically manage the fishery resources of the to work along similar lines. The functions territorial waters. The Small-Scale Fisheries Devel- of INIVE are to contribute to knowledge of opment Institute (IDPPE) is a public institution es- Mozambique's nosological classification and tablished in 1998 (Decree No. 62/98 of 24 Novem- provide the technical and scientific bases needed ber, Council of Ministers) to promote development for the prevention and control of animal dis- activity in small-scale fisheries production as an in- eases, to make studies in the field of veterinary tegral part of rural development. The objective of science and technology, to provide specialized the Institute is to conduct studies so as to formu- services to guarantee the health of animals and late development policies, strategies, plans, and public health, and to lead the application of re- programs. search results to the benefit of national techni- cal, scientific, and socioeconomic development. Ministry of Industry and Trade (MIC) Its main areas are diagnosis and research, vac- cine and biological reagents production, food The Ministry of Industry and Trade is responsible quality control, and drug and biological prod- for the coordination and application of the policies uct control. related to industry and trade. One of the responsi- bilities of this Ministry is to support and promote INIVE has developed programs related to chicken, actions with the objective of contributing to the goat, cattle, and swine diseases, production systems, quality assurance of products, processes, and serv- quality control of food of animal origin, and drug ices in the industrial sector, so as to allow them to control. satisfy the domestic market and to guarantee com- petitiveness on the external market. On trade its Ministry of Fisheries. The standards and technical responsibilities are to support initiatives for the in- regulations followed by the fisheries sector are ba- crease and diversification of exports and to protect sicaHly those from the Codex Alimentarius, which consumers. are required by clients of fish and seafood exports. MIC supervises the quality services, at this time The Ministry of Fisheries, as indicated on the provided only by INNOQ. case of the fisheries sector in Mozambique in Sec- MIC is also responsible for the inspection of in- tion 4, is responsible for the application of the spe- dustrial and commercial activity. The inspectors cific regulations, namely, The Regulations on In- usually work with the Ministry of Health on issues spection and Guarantee of Quality of Fishing concerning health regulations. As in other min- Products (Decree 17/01 of 12 June, Council of istries, efforts are being developed to improve in- Ministers, BR no. 23, 1 Series), the basis for qual- spection services. However, there is a lack of ap- ity control of fishery products; the Fisheries Act propriate human, material, and financial resources (Law 3/90 of 26 September, People's Assembly, BR affecting inspection activities. no. 39, I Series); the fisheries policy and imple- The main regulations issued and whose applica- mentation strategy (Resolution 11/96 of 28 May, tion is the responsibility of MIC and MISAU are: Council of Ministers), and the Marine Fisheries Regulations (Decree 16 of 28 May, Council of Min- * The MD that establishes the standards of quality isters, BR no. 21). for wheat and wheat flour and for maize and 112 Bridging the Standards Divide: A Case Study and Action Plan for Mozambique maize meal (Ministerial Diploma No. 120/87 of origin in the framework of SADC and the Cotonou 21 October, State Secretariat for Food and Light Agreement. Industries); According to the statutes, approved in March * The Dispatch that prohibits the importation of 2000, Mozambique Customs is a state body of a wheat flour containing potassium bromide (Dis- paramilitary nature, which operates throughout the patch of 05 October 1996, Ministry of Industry territory of the Republic of Mozambique to inspect and Trade and Ministry of Health); and police the customs, taking measures when nec- * The MD that enforces the iodination of salt essary with regard to people and goods in frontier and compliance with the Mozambican Stan- zones (Decree 3/2000 of 17 March, Council of dard on iodized salt. The MD mentioned sets Ministers). the level of KI03 at between 25 and 55 ppm. The Tariff Code Book (Pauta Aduaneira) con- Regarding the technical specifications it states tains all relevant laws, regulations, and tariffs. Some that these must follow the Mozambican Stan- of the main laws are indicated in Annex A. dard on salt (Ministerial Diploma No. 7/2000 is- sued on 02 November 1999 by the Minister of Problems in Meeting Mandatory Technical Regula- Industry, Trade and Tourism and the Minister tions. It has been noted that producers generally of Health). The application of this regulation is face problems in complying with technical regula- the responsibility of MIC, MISAU and Customs tions. These problems are related to the difficulties inspectors. identified in the analysis (see the section entitled "agricultural Production and Trade") of the prob- Mozambique's Customs System. Mozambique's cus- lems facing the agriculture and the agroindustrial toms system is made up of the existing bodies and sectors, mainly poor infrastructure, production legislation and others that may be created in the fu- technologies, knowledge, and qualified labor. The ture. Its functions include proposing measures and fact that the majority of the regulations on food re- changes in fiscal and customs policy relating to for- fer to the Codex standards in general and these stan- eign trade, implementing them, punishing infringe- dards in particular are not yet among the group of ments, collecting customs duties and other taxes Mozambican standards, sometimes leads to a situ- and tariffs, inspecting and controlling the entry and ation where it is not known which standard to use. exit of goods to and from Mozambique, and giving In addition to the problems faced in the pro- opinions on international treaties and conventions ductive sector, the capacity to supervise the appli- (Presidential Decree 4/2000 of 17 March). cation of regulations is weak and the institu- The Mozambican Government began the reform tions responsible for inspection have problems in of its customs procedures in 1995. The Minister of enforcing the law. Planning and Finance created the Technical Unit for Even in the cases where the regulations are copied Customs Restructuring (UTRA) in February 1995 from the Codex standards and translated into Por- with the objective of managing the customs reform tuguese, as with maize and maize meal, and wheat process. and wheat flour, where the diplomas that specify Under this restructuring, new legislation con- their characteristics date from October 1987, these cerning preshipment inspection was enacted. Since diplomas are not well known and are only referred 1996, preshipment inspection has been handled by to in exceptional circumstances. However, some- Intertek Testing Services (ITS), a U.K. based com- times in commercial transactions other regulations pany, chosen by international tender. Another pri- are used, such as South African regulations. vate company, Crown Agents was contracted in The problems noted above can also be seen in re- January 1997 to implement the customs reform. lation to imports, where the supervision carried out In 1998 the existing import and export procedures is not always the most effective. were simplified and a single document replaced the The case of salt will be used to illustrate this ques- previous complicated paperwork requirements. tion. This product has an important role in nutri- A joint government-private sector body, the tion and also has good potential for export. The case Higher Technical Council for Customs, provides illustrates how embryonic is the process of develop- recommendations to the Government on tariff set- ing standards and their associated regulations, ting and changes to legislation related to rules of and how great the difficulties faced in assuring 113 Standards and Global Trade: A Voice for Africa Table 2.12 Salt Production (ton) | Product || 1996 1997 1998 1999 2000 2001] Noniodized salt 32,500 41,200 41,200 l 45,500 20,700 29,400 Iodized salt 1,376 1,890 27,838 l 10,860 1,235 l 14,330 Percentage of iodized salt 4.2 4.6 67.6 23.9 6.0 48.7 compliance with them. Moreover, it is a typical However, the salt production data available in- process in which joint efforts have brought about dicates that during the period from 1996 to 2001, some success. output peaked in 1998. Of all the salt produced, The case of fisheries illustrates a success story in 67.6 percent is iodized, whereas, 32.4 percent is which, because of the importance of this produc- not. The proportion of iodized salt fell to 6 per- tion in the Mozambican economy, the system cent in 2000, and rose again to 48.7 percent in 2001 maintains the credibility of exports. (Table 2.12). The Ministry of Industry and Trade is the state The Case of the Iodized Salt in Mozambique. body in charge of developing the salt sector. Mozambique has excellent climatic conditions for UNICEF is giving support to the salt iodination salt production, encouraging the development of program, and following the floods, UNIDO has also large modern salt production plants, making salt a supported the recuperation of this sector. major export and creating jobs for people living With regard to exports, Malawi, Zimbabwe, and near the coast. the Democratic Republic of Congo are the normal However, salt production is limited because of importers of salt produced in Mozambique. outdated technology used in production and a However, salt exports were very low in 2000, pos- shortage of skilled technicians. The salt produced sibly because of the steep decline in exports to and placed on the domestic market, in general, is Malawi owing to the high costs of transport. Fur- not of sufficiently good quality. Thus the salt on sale thermore, it has been noted that large quantities of in the larger supermarkets (mainly in Maputo) is salt are exported in cross-border trade, without re- imported. specting the existing legal channels for exports. The salt industry is even more important for (Table 2.13). Mozambique because of its decisive role in nutri- It should be mentioned that salt produced in tion in that it is the ideal way of introducing iodine Nampula is exported to Malawi in bulk and receives into the diet. The iodination of salt has been the necessary treatment there to bring it up to mandatory in Mozambique since July 2000. standards for consumption. Table 2.13 Salt.Export (ton) Country 1 986 1987 1988 1989 1990 2000 2001 Malawi 7,000 1 12,000 1 7,000 10,000 5,000 4,087 43 Zimbabwe 25,000 10,000 15,000 17,000 20,000 RDC (formerty Zaire) 5,000 12,000 8,000 7,000 l 18 134 Swaziland l 3,000 5,000 Hong Kongl 39 Malaysia 21 UK" 2 Colombiaa 23 Others L I 69 Nb. Between 1990 and 1995, the state enterprise Extrasal E.E. was closed and begun the privatization of the salt production. a. Pure salt. Source: EXTRASAL.E.E, INE. m 14 Bridging the Standards Divide: A Case Study and Action Plan for Mozambique Table 2.14 Salt Import following areas were identified as needing harmo- (ton) nization: | Country |199 2000 2001l r 99 * Standards for salt quality; Africa do sul 3791 82 * Method of analysis for salt iodine; and Namibia 153 * Sampling protocols. Portugal 73 8 Espanha 13 For each of these areas, recommendations were for- Paises Baixos 1 mulated and adopted. On the basis of recommen- Outros paises 98 24 dations from the Botswana meeting and the Codex Total (ton) 703 128 standards, INNOQ coordinated the formulation of Thousand US$ 151 l 55 a Mozambican standard in iodized salt. The stan- Source: INE, DNA. dard became mandatory through technical regula- tions on iodized salt (Ministerial Diploma No. Salt imports to Mozambique come from South 7/2000 of 5 January). The regulation on iodized salt Africa, Namibia, and Portugal (Table 2.14). mainly establishes that all food salt must be iodized (iodine as K103). The level of iodine must not be less than 25 ppm and not more than 55 ppm. This Regional Harmonization of Standards and Regu- regulation applied to salt produced in Mozam- lations. Iodine deficiency is the most common bique, as well as, imported salt. With regard to cause of preventable mental retardation and brain damage in the world. A- diet deficient in iodine exports, the regulation states that exports must damae inthe orld A iet eficent n ioine comply with the specifications of the importer. can therefore lead to a wide range of abnormali- This was the speriene t s the suc- ties Iodne DficincyDisoders(IDD is he~ This was the first experience that saw the suc- ties. Iodie Deicincy isoders (ID ) iscessful formulation of a standard, with participa- general term used for all the complications tion from various interested parties. that occur in populations with low iodine in their Efforts have been made to ensure that the salt avail- diets. able for public consumption complies with the stan- Salt is regarded as the ideal vehicle for ensuring dard and the existing legislation on the subject, with iodine consumption and salt iodmnation is a vital regard both to locally produced and imported salt. factor in preventing IDD. In July-August 1997, the Commonwealth Re- The National Program of Salt lodination. The salt gional Community Health Secretariat (CRCHS) iodination program has received support from commissioned a consultancy to look at harmo- UNICEF, and a national committee has been set up nization of salt iodination programs in Eastern, with representatives from the Ministries of Indus- Central and Southern Africa (ECSA). try and Trade (MIC) and of Health (MISAU), the The recommendations made in the consultant's Institute for the Development of Small-Scale report included, among other issues: Industry (IDIL), the National Institute of Stan- dardisation and Quality (INNOQ), and the South * The need to facilitate and review harmenization of Save Salt Producers Association (APSSS). of USI legislation and the relevant Standards Acts This program was carried out in two phases: in the ECSA region. * The need to conduct ECSA regional conferences First phase: This consisted of the distribution on USI pojicy direction and review with re- of iodized salt capsules in Niassa gard to SADC and COMESA trade agreemehts province in 1991 and Tete province in that encompass salt as a basic and essential trade- 1992. The capsules were distributed to able product for both human and animal school-age children and to women of consumption. childbearing age in health units. Second phase: This began in 1995 with the produc- In 1999, Mozambique participated in the Inter- tion of iodized salt, consisting of a Country Workshop on Harmonization of Iodized mixture of iodized salt with normal Salt Regulations for Southern Africa where the salt and a little iodine. Standards and Global Trade: A Voice for Africa As part of the effort to support salt producers who support the development of salt producers' associ- achieve the minimum quality standards in their salt ations and the need to set up laboratories near products, the government has exempted them from production areas. value added tax (VAT), which was 17 percent. The activities being carried out involve both state The Case of the Fisheries Sector in Mozambique. institutions and the private sector. Under the pro- The fisheries sector is one of the most important con- gram, training is being given to salt producers, to- tributors to the Mozambican economy, representing gether with awareness campaigns. The objective is 27.7 percent of Mozambique's total exports in 2000. to provide them with technical regulations and in- Prawn exports rose from 5,694 tons in 1994 to 9,729 formation on the standard. Some work has also tons in 2000. Over the past 10 years, prawns account been done toward training inspectors. for 21 percent-38 percent of the total catch of fish However, there are various problems related and seafood (Tables 2.15 and 2.16). to the production and the low purchasing power The most abundant seafood resources are of the population, which result in the existing prawns, while, small pelagic fish and tuna are the legislation being violated and the standard be- main varieties of fish caught. In the large inland wa- ing ignored. The market continues to offer low- ters there still exists an unexplored potential of quality salt for human consumption, particularly small pelagic fish. in nonurban areas. Nevertheless, despite all these In Mozambique, the small-scale fisheries are con- problems, studies conducted by the Ministry of sidered either semi-industrial or artisanal. Prawns Health show that the prevalence of goiter has fallen are harvested mainly by industrial companies and by 5 percent. by a large number of joint ventures between Mozambique, Japanese, Spanish, and South African Conclusions and Recommendations. The work car- companies. ried out to create awareness about the need to ap- Aquaculture in Mozambique is a priority for the ply the regulations and the related standard has government, especially prawn farming. The first brought results: most of the salt producers know major foreign investment in industrial-level prawn the regulations and the standard and some of them farming has been approved and is being imple- have improved the quality of this product. mented at Quelimane in Zambezia province. There is a need to improve coordination between Opportunities also exist for farming fish, oysters, the work conducted through the National Com- mussels, algae, and pearls. mittee together with UNICEF and that done by Investment opportunities in the fisheries sector UNIDO. lie primarily in the need for a gradual substitution The report of a visit held in November 2001, by of industrial vessels by semi-industrial freezer boats members of the National Committee to the salt that can discharge prawns for further on-shore producers in the provinces of Zambezia, Cabo Del- processing. gado, and Nampula identified the main problems Mozambique currently exports mainly raw faced by salt producers such as high prices of rail- materials. Government strategy is to promote way transport, lack of packaging material, equip- processes that add value in this sector. Further- ment in bad condition, or lack of equipment to more, Mozambique needs to improve its services iodize and improve salt quality. to the fishing industry. The main recommendations from this visit, that Prawns represent 90 percent of all exports of fish we consider relevant, are the need to promote and products, and can be found along almost the whole Table 2.15 Catch by Type of Seafood 1995 1996 1997 1998 1999 2000 Crustaceans 10,310 10,442 12,868 11,677 11,545 12,319 Fish 14,076 18,176 26,132 24,161 34,982 40,524 Calamari and others 526 672 705 779 754 i 688 Total catch 24,912 29,290 39,705 36,61 7 47,281 53,531 Source: INE (2000). 116 Bridging the Standards Divide: A Case Study and Action Plan for Mozambique Table 2.16 Shrimp Capture and Export-Historical Evolution 1997-2002 Shrimp Shrimp Toa Sa Shrimp Capture Export Products Capture/Total Year (ton) (ton) (ton) Sea Production (%) 1979 4,182 6,410 65 1980 6,984 14,413 48 1981 8,678 18,224 48 1982 6,220 15,831 39 1983 5,767 18,655 31 1984 5,847 1 7,555 33 1985 6,092 20,566 30 1986 5,863 25,686 23 1987 5,570 25,198 22 1988 7,436 32,131 23 1989 5,903 27,560 21 1990 6,863 6,353 32,919 21 1991 7,698 7,841 25,536 30 1992 6,760 8,680 27,808 24 1993 7,347 6,185 19,195 38 1994 6,645 5 5,694 23,058 29 1995 7,699 6,127 24,747 31 1996 8,123 6,525 35,621 23 1997 9,825 8,810 39,703 25 1998 8,559 9,159 36,677 23 1999 8,846 7,771 33,989 26 2000 9,460 9,729 39,065 24 20010 9,489 9,331 32,781 29 2002° 9,500 9,300 35,090 27 Average 31 a. Estimated Source Ministry of Fishenes length of the Mozambican coast. Prawn fishing Fish products are usually subject to restrictive boats use deep dragnets, and may be industrial, quality requirements, given that their main desti- semi-industrial, or artisanal. Industrial fishing nation is for direct human consumption. The (notes on prawn fishing in Mozambique) is high level of import requirements, particularly in responsible for 87 percent of the registered catch, the European Union, has meant that Mozam- using modern, well-equipped boats. bique's fisheries sector has gradually developed a Increased prawn fishing led to declining yields, system that enables it to meet the require- and in 1990 the Ministry of Fisheries began to ments and guarantee the exports. The system is introduce prawn management measures, such as a primarily based on the European Union's quality closed season during which fishing was prohibited, requisites. increased size of the net mesh, and the establish- The Ministry of Fisheries is the government body ment of acceptable catch quotas. in charge of developing the sector, through its Fish- Most exports go to the European Union and eries Inspection Department (DIP). This depart- Japan, as the largest fishing companies come from ment classifies licenses, certifies, and audits the those regions. Within the SADC, South Africa, export-oriented fishing units; a total of 80 fishing Mauritius, and Zimbabwe also import prawns. The boats and 6 companies on land, and carries out AGOA program opens up opportunities for ex- health controls of their export products, essentially porting to the United States on preferential terms. following Codex standards. Standards and Global Trade: A Voice for Africa The DIP guidelines for classifying fishing units The research activities carried out by IIP influ- are based on the HACCP system. Units are classi- ence and guide the formulation of policies and fied as regular, good, or excellent, and this defines technical regulations in the Ministry of Fisheries. the destination of their produce. Those with "reg- The Small-Scale Fisheries Development Institute ular" classification only produce for the domestic (IDPPE) is a public institution established in 1998 market, those with "good" classification export to (Decree No. 62/98 of 24 November, Council of South Africa and Japan, and the "excellent" export Ministers) to promote development activity in to the European Union and other countries. small-scale fisheries production as an integral part The DIP has offices in six provinces, with in- of rural development. The objective of the Institute spectors and fish auditors, and has two inspection is to conduct studies to formulate development rooms and three laboratories for making sensory policies, strategies, plans, and programs. It should and chemical analyses. The laboratories on Beira carry out studies and promote development activ- and Maputo are also equipped to do microbiolog- ities and projects related to socioeconomic aspects, ical analyses. fisheries technology, and complementary activities. In addition to health control, the DIP draws up It should also promote activities and projects to technical regulations and procedures with which all increase the skiHls of officials and fishermen. those wishing to set up fishing units or export units The Ministry of Health is the body that controls must comply. Its annual meeting discusses new pro- the fishing units and their produce when it is des- posals for regulations and procedures, and debates tined for domestic consumption. The LNHAA also topics, which will enable its technicians to gain new does laboratory analysis. knowledge. The National Institute for Standardisation and The growth of DIP was mainly a consequence of Quality (INNOQ) is the body that coordinates the the demands of the importers, the EU in particu- development of standards at the national level. In lar, but an additional factor was that the National this regard, as part of the program to harmonize Laboratory for Water and Food Hygiene (LNHAA) SADC standards and technical regulations, which is in the Ministry of Health suffered a gradual reduc- being carried out by SADCSTAN, some fishery tion in capacity due to lack of funding, and was no product standards, that the SADC members con- longer able to provide the analyses requested with sider a priority, are already at the stage of final drafts the necessary speed and quality. The DIP thus for discussion-they are based on South African evolved from its initial inspection rooms for standards. The regional harmonization process sensory analysis to establishing laboratories for plans for them to become mandatory once they chemical and microbiological analyses. have been approved. These standards are being an- In addition to the DIP, the Ministry of Fisheries alyzed by the Technical Committee on food, on is responsible for the Fisheries Research Institute which the Ministry of Fisheries is represented by (IIP), the Small-Scale Fisheries Development the DIP. Institute (IDPPE), and the Fisheries School (for The private sector involved in prawn fishing is training sailors). organized into the Mozambican Association of The Fisheries Research Institute (IIP) was estab- Industrial Prawn Fisheries (AMAPIC), which has lished in 1988 (Ministerial Diploma No. 75/88 of 18 worked with the Ministry of Fisheries to improve May, National Planning Commission) and restruc- the performance of the fishing units. tured in 1998 (Decree No. 63/98 of 24 November, The SGS Company has done the certification of Council of Mmisters) to make an mventory, evaluate export prawns for some clients, but only with and scientifically manage the fisheries resources of the regard to the quantities prepared for shipping. territorial waters. Furthermore, it collaborates in de- In terms of regulations, the Regulation on termining the most appropriate ways for the conser- Inspection and Guarantee of Quality of Fishing vation and optimization of fisheries exploitation, Products (Decree 17/01 of 12 June, Council of Min- conducts environmental studies needed for research isters, BR no. 23, I Series), is the basis for quality into fishing resources, conducts studies and experi- control, and was drafted to be equivalent to the mental research on the cultivation of aquatic species European Union Directives 91/493/CEE and for the purpose of commercial production, and pub- 92/48/CEE with regard to sanitary conditions in the lishes technical and scientific information. productive units during operations and product 118 Bridging the Standards Divide: A Case Study and Action Plan for Mozambique quality. This regulation has many aims: to be a guid- requirements of importers, with the exception of ing instrument for the development of a process- one isolated case, when in January 1998 a ban re- ing industry; to update and modernize national stricted to fishery was imposed by the European legislation in accordance with the requirements of Union, because of an outbreak of cholera. The de- the international market; to set legal boundaries for cision was not applied to fishery products, which the responsibilities of the fisheries inspectorate and were caught, frozen, and packed in their final pack- the role of the processing industry; to serve, to- aging at sea and exported directly to the EU. gether with the marine fisheries regulations, as an instrument for fisheries management and adminis- Conclusions. In light of the challenges related to ex- tration; and to be a sectoral instrument that also ports this sub-sector has an established system, has implications for other sectors such as health, based on HACCP, enabling the quality assurance of customs, and commerce. export products. The main fisheries sector legislation currently in One of the subsector's largest needs is training force also includes the Fisheries Act (Law 3/90 of for middle- and senior-level staff of the various 26 September, People's Assembly, BR no. 39, I bodies and companies involved. Another is up- Series), the fisheries policy and implementation grading of the laboratories. strategy (Resolution 11/96 of 28 May, Council of Existing regulations need to be revised in one or Ministers), and the Marine Fisheries Regulations another aspect. It is important to speed up the (Decree 16 of 28 May, Council of Ministers, BR no. development of national standards and codes of 21). There is also a Master Plan for the Fisheries good practice based on Codex Alimentarius and Sector, which was drawn up in 1994. A revised harmonize them at the regional level. version is now awaiting approval. Other technical regulations related to fisheries Constraints and Recommendations for an Action and public health in general are: Sanitary Control Plan. Notwithstanding the good performance of the register (Order in Councl No. 11/78 of 14 January, fisheries sector, the planned short-term activities of Ministry of Health and Ministry of Industry and the DIP need financial assistance in the following Trade); health certificate (Dispatch of 13 November areas: licensing control and audit; certification; con- 1980 Ministry of Health); Decree No. 5/80 of 22 struction, equipping and operation of laboratories; October Council Of Ministers and Ministerial revision of technical manuals for the laboratories; Diploma No. 73/82 of 23 June, Ministry of Health, inspectors and other technicians; harmonization of Ministry of Finance and Secretary of State for La- the inspection activities with other institutions; dis- bor); Crimes against Public Health in the Context semination of regulations; preparation of training of Food Hygiene Act (Law No. 8/82 of 23 June, materials and holding general staff training courses Standing Commission of the People's Assembly); (English, IT skills, secretarial skills), and specific Hygiene and sanitary requirements In the produc- technical courses for industrial workers, sailors, in- tion, transport and trade of foodstuffs (Decree No. spectors, and other technicians on hygiene and good 12/82 of 23 June, Council of Ministers); Regulations working practices, the HACCP system, and labora- on the hygiene requirements of food establishments tory hygiene and techniques; participation In na- (Ministerial Diploma No.51/84 Ministry of Health); tional and international events; and postgraduate Regulations on imported foodstuffs (Ministerial training (DIP 2002). Diploma No. 80/87 of 1 July Ministry of Health); AMAPIC feels the need to prepare private sector Regulations on food additives in respect of the im- technicians for introducing the HACCP system. portation, production, marketing, and use of food This subsector, like others, reflects the reality that additives (Ministerial Diploma No. 100/87 of 23 activities around quality are still embryonic in September, Ministry of Health); Pesticide regula- Mozambique, with a consequent lack of infrastruc- tions (Mmisterial Diploma No. 88/87 of 29 July, tures at different levels. Development of the na- Ministry of Health and Ministry of Agriculture) Ap- tional quality system and respective infrastructures proval of new regulations on pesticides is in process will certainly be a contribution toward improving and wiH revoke the regulations approved in 1987. its performance. Mozambique has managed to comply with inter- The opening of the U.S. market to fish products nationally acceptable levels of quality and with the is a new challenge for AGOA. In addition to the 119 Standards and Global Trade: A Voice for Africa need to implement the standards, companies will The existing quality system generally possesses have to demonstrate that they have implanted the the following components. HACCP system, which is already a precondition for exporting to other regions. Another requirement Standardization. The development of Mozambi- for the U.S. market is that the boats must have ap- can standards, based on international standards and paratus for detecting turtles and currently only one harmonized in the region, would constitute an im- boat has it. The companies that process prawns and portant factor in development since it would en- other products from artisanal fishing on land and able national production to be more competitive. prepare them for export, are not covered by this These are also a basic requirement in quality requirement. certification for products. Furthermore, national One of the export companies has a technician standards could serve as an important tool in the who took a course in the United States on H-ACCP, control of imports, mainly in relation to such things and is registered at the FDA. INNOQ has a trainer as food, where poor quality could affect the health of trainers and auditors of HACCP who is also of consumers. registered at the FDA, and this will help to provide Broad consultation was held to determine the increased support to exports in this area. INNOQ critical areas and priorities for the development of plans to begin HACCP training courses in 2002, but Mozambican standards, as the basis for the creation technical and financial support may be necessary of a national subsystem of standardization. The for the courses to be recognized. consultation also served to identify the organiza- tional structure to develop so as to ensure that the Domestic Standards Setting System preparation of the standards represents national priorities, reflects the interests of the various stake- The need to take a more systematic approach to holders and above all, is suited to the current eco- some aspects of quality led to the establishment of nomic situation. Thus, a technical committee the National Institute of Standardisation and Qual- drafted the INNOQ 1 Directive, which was then ap- ity, INNOQ in 1993. The establishment of the in- proved at a meeting of the National Council on stitute followed the perceived need to keep up with Quality. The Directive deals with how Mozambican regional and international developments and to standards will be drawn up, based on international support local firms in their efforts to improve the procedures contained in Guides of the Interna- quality of their products. tional Organisation for Standardisation (ISO) and The standards setting system is coordinated by establishes that the preparation of Mozambican INNOQ and various bodies participated in the p p. standards should, in princple, be based on inter- development of standards either voluntary or national standards. mandatory (technical regulations). Some of the Under the directive, four Sector Technical Com- bodies that participated in this process have been mittees on Standardisation (CTNS) were set up. analyzed in the previous section. These work with 11 Technical Committees on Stan- dardisation (CTN), involving about 40 technicians The QualityvSystem from various institutions. Contact with various Currently Mozambique has only the rudiments of stakeholders led to the agro-food area being a system of standardization, quality assurance, ac- identified as one of the priorities. This subject creditation, and metrology. Activities in standardi- was thus included in one of the sectoral technical zation and quality assurance are not enough to committees on standardization, which is dealing meet domestic requirements and those arising from with issues relating to food in general, as well as the the importation of goods. There is at present no environment and health. subsystem of certification. Most sectors have no The identification of specific subjects on which standardized procedures, and there is no system of to develop national standards has meant that the consultancy for industrial firms on issues relating standards on wheat and wheat flour, and maize and to standardization and quality assurance. Factories maize meal have already been ratified. However, no in Mozambique use different systems of standard- real steps have been taken to publicise and apply ization at the same time (INNO © 2002. Plano es- these standards, since the legislation in force on this trategico para a qualidade). issue dates from 1980 and needs to be revised. 120 Bridging the Standards Divide: A Case Study and Action Plan for Mozambique A standard for iodized salt has also been written would allow confidence in the accuracy of meas- and approved, based on the Codex standard and urements in the country is only now being devel- in line with the SADC region. This standard is oped. Traceability is very important, since without mandatory. this element it would be difficult to have calibra- The national standardization program includes tion or test certificates accepted by trade partners. both subjects that are regional priorities, such as la- The development of the metrology subsystem is beling of foodstuffs, fruit, and juices and others ac- especially importance, mainly because it will be de- cording to national priorities, such as copra, honey, cisive as one of the bases of the subsystem of certi- sugar, tea, and cashew nuts among others. Some of fication and fundamental in guaranteeing the these items may possibly be exported to the United reliability of trade, including exports. States under the AGOA program. In general, the The absence of any appropriate infrastructure in products mentioned above have significant con- the country that would allow effective development sumption potential in the domestic and export of activities related to metrology has led to priority markets. being placed on the drafting of the first standards One of the aims of standardization is to con- and preparing basic legislation, which is being done tribute toward the harmonization of standards and in conjunction with the countries in the region. technical regulations in the region, with a view to Regulations on the labeling of prepackaged implementing the SADC Trade Protocol. Mozam- products have been harmonized in SADC countries bique has thus been active in the work going on in in 2002. the region on these issues, which are discussed be- Metrology activities, mainly legal and industrial, low. However, it is of prime importance that the are starting from scratch, on the basis of a devel- various institutions and members of the business opment project prepared by UNIDO. Project im- community become more involved in the develop- plementation is dependent on the existence of ment of Mozambican standards. financial and technical resources and physical The process of developing standards is lengthy infrastructures. and the absence of specific standards for various The first embryonic laboratories in this area de- products leads to problems in ensuring that imports veloped under a regional project (SADCMET) were and domestic products are checked and guaranteed installed in 2001 and they have begun working in as fit for consumption. 2002, together with a mobile laboratory. Mass, The main problem faced in the development of volume, temperature, and length standards have standardization is the fact that this activity is not con- been received and have allowed the start of some sidered as a priority. Consumers in general do not work in the south of the country. Efforts are under demand quality; the volume of production is low, as way to train appropriate personnel to run the the few export products are guided by specification laboratories. requirements of their different destination markets. A working group on metrology (GTM) involving It is still necessary to convince the various sectors the main stakeholders was created by INNOQ. This that the discussion, development, and application group is responsible for support to the development of national standards based on international de- of standards and technical regulations in this area, mands, will determine access to foreign markets. and also for input on regional and international INNOQ does not have appropriate infrastructure activities. (human resources, technical and financial means) The absence of a subsystem on metrology to sup- to support the development of standardization. port the national quality system creates costs at in- dustrial and commercial level. The enterprises that Metrology. Quality control of food products, in need calibration services are sending equipment to particular those derived from agroindustries, is par- South Africa and other countries, even for simple ticularly important. The identification and correct operations that could be done in Mozambique. The measurement of the products is therefore essential costs are higher and it is time consuming, and there and the use of harmonized procedures in this re- are problems because of the need to make tempo- gard is one of the regional objectives. rary exports. With regard to scales and other Weights and measures inspection in Mozam- equipment, it is often necessary to bring foreign bique is almost nonexistent and infrastructure that technicians and equipment, to do the job, and it is 121 Standards and Global Trade: A Voice for Africa not always possible to be certain about the effi- transparent and allows similar quality standards to ciency and quality of the work. The needs of this be required of imported goods. area are growing and becoming more difficult, ow- Firms must have access to recognized certifica- ing to the increase in the number of certified com- tion schemes, till such time that national schemes panies that need to prove that their equipment is are not developed. For this reason, INNOQ estab- calibrated by recognized entities. lished cooperation agreements with its Portuguese Therefore, there are many needs regarding this counterpart-the Portuguese Association for Cer- subsystem whose main objective is to protect con- tification (APCER), aimed basically at starting joint sumers and contribute toward the credibility to activities in certification, and with the South the whole quality system being created in the African Bureau of Standards (SABS). This cooper- country. ation will allow INNOQ and other institutions to gain time to develop the standards institutionally Conformity Assessment. Quality assurance of and to establish required local infrastructure. food products is achieved in many countries by With regard to product certification, work is un- mandatory certification schemes or appropriate in- der way toward having a national conformity mark spection infrastructures. Certification is thus de- approved, since the creation of conditions to begin signed to protect the consumers, putting products certifying the quality of products is regarded as a considered safe at their disposal. However, there is priority, which also requires better quality of serv- no formal subsystem of certification in Mozam- ice from national laboratories. bique, and only state bodies mandated for that pur- It is thought that a duly recognized national mark pose carry out inspections. could play a very important role. This role could The Ministry of Health, the Ministry of Fisheries, be, on the one hand to provide some guarantee to and the Ministry of Agriculture and Rural Devel- consumers regarding the safety of the product they opment undertake inspections of the quality of are using, and on the other to oblige firms to pay food products, based on the Codex Alimentarius more attention to the quality of their products to standards, which served as the basis for national leg- facilitate exports. islation in this sphere. Creating a national quality system that is func- The lack of specialized human resources and tional also implies dealing with questions of ac- even of equipment and infrastructure means that creditation, either of certifying bodies, laboratories, the inspections carried out by the various state inspection bodies, or the auditors themselves. bodies are not enough to ensure the quality of This issue is being considered in a regional products on the market, for both domestic and im- context, and the national perspective is to create a ported products. Also, these activities do not guar- focal point to deal with it, since the development antee the application of the existing legislation, of certification will become important in this which in most cases results in the constant breach process. of the most basic standards of public health and safety. . . Organizations, Infrastructure and Poor coordination among the various state insti- tutions that deal with agroindustries also hampers thei ffec the development and monitoring of programs that The public institutions that are responsible and par- would support industrial development. ticipate in the process of preparing and developing However, it should be noted that the quality of standards and technical regulations are divided into production does not improve the quality of the two groups. Some institutions are the focal points product alone, but also improves because of the ex- for the international organizations for standardiza- istence, at the national level, of infrastructures that tion and the others are collaborative research and would support efforts by the local business com- extension institutions that are important in this munity. This means, for example, that laboratories process; the latter have been discussed in the for testing, and research and other institutions need previous section. to be properly strengthened with the aim of ensur- The role and participation of the private organ- ing that the internal system of support to business izations will be described in the section entitled development and the improvement of quality is "Private Sector Perspectives" 122 Bridging the Standards Divide: A Case Study and Action Plan for Mozambique Public Institutions. Institutions that are focal Commission (IEC), the aim of which is to facil- points for organizations on international standard- itate increased participation by developing coun- ization are the following: tries in international standardization. With regard to metrology, INNOQ is a National Institute of Standardization and correspondent member of the International Quality-INNOQ. The Mozambican Government Organization for Legal Metrology (OIML). The on 24 March 1993 created the National Institute work carried out by INNOQ on metrology was of Standardization and Quality (INNOQ), subor- described in the section on metrology. dinated to the Ministry of Industry and Energy, In addition to its SADC activities, INNOQ now the Ministry of Industry and Trade. Its ac- has participated actively in COMESA harmo- tivities cover both goods and services produced in nization work, and is following the process now Mozambique and imported goods. INNOQ is a under way among the countries of the Indian public institution at the national level, with ad- Ocean Rim. ministrative autonomy and a legal personality. (b) Quality and environmental management, train- On 30 April 2002 it had a total of 15 staff mem- ing and awareness-raising, and direct support bers for its various areas of work, including six for businesses and quality management. technicians. Since its inception INNOQ has worked with The objective of INNOQ is to set up a National companies in various sectors to support their Quality System, which will improve the quality of efforts to improve quality. Direct support is products and services through standardization, provided for the drafting of procedures, certification, metrology, and quality management. through lectures and training courses. Some Activities are currently under way in the ar- From 1993 to 1996 the activities were carried eas of standardization, metrology, and quality out within the framework of a regional project management. implemented by DNV, a Norwegian company. From 1997 to 1999 they relied on support from (a) Standardization and metrology. the Portuguese Quality Institute/Resource con- INNOQ is responsible for the development sortium within the framework of an agreement of Mozambican standards, which are drawn up with the Swedish International Development by the Technical Standardization Committees Agency (SIDA). (CTN) in line with INNOQ Directive 1. Five The program with SIDA began in 1997, with standards for the food sector have been ap- the participation of eight industrial and serv- proved (for maize, maize meal, wheat, wheat ice companies. There were discussions in the flour, and salt) and six for the construction sec- companies to raise awareness about quality, en- tor. A further 100 Mozambican standards are abling them to participate more fully. By the in various stages of preparation. end of the program five companies had proce- INNOQ is the focal point for SADC work dures drawn up and three had drafted quality within the SQAM framework, and coordinates manuals. The other companies dropped out for participation in the regional harmonization of various reasons related to internal processes of sanitary and phytosanitary (SPS) measures and reorganization or restructuring. technical regulations. Nine training courses on Quality Manage- INNOQ has been a correspondent member ment Systems and two on Standardization were of the International Organization for Stan- held during this program, with an average dardization (ISO) since 1994, and is the focal participation of 40 people each. point for the SADC Expert Group Meeting on A program to support improved quality in standardization, quality assurance, and metrol- companies was launched in 2002 with backing ogy (see the section on involvement in regional from PODE. Its main objective was to help and international standards development). It is introduce quality systems and prepare the also the enquiry point for the Agreement on companies for certification. This training pro- Technical Barriers to Trade (TBT/WTO). gram is aimed at specific companies, to prepare INNOQisintheprocessofjoiningtheAffiliate them to apply ISO 9000 standards and to de- Program of the International Electro-Technical velop procedures and a quality manual, with a 123 Standards and Global Trade: A Voice for Africa view to certification. The budget for this pro- With regard to the certification of products, gram is US$12,000, but the costs vary accord- INNOQ is working on the development of a na- ing to the size of the firm. tional mark of conformity, to create the condi- (c) Public awareness and training activities. tions to begin certifying the quality of products. INNOQ organized courses and seminars for INNOQ has established an agreement with SABS more than 1,000 participants durmg 1997 and for the purpose of joint certification. The juxta- 1999. Some of these activities took place in position of the Mozambican mark of conform- Beira and Nampula. ity to the South African mark as agreed, will help In 2002, PODE covered 50 percent of the the Mozambican mark to become better known. costs of private enterprises participating in a However, product certification requires the training program administered in modules by existence of laboratories recognized for com- INNOQ. The main objective of the training petence, so that the mark of conformity at- program, which began in July and extended to tributed has some meaning and acceptance. at least one province, was to equip the partici- Certification is limited by the low level of pants with the skills to introduce quality man- awareness, expertise (consultants, auditors, and agement systems based on the ISO 9000:2000 other qualified personnel) and accredited lab- series of standards. oratories. Moreover, the lack of technical staff Jointly with the Mozambique-Portugal could become a bottleneck, if staff is not prop- Chamber of Commerce, INNOQ drew up (in erly integrated for optimal use of their skills. 2002) a broad program on various aspects re- It should be noted that the subject of certifi- lated to quality and the environment, includ- cation has become broader in Mozambique, in- ing the Hazard Analysis and Critical Control duding the discussion of schemes relating to the Point (HACCP). certification of forests and organic products. Public awareness activities have taken various While INNOQ has been working within the forms, including training courses; talks; semi- framework of SADCA (cooperation on ac- nars; the holding of quality weeks; making con- creditation within SADC), with the revision of tact with institutions, businesses, intermediate INNOQ statutes, this activity should be handed and higher education institutions, and the press. over to a specific body that will handle this type (d) Activities related to certification and accred- of work in the country. itation. The national priority is to prepare laborato- Firms need to be aware and to prepare them- ries for accreditation. The first training in a selves for the new challenges ahead arising from group of laboratories selected for this purpose the implementation of the SADC Trade Proto- was carried out in 2000. col. A priority was established to help them to (e) The INNOQ library. improve quality directly through the implemen- A properly organized, equipped, and stocked tation of quality systems. Work began in 1999 to library is the cornerstone of any national stan- raise awareness about the need to introduce sys- dards body, since it is thus appropriately en- tems of environmental management. dowed to satisfy the requirements of various In the short term, certification should con- clients. tinue to be done only by firms or other institu- The establishment of a documentation cen- tions properly accredited for that purpose. How- ter that can respond to the requests it receives ever, INNOQ has established a cooperation has long been a matter of concern. The INNOQ agreement with the Portuguese Certification As- library currently has a large number of stan- sociation, aimed basically at opening the way to dards from the ISO, the Codex Alimentarius, joint activities in this sphere, and in the first the South African collection of standards, Por- phase to the training of Mozambican auditors. tuguese standards, most from Malawi, Zambia, INNOQ technicians have observed the audits and the Seychelles, the OIML documents, and carried out on certified firms by the South some others. Moreover, the library has reviews African Bureau of Standards (SABS) in Mozam- and journals from various other similar insti- bique and participated in audits conducted in tutions and specialized books. The Interna- South Africa so as to be registered as auditors. tional Electrotechnical Commission (IEC) has 124 Bridging the Standards Divide: A Case Study and Action Plan for Mozambique supplied INNOQ with 200 standards in 2002, In relation to firms, some have taken part in the selected on the basis of national priorities, process, but their presence is generally insignificant. under the IEC Affiliate Programme. The certification of firms according to the ISO 9000 series of standards is still in its infancy. Three Department of Environmental Health (DHA) of the firms, in the service sector, have been certified, one Ministry of Health (MISAU). The DHA is the point by SABS and two by APCER. Cement is the only of contact for the CodexAlimentarius Commission. Mozambican product to be certified by SABS. It has participated in the annual meetings of the or- The Government identified Intertek Testing Ser- ganization and has contributed to the preparation vices as the firm to carry out preshipment inspec- of technical specifications. The analysis of this de- tions, while SGS normally carries out inspection of partment may be found in section on the Ministry exports, contracted by a third party. of Health. Department of Plant Health (DSV) of the Ministry Strengths, Weaknesses, and Prospects of Agriculture and Rural Development (MADER). Quality and standardization are a new concept in Mozambique is not a signatory of IPPC; however, Mozambique and the economic base of the coun- a representative of the DSV has participated in try is very weak. However, a number of actions have IPPC meetings but has exercised no influence on been taken and some improvement may be ob- the setting of standards. The analysis of this de- served both in very concrete aspects as well as in partment may be found in the section on the the attitude of managers and consumers toward the Department of Plant Health. issue. Other strengths include: National Directorate of Livestock (DINAP) of * Five food standards have been approved. MADER. The National Directorate of Livestock * The standardization program in 2002 included (DINAP) represents Mozambique at the OIE. The standards for cotton, cashew, honey, tea, sugar, analysis of this department may be found in the sec- fruit, fish, water, milk, meat, vegetables and tion on the National Directorate of Livestock. fertilizers, as well as the related sampling and testing methods. Consumers Associations. Mozambique currently * Standards for labeling are under preparation. has three organizations defending consumers' * The ISO 9000 series of standards (Quality Man- interests: PROCONSUMERS, DECOM, and the agement) and the ISO 14000 (Environmental Consumer Protection Institute, with the first two Management), have been adopted in 2002, while being very active. the standards related to HACCP (Hazard The consumers associations are associated the Analysis and Critical Control Point) are being various committees and working groups dealing analyzed. with standardization and metrology, although their * The certification process has improved and the participation is not always active. The associations first four companies have been certified in the last are newly established and lack technical capacity to three years. participate in these activities. * The first metrology laboratories have become DECOM has drafted and proposed a consumer operational during 2002. protection bill, which has already been discussed * Technical regulations are being revised, mainly in with a number of stakeholders. It includes propos- the agriculture sector. als for the development of a series of specific * Foodstuff regulations, applied to domestic pro- technical regulations, and for the establishment of duction and imported goods, generally men- a Public Institute for Consumer Protection. tion the obligation to comply with the Codex standards. Other Organizations. Some economic associations are represented in the National Council for Quality Weaknesses of the system include: and in other standardization and metrology com- mittees. The number of participating associations is * Lack of appropriate human, material, infrastruc- growing. ture, and financial resources. 125 Standards and Global Trade: A Voice for Africa * A low level of awareness about the importance of At multilateral level, Mozambique is a member quality and standardization among government, of the International Organisation for Standard- private sector and donors. isation (ISO), the Codex Alimentarius, the Inter- * The process of developing national standards is national Office for Epizootics (OIE) and the in a very embryonic phase. International Organisation for Legal Metrology * The participation of most stakeholders in the (OIML). drafting of technical regulations is limited be- With regard to other international standards or- cause of the short notice given for their analysis. ganizations, Mozambique is a member of the Inter- * Coordination among institutions and stakehold- national Telecommunications Union (ITU) and is in ers is deficient. the process of joining the International Electrotech- * Control of the compliance with technical regula- nical Commission (IEC) Affiliate Programme that tions, is not effective, either with respect to will allow the country to have access to some inter- imported or domestic products. national standards in electro-technology. * Inspection of weights and measures is almost nonexistent. nonexistent. ~~~~~Regional Standards Development * Inadequate legal framework. The revision of regulations should proceed and extend to other Among the regional organizations in which Mozam- sectors more rapidly. bique participates, the following are notable. * Lack of trained technical staff and of mechanisms for retaining recruited staff; African Regional Standardisation Organisation * Laboratories with inadequate equipment; (ARSO). The African Regional Standardisation Or- * Inspectors with little and poor training; ganisation (ARSO) covers the whole of the conti- * Poor means to circulate information; nent. This is an intergovernmental organization * There is no culture of sharing information. created on 11 January 1977 with 23 members. It is open to all the members of the Organization of Prospects. There is growing need to follow inter- African Unity (OAU) and The United Nations Eco- national recommendations, the entry into the Trade nomic Commission for Africa. Its mandate includes Protocol and the whole process of state sector the preparation and promotion of standards. reform will contribute to the improvement of pub- Mozambique is not a member of ARSO for reasons lic institutions involved in the process, creating related to limitations of technical staff and lack of awareness about the need to develop a credible and financial resources. Nevertheless, the country has transparent system aligned with international received assistance from the organization for the procedures. training of technical staff as well as a set of the The challenges that markets impose on compa- principal ARSO standards. nies make them change their attitude toward these activities, and this awareness is slowly improving. It Southern African Development Community is expected that the private sector needs will speed (SADC). Questions relating to the trade of goods up the development of the appropriate infrastruc- within SADC are covered in the SADC Trade tures by government as well as the private sector. Protocol. It is expected that the quality policy now under However, besides the trade protocol, other pro- preparation will be approved soon. The five-year tocols relating to other areas have also been signed, strategic plan will be implemented when funds but a lack of coordination among the various in- become avallable. stitutions within the countries themselves and this is often reflected at regional level. The coordination of activities related to stan- Stanvolaerends Revegiopena andInternationa dardization, quality assurance, accreditation, and metrology among SADC countries members would Mozambique is a member of various regional or- allow sharing of infrastructure, enabling countries ganizations that issue standards. However, it has such as Mozambique to benefit from the infra- placed priority on participation in the Southern structure existing in neighboring countries. This is African Development Community (SADC). happening in metrology, where the existence of 126 Bridging the Standards Divide: A Case Study and Action Plan for Mozambique advanced laboratories in South Africa will allow priority working areas of this structure, de- Mozambique to start with less developed infra- scribed in Annex C. structures and in accreditation, where the facilities (b) SADC Cooperation in Measurement Trace- available in the region will be shared through ability (SADCMET). SADCA. This will allow Mozambique to obtain ac- The objective of SADCMET is to coordinate creditation services through the recognized bodies metrology activities and services in the region in the region while at the same time training audi- to provide regional calibration and testing serv- tors and preparing the national infrastructure. ices, including regulatory bodies, with readily available traceability to the SI units of meas- Activities Related to the MOU on SQAM. With urement, through legally defined and regionally regard to the SADC Trade Protocol (summary ap- and internationally recognized national meas- pended in Annex C), many clauses mention the urement standards. need for harmonization of standards and technical INNOQ represents Mozambique on this regulations as one of the ways to facilitate com- structure and participates in its meetings. mercial exchanges in the region. The need to deal Many subjects are dealt with, but Mozambique's properly with questions related to quality in gen- participation has been limited because of the eral and to standardization in particular led the absence of any metrological infrastructure, lack ministries in charge of industry and trade in the of expertise and inadequate financial support. region to adopt a Memorandum of Understanding However, Mozambique has benefited from re- on Standardization, Quality Assurance, Accredita- gional training activities and from a regional tion, and Metrology (SQAM), which is summarized project, supported by NML, PTB, UNIDO, and in Annex C. SABS that installed the nucleus of a national The objective of the MOU is to establish the for- metrology laboratory. mal framework in which the cooperation among SADCMET is also involved in preparing the national institutions in standardization, quality projects to support the development of quality assurance, accreditation, and metrology (SQAM) infrastructures, mainly related to metrology, in will take place in the region and this framework is the member countries. Through SADCMET, referred to as the SADC SQAM Programme. awareness campaigns on metrology and SQAM The objectives of the SADC SQAM Programme in general are being prepared. are the progressive elimination of Technical Barri- Internally, INNOQ has created a Metrology ers to Trade (TBT) among the member states and Working Group (GTM), which analyzes the is- between SADC and other regional and international sues arising in the regional meetings, as well as trading blocs, and the promotion of quality and an discussing questions related to the development infrastructure for quality in the member states. of this subsystem in Mozambique. The group In the context of the activities covered by the incorporates the various stakeholders, including MOU, a project was prepared in 2001, with UNIDO ministries, research institutions, universities, involvement, to develop these activities in the economic associations, and consumers. region. The cost of the project was E20 million The network also permits information shar- (20 million euros). ing to support the private sector, providing in- To implement the SADC SQAM Programme, the formation that might enable firms to obtain the following structures were created. appropriate calibration services in neighboring countries. (a) SADC SQAM Expert Group (SQAMEG). (c) SADC Cooperation in Legal Metrology (SAD- The objectives of SQAMEG are to coordi- CMEL). nate regional activities of SQAM and provide The objective of SADCMEL is to facilitate a forum to deal with conformity assessment. the harmonization of the national legal metrol- INNOQ has represented Mozambique at the ogy regulations of the member states and of meetings of this structure and has participated SADC with other regional and international actively, although for reasons related to lan- trading blocs. guage and lack of technical capacity, INNOQ INNOQ also participates in the meetings of did not assume responsibility for any of the this structure, where the main items on the 127 Standards and Global Trade: A Voice for Africa agenda have been related to the harmonization The last meeting of SADCSTAN redistrib- of regulations as related to legal metrology in the uted the secretariats according to which region. For example, the final stage of discussion countries volunteered. The secretariat for de- and harmonmzation has been reached of the rec- veloping the various items for standardization ommendation from OIML on the labeling of is centered mainly in South Africa (South prepackaged products, to be approved in the re- African Bureau of Standards-SABS), because gion. This will affect the labeling and packaging of the lack of technical and financial capacity of some products in the context of this study with in the other countries in the region. the aim of protecting consumers. A counter-scale Mozambique assumed responsibility for the document based on OIML recommendations secretariat to develop the standard for salt, and was finalized for discussion by the private sector an English translation by SABS of the draft has in member countries; requirements for beam been circulated among the other countries in scales are beng discussed. A document on the the region. minimum training requirements for metrolo- At national level, the Standardisation Tech- gists in the region is being finalized. nical Committees carry out the work and Member countries representatives are at- within the agreement with the National tending training courses held under the aus- Standardisation Program, which includes the pices of SADCMEL and SADCMET. regional priorities. The GTM mentioned above also deals with One of the objectives of SADCSTAN is to be issues related to legal metrology, since one of accepted by ISO as one of the standardization its objectives is to ensure discussion and dis- organizations of the region. semination of information relating to this With regard to the harmonization of techni- structure. cal regulations, this matter has received special One of the main constraints to participation treatment and two meetings have been held to in SADCMEL is language, which creates prob- discuss regional integration. It was agreed that lems for the dissemination and analysis of the a Technical Regulation Framework would information produced. probably be the most appropriate policy frame- (d) SADC Cooperation in Standardisation (SAD- work that would link the requirements of the CSTAN). SADC Trade Protocol to the institutional in- The objective of SADCSTAN is to promote frastructure that make up the SADC SQAM the coordination of standardization activities environment. This framework will make it pos- and services in the region, for the purpose of sible to ensure that technical regulations will be achieving harmonization of standards and adopted and implemented according to the technical regulations, with the exception of le- WTO TBT Agreement. gal metrology regulations, in support of the The SADC Secretariat arranged a workshop objectives of the SADC Protocol on Trade. on a Technical Regulation Framework for INNOQ represents Mozambique in this SADC on 21 and 22 March 2002 in Gaborone. structure. The priorities set for the region in- The workshop considered that there is a real clude the harmonization of standards, some of need for a common regional approach; there is which relate to the areas of interest to this need for more detailed work to identify the study, such as fish, fruit, and labeling. pros and cons of the different approaches to The 2001 meeting of SADCSTAN approved the problem and member states need to carry the procedures for regional harmonization out a stocktaking exercise to evaluate the cur- (harmonized SADC standards), which are rent situation. based on international procedures. The first (e) SADC Cooperation in Accreditation (SADCA). harmonized standards are now in final draft The objectives of SADCA are to facilitate the form. creation of a pool of internationally acceptable The most serious obstacle to Mozambique's accredited laboratories and certification bodies participation in this process is the language (for personnel, products and systems, includ- barrier and the impossibility of circulating the ing quality and environmental management drafts of standards in Portuguese. systems) in the region, and to provide member 128 Bridging the Standards Divide: A Case Study and Action Plan for Mozambique states with accreditation as a tool for the re- agricultural trade; (b) to move the regional trade moval of TBT in both the voluntary and regu- agenda forward, closer coordination is needed both latory areas. among the various agencies-and players within the Mozambique has participated in this struc- member states as well as between the states; (c) ture through INNOQ, which has circulated the member states are hampered by an outdated legal principal conclusions that have been reached and regulatory framework on SPS and food from the ongoing work. The various meetings safety-some laws and regulations dating as far of SADCA have made it possible to create a back as the colonial era. These outdated rules and model for the development of accreditation in regulations are inadequate to deal with current in- the region that is pioneering in the field. A pro)- ternational standards and requirements; (d) mem- ect to implement this has been prepared and ber states often lack the appropriate technical and funding is being sought. The International human resource capacity to deal with complex is- Accreditation Forum, Inc. (IAF) has granted sues of SPS and food safety, to assess related risks, SADCA special recognition as a Regional and to monitor policies and their outcomes; and Accreditation Group. (e) there is need to clarify the roles and responsi- The prospect in Mozambique is to create an bilities of the key stakeholders in both the public accreditation unit (focal point) that will coor- and private sectors in the implementation of the dinate its activities with what is going on in proposed SPS and food safety measures. SADC and which will benefit from existing Mozambique has participated in some regional accreditation facilities in SADC. meetings on this subject and in the actions under way to follow up the recommendations of the Activities in the Context of SPS. The SADC Trade seminar. Following the creation of the SADC Con- Protocol specifies that member states should base sultative Forum on SPS/Food Safety, a national SPS measures on science, in accordance with the working group was created to deal with this topic. WTO Agreement. INNOQ was given the responsibility by the Min- Thus SADC created a Consultative Forum on istry of Industry and Trade to lead this group and SPS/Food Safety, which organized a workshop on coordinate activities in this sphere, incorporating sanitary and phytosanitary standards (SPS) and representatives of the various related sectors, food safety issues in Windhoek, Namibia from including ministries, institutions, and the private 20-22 November 2000 to deliberate on specific ac- sector. However, this group suffers from a lack of tions and steps for harmonizing SPS measures in resources and the specialists assigned to work with support of the implementation of the SADC Trade it are overloaded with work. Protocol. Mozambique is an active member of the plant The workshop, was jointly organized by the protection organization within the SADC and is SADC Food Agriculture and Natural Resources also an active member of International Red Locust Sector Development Unit (FANR SDU) and the Control Organisation (IRLCO)-CSA, the organiza- Trade Sector Coordinating Unit (TSCU), and was tion in charge of controlling migratory pests in the facilitated by the Food Security and Rural Devel- region, currently led by Mozambique's Ministry of opment Hub. The SADC Workshop on SPS/Food Agriculture and Rural Development. Safety was organized to raise awareness among pub- Participation in the activities mentioned above is lic officials, standards bodies, exporters, and the pri- through the Department of Plant Health in the vate sector on the importance of harmonizing SPS Ministry of Agriculture and Rural Development. and food safety standards in support of the imple- Mozambique also participates in meetings of the mentation of the Trade Protocol. SADC Livestock subcommittee through the The key findings and recommendations of the National Directorate of Livestock of the Ministry of workshop are: (a) there is need for clear institu- Agriculture and Rural Development. tional arrangements at both the regional and na- tional levels to deal with issues of sanitary and Community of Countries with Portuguese as the phytosanitary measures and food safety so as to Official Language (CPLP). In the context of this move more expeditiously in the implementation of community, Mozambique has coordinated its ac- the SADC Trade Protocol with specific regard to tivities with Angola and Portugal. However, in 129 Standards and Global Trade: A Voice for Africa March 2002 the first meeting of SQAM representa- as the basis for the development of Mozambican stan- tives from the member countries of the CPLP, dards in this sphere. As in other areas, the prepara- namely Angola, Brazil, Cape Verde, Guinea Bissau, tion of the standards is by technical committees that Mozambique, Portugal, Sao Tome and Principe, involve ministries, technological and research insti- and Timor was held. It was agreed to hold an an- tutions, including universities, economic, profes- nual meeting of standardization bodies and focal sional, consumer, and other interested associations. points from CPLP countries so as to discuss So far Mozambican standards for iodized salt, activities related to standardization. wheat, wheat flour, maize, and maize meal have been developed in the context of Codex, and others Indian Ocean Rim Association for Regional are in various stages of development, for example, Cooperation (IOR-ARC). This organization is foodstuffs, sampling and testing methods, labeling, composed of 14 countries (Australia, India, In- and pesticides. The Department of Environmental donesia, Kenya, Madagascar, Malaysia, Republic of Health has also drawn up specifications based on the Mauritius, Mozambique, Sultanate of Oman, Codex, which are currently being used as the basis Singapore, South Africa, Sri Lanka, Tanzania, and for the development of relevant national standards. Yemen). In the context of this organization, There have been problems, however, in obtaining Mozambique is a member of the Indian Ocean Le- the latest version of Codex standards, which often gal Metrology Forum (IOLMF) of which the secre- do not exist in hard copy. A summary on this tariat is with The National Standards Commission, organization is contained in the Annex C. Australia. Participation in the forum has been by correspondence and has produced information that International Plant Protection Convention is contained in the Directory of Legal Metrology in (IPPC). Mozambique is not a signatory of this con- the Indian Ocean. There is almost no participation vention, although the Department of Plant Health in other activities of the organization. Mozambique attends its meetings and the regulations written by is also a member of the Committee that deals with the Ministry of Agriculture and Rural Development SQAM in general. are in line with the recommendations of this organization. A summary of this organization is International Standards Development contained in the Annex C. The following organizations are among the most Office International des Epizooties (OIE). The notable in which Mozambique participates. Department of Animal Health of the Ministry of Codex Alimentarius Commission (CAC). The De- Agriculture and Rural Development represents CodexpArtmentaofEnviriusConmmissin HeAl ) The Mi y Mozambique on this organization. However, it only partment of Environmental Health of the Ministry participates in international meetings. A summary of Health is the point of contact with tesCode of this organization is contained in the Annex C. Alimentarius. As the point of contact, it is respon- sible for coordinating activities relating to this or- International Organisation for Standardisation ganization in the country. Among other tasks, this (ISO). Mozambique has been a correspondent includes maintaining Codex documentation and member of the ISO since 1994, participating since circulating information to interested parties, as well then in the ISO General Assemblies and Joining as coordinating the national position regarding the some of the policy development committees, no- preparation and approval of Codex standards. tably the Committee on Conformity Assessment The point of contact should work with a national (CASCO), the Committee on Consumer Policy Codex committee, which does not exist in (COPOLCO), the Committee on Developing Mozambique. Country Matters (DEVCO), and the Committee on Existing legislation in areas related to Codex Information Systems and Services (INFCO). activities generally refer to the standards that have Participation in ISO has helped Mozambique become compulsory either in domestic production keep up to date with ISO standards, participate or in relation to imports. in the international network of standardization The national program of standardization devel- organizations, receive important information on oped by the INNOQ has been identifying the priority various committees, and obtain support in specific areas for activity, including food, and Codex is used training programs and other areas. 130 Bridging the Standards Divide: A Case Study and Action Plan for Mozambique The most important information is circulated influence over decisions is sought. With regard to among INNOQ stakeholders. The standards and other regional organizations of which Mozambique other documents are used as background for the is a member, it has sought to keep abreast of events development of Mozambican standards where pos- and use the information where possible. Thus we sible and adopted as Mozambican standards when- will focus our analysis on SADC. ever necessary. A stumbling block in the process of Mozambique benefits from participation in the adopting standards is the fact that most of them SADC SQAM programme, mainly through sharing have not been translated into Portuguese. experience, regional training activities, and form- INNOQ has been active in representing Mozam- ing a common approach to specific subjects for bique on DEVCO and through this has received dealings with donors. It also learns from the expe- support from the ISO, notably to attend courses and rience of other countries and is thus able to avoid seminars outside the country and to hold courses some mistakes, while influencing the process of inside the country. It was also through this com- regional harmonization. mittee that Mozambique took part in a project that The main constraints to a more effective partic- allowed the first inventory to be taken of six ipation in the regional standards setting result laboratories with a view to their accreditation. mainly from the factors mentioned below: There is almost no participation in the other committees, where the main benefit from atten- Language: For harmonization of standards and reg- dance is the receipt of information that is very ulations to take place it is required that all coun- useful in the work of standardization. Also, partic- tries seek internal consensus. The fact that the ipation in the international process of developing working documents, draft standards or regula- standards and influence on this process is almost tions, are written in English hampers discussion nonexistent. A summary of this organization is within Mozambique. The SADC Secretariat re- contained in the Annex C. cently took some action to support translations. Priority, however, is given to translating finished The International Organisation of Legal Metrol- documents. In technical areas such as this, that ogy (OIML). Mozambique has been a correspon- priority does not help much to resolve the prob- ding member of the OIML since 1995 through lem. This situation has resulted in Mozambique INNOQ. The process of regional harmonization being pushed to the sidelines in relation to some with regard to legal metrology is based on OIML decisions on the adoption of standards and reg- recommendations and obtaining the documents of ulations. It also prevents the country from taking this organization is therefore particularly important. over the technical secretariat for the development Thus, while INNOQ does not participate directly of some standards and affects participation in in the activities of this organization, it has been some other activities. given assistance through SADCMEL in the revision Financial capacity: The situation described above is of some international recommendations. The rec- made even worse by the lack of financial re- ommendations are regarded as priorities and are sources that limits participation in the various under analysis in the region with a view to incor- meetings, given that the expenses involved are the porating them into standards and regulations of responsibility of the member country. This af- each member country. fects, for example, translation capacity and the SADCMEL represents the countries of SADC in management of all the work of coordination and the OIML and in the International Bureau of circulation of information. Weights and Measures (BIPM). Technical capacity: Scarcity of technicians and work overload of the existing technicians mean that they are often not available to take part in re- The Country's Strengths and Weaknesses in gional meetings. At the same time, the lack of in- Participating in Regional and International frastructure also affects participation. Standard Setting The lack of incentivesfor the technicians: Despite the Regional Standard Setting. As mentioned above, facts mentioned above, we have tried to circulate priority is given to participation in regional stan- information and create specific groups such as dardization activities in the context of SADC, where the GTM, the group on SPS, and the technical 131 Standards and Global Trade: A Voice for Africa standardization committees. This has helped dis- The international organizations have given this cussion of these matters in the country, although matter some attention. The 24th General Assem- participation in meetings has not always been ad- bly of the ISO in September 2001 discussed the equate, because of the lack of incentives for the matter and decided that regional seminars would technicians and their work overload. be held in 2001 and 2002 to discuss this and pro- The lack of awareness: It should be mentioned pose ways of reducing the effects of weak partici- that in the context of implementation of the pation by developing countries in international SADC Trade Protocol, other matters have standardization. caught the attention of both the government The seminar for Africa was held in Nairobi, Kenya and the business community, and quality is not on 18 and 19 March 2002. Mozambique was repre- yet a priority. sented by the Head of the Standardisation Depart- ment at INNOQ and by the chair of the Consumers Strengths and Weaknesses of Participating in Association. The conclusions of the seminar point International Standards Setting. The benefit to to the design of a program of action for enhancing be drawn from participation in international or- the participation of developing countries and ganizations, apart from the learning factor, is what economies in transition in international standard- results from the application of the available docu- ization, which will be on the agenda for discussion mentation as the basis for the development of at the next ISO General Assembly and put for the national technical standards and regulations. consideration of donors. As mentioned in previous sections, while Mozam- bique is represented at some international meetings Private Sector Perspectives and is trying to base its standards on interna- tional standards, its participation in international Ttprivate sector in Mozambique plays an im- portant role in economic development in general standardization is very small. The very little that and is one of the main actors in setting standards does exist is confined almost exclusively to the state and quality systems. sector. Thus, many problems hamper effective partici- Main Private Sector Associations pation in these organizations, most notably: The Confederation of Business Associations of * Financial constraints for the payment of sub- Mozambique (CTA), created three years ago, is an scriptions that are normally high, and for the organization of more than 41 Mozambican busi- participation in meetings; ness associations covering over 1,300 firms from * The lack of awareness on the part of both the gov- almost all the productive and service sectors. ernment and the business community of the im- The mission of the CTA is to participate in portance of using standards, and ignorance of the and contribute to the economic growth and consequences of not using them; development in Mozambique by constructively * The low production and the low levels of exports, engaging and lobbying with the government to which in most cases do not make failure to ensure that the country's major macro- and micro- comply with standards a problem; economic policies are not detrimental to domestic * The lack of consumer awareness of the quality or and foreign direct investment flows or to the de- standards problem; velopment of small and medium enterprises * The lack of technicians who would allow effec- (http://www.cta.org.m2). tive participation in the process; The main objective of the CTA is to ensure that * Technological questions. those government policies and programs are not detrimental to the economic development of the It is thought that growing awareness of the World country and to the development of the local private Trade Organization (WTO), implementation of the sector. SADC trade protocol and the proximity of South CTA aims to strengthen and deepen a construc- Africa, a country with a very advanced economy tive policy dialogue between the government and will dictate a short-term reversal of the way of the private sector; to improve the business and in- dealing with this problem. vestment climate by reducing the cost of doing 132 Bridging the Standards Divide: A Case Study and Action Plan for Mozambique business in Mozambique; to promote the systematic Non Governmental organisations (NGOs) play reform of the legal framework of the country, in- an important role in sectoral development, design- cluding the reform of the Commercial Code; to en- ing and implementing projects and activities in courage and stimulate business relations between specific fields and locations. These organisations national and foreign investors; and to develop and operate at national, provincial, and district levels, improve cross-border cooperation between the in coordination with the related government insti- business sector in Mozambique and the business tutions. NGOs have the strong advantage of being sector in neighboring countries. linked with the international NGO networks, with CTA has worked closely with the government on faster and easier access to resources and informa- a number of initiatives, including removing and tion and with a more practical structure and simplifying administrative and procedural con- working system. straints to doing business, encouraging the reform of outdated legal instruments, providing comments Business Environment and the Situation of Firms on new laws such as labor and industrial laws, and presenting private sector views on policies in bilat- The private sector in general has been also affected eral and multilateral trade agreements. by several problems that slow down the economy Mozambique has links with the business commu- growth rate. Factories are being closed, unemploy- nities in several other countries through established ment is growing, and purchasing power is shrink- associations. These include the Mozambique Cham- ing. In 1999, the net position of the largest 100 ber of Commerce (CCM), the Mozambique-USA companies in Mozambique showed on average that Chamber of Commerce, the Portugal-Mozambique they operate at break-even or at a loss, 23 percent Chamber, and the Chamber of Commerce and In- of the total business volume involves six firms in dustry of Mozambique-South Africa (CCIMOSA). the energy and fuel marketing sector, and the few The professional associations representing sectors firms making a net profit are in financial services and branches have been supporting their members and the trade sector. Among the largest companies, in specific issues and representing them in sector 52 operate in trade, banking, insurance, and other associations or in CTA. services although Mozambique is essentially an In the industry sector, the Mozambique Indus- agricultural country. The banking, building, and trial Association (AIMO) was established in 1982. hotel sectors depend mostly on foreign interests. According to its statutes, the objectives of the asso- The small and medium firms, which dominate in ciation are to promote the participation of its mem- Mozambique, do not fulfil their economic and bers in the development of economic activities in social function and are unable to meet their fiscal the technical, financial, commercial, associative, responsibilities to the state. and cultural spheres; to defend the interests of The creation of branch commercial and indus- national industries and their shareholders; to dis- trial associations and their coalitions facilitate the seminate professional ethical standards; to support relationship among the firms working in the same and monitor best practice; and to promote, protect branch and related activities and help them to have and coordinate the interests of its members. better and easier access to information, to discuss Business associations representing producers of and find solutions to members' problems, and specific industrial branches include in salt, edible achieve goals successfully. oil, sugar, cashew nuts and seafood. The organisation of annual conferences of the In the trade sector there is the Mozambique private sector since 1995, considered a forum of Commercial Association (ACM) with the objectives reference on economic and business matters in of promoting the development and coordinating Mozambique, has improved the dialogue between commercial and related activities to improve the government and the private sector, facilitating the situation of ACM members and to extend their par- analysis of complex situations, programming con- ticipation in external trade. crete actions, and finding solutions to facilitate the In the agriculture sector there are business asso- economic growth. ciations representing producers of sugar, cotton, A survey carried out in about 50 firms in 2001 fruits and vegetables. There are also specific associ- shows that 62 percent were confident that their busi- ations representing farmers and peasants. ness would improve. In general, businesspersons are 133 Standards and Global Trade: A Voice for Africa willing to find ways and means to overcome the * Participate in and promote national events re- problems and challenges that exist, such as the fact garding quality, such as "Quality Weeks," that the great majority of the population depends "National Quality Awards" and others; on subsistence farming and has practically no link * Participate in and promote quality dissemination to national and international consumer markets; the actions, such as meetings, workshops, and news domestic economy is relatively small; the business in newspapers, magazines, and other media. environment in certain areas is dominated by mo- Develop human resources, training the necessary nopolies and oligopolies, with foreigners predomi- technicians to improve quality of both on prod- nating in vital sectors; Mozambican private capital uct and services; is practically irrelevant; high operating and transac- * Invest in the development of quality infrastruc- tion costs reduce the competitiveness of small firms tures, taking advantage of business opportunities and serve as negative incentive to new investment, arising from the implementation of the quality for example, the price of fuels, the costs of loading policy; and unloading in the ports, the excessive costs of * Participate in the financing of quality support telecommunications, coastal shipping, banking activities. services, air transport and the costs of energy. During the 6th Annual Conference of the Private Sector in Mozambique, held in Maputo in March Challenges 2001, the following questions, considered central to The private sector is represented in the National ensure better functioning of the economy, were dis- Council for Quality and in all the technical com- cussed in the thematic panels. The resulting matrix mittees, including those formulating standards. identified issues, proposed solutions, gave an m- Representatives of private firms have, through dicative time scale, while comments showed that the INNOQ, taken training courses and participated in participants in the agriculture, industry, and trade seminars outside the country. Several firms are panels dealt with issues related to standards and currently taking part in activities that will help quality. It was suggested that work should be un- them to improve the quality of their services. A dertaken to review and establish quality standards growing number of firms and technical staff are be- for farm produce to improve agricultural market- coming interested in the training programs in this ing and rural development. The need to strengthen sphere. INNOQ was recognized (CTA 2000. 6a Conferencia However, the involvement of the private sec- Anual do Sector Privado em Mocambique). tor in both the formulation of standards and in other activities related to the provision of services to improve quality is very limited. There are no Quality Policy and the Role of the Private Sector conuttsor consuting fims speali n consultants or consulting firms specializing in The quality policy currently under discussion in the assisting business development. Firms and busi- country includes the development of a legal frame- ness associations and their representatives need work that will allow harmonious growth of state to regard activities related to quality assurance as institutions and the participation of the private priorities and must become more active in the pro- sector in specific activities. (INNO © 2001, 1 Con- duction and implementation of activities planned ferencia Nacional sobre a Politica da Qualidade jointly with INNOQ. (Proceedings)). The development of important projects like the It prioritizes the following aspects for the private MOZAL aluminum smelter also demands extra ef- sector: fort from firms regarding the quality of their prod- ucts. MOZAIs requirements of its suppliers are * Improve product and service quality assuring very high, both in the development phase of the the introduction of international practices in project and during implementation. In that context, what concerns quality, contributmg to greater support projects were carried out for 25 firms to competitiveness; improve the quality of the service provided and the * Participate through its representatives in govern- level of their performance as suppliers to MOZAL. ing bodies and technical committees with rele- One of the targets in the development foreseen vance to standardization and quality; in agriculture and the efforts currently being made 134 Bridging the Standards Divide: A Case Study and Action Plan for Mozambique to diversify the export base is the improvement of spection, certification and approved procedures, quality and the establishment of good practice in treatments, quarantine, statistical methods, sam- production. pling procedures, risk verification methods, and The private sector is facing various problems re- packaging and labeling requirements directly linked lated to the high costs of production, problems of to food safety. access to bank loans, unfair competition from im- The agreement requires members to harmonize ported goods, outdated customs tariffs and others their SPS measures on the broadest possible base, with negative impact on performance. This is one using international standards and taking an active of the reasons behind the low involvement of pri- role in the relevant international organizations, vate firms in the development of standards or in such as the Codex Alimentarius, IOE, and the IPPC other activities related to quality control. network. The recent coming into force of the SADC Trade The agreement contains provisions on the pub- Protocol is a challenge. As the reform of the cus- lication of regulations, enquiry points, and proce- toms service advances and tariffs are consequently dures for notification or new or modified SPS reduced and other trade barriers removed, the need measures that deviate from international standards to address questions related to quality becomes and recommendations. (APHIS and SPS Agree- clear, not least because neighboring South Africa ment: Rights and Obligations under WTO and has a developed economy and a strong and well- NAFTA). defined quality assurance infrastructure. An SPS committee was created under the leader- ship of INNOQ to deal with matters of obligations WTO and Trade Commitments: arising from this agreement and because the mem- bers of SADC are taking steps toward harmonizing SPS measures. It includes representatives of the The World Trade Organisation (WTO) was created Ministries of Industry and Trade, Agriculture and by the Marrakech Accord of 15 April 1994 and be- Rural Development, Health, and Fisheries, and the gan operating on 1 January 1995. Mozambique was private sector. a member of the WTO's predecessor, the General The appointment of persons to serve as enquiry Agreement on Tariffs and Trade (GATT) from 27 points is under way and is expected to include July 1992 and deposited the documents of ratifica- INNOQ, the Ministry of Agriculture and Rural tion of its membership of WTO on 26 August 1995. Development, and the Ministry of Health. As a member of the WTO, the Government has placed priority on activities that allow it to fulfil its obligations. Mozambique has coordinated its posi- The Agreement on Technical Barriers tion taken at the WTO with the other members of to Trade (TBT) SADC. The TBT agreement aimed at ensuring that techni- The Ministry of Industry and Trade is the focal cal regulations, standards, and procedures for con- point for the WTO. formity assessment applicable to international trade do not create unnecessary obstacles to such trade. The Agreement on Sanitary and The agreement further establishes that the compul- Phytosanitary Measures (SPS) sory standards for products will not create unnec- essary barriers to trade if they are based on inter- This agreement reaffirms the right of any govern- nationally accepted standards. If for geographical, ment to adopt measures to protect human, animal, climatic, or other reasons, it was not possible for the and plant life or health, subject to the provision that members to base the compulsory regulations on in- these are not used in an improper way for protec- ternational regulations, they wlll be obliged to pub- tionist purposes and that they do not give rise to lish a draft of these regulations to allow producers unnecessary barriers to international trade. in other countries the opportunity to comment. The SPS measures include laws, decrees, regula- The Code of Practice for the Preparation, Adop- tions, requirements and procedures, covermg, tion and Application of Standards contained in An- among other things, the criteria for finished prod- nexe 3 of the TBT agreement requests countries ucts, production methods and processes, testing, in- to apply their best efforts so that their national 135 Standards and Global Trade: A Voice for Africa standardization bodies follow the same principles ment among several ministries and the business and rules in the preparation and adoption of vol- community affects the activities of the enquiry untary standards as established for compulsory point. standards. (The Agreement on Technical Barriers to Both the Ministry of Industry and Trade and trade). INNOQ have organized a number of activities to INNOQ notified the ISO of acceptance of An- raise awareness on these agreements and some con- nexe 3 of the TBT Agreement. INNOQ Directive 1 tinuity in these is regarded as necessary. that establishes the procedures for the preparation The enquiry point for the SPS Agreement has of Mozambican standards complies with the re- not been nominated yet. The SPS Committee un- quirements of this Annexe. Compliance with this der INNOQ needs appropriate support to de- Annexe assures the international community that velop its activities. The appointment of an enquiry the signatories comply with the minimum rules point for the SPS Agreement should be accompa- established internationally. nied by actions that will allow the conduct of its The Mozambique Government, through the functions. Ministry of Industry and Trade, which is the focal point for the WTO, appointed INNOQ as the Main Findings and Proposed Action Plan enquiry point for the TBT Agreement. Main Findings Mozambique is a country with great economic po- General Analysis of the Main Problems tential, mainly in the agriculture sector. Agriculture Strengthening internal organization and infra- is the main economic activity, contributing around structure is generally regarded as necessary to 25 percent to GDP and employing about 80 percent ensure that the country responds to the various re- of the labor force. The lack of appropriate tech- quests in the context of the agreements, including nology for small producers, who often lack farm- the need to notify the existence of technical regu- ing inputs and store their crops using local tech- lations and standards that affect trade. It also nology, contributes to low yields, post-harvest provides the capacity to analyze how much export losses, and low quality of the crop; these problems products are affected by measures taken by other are associated with the lack of an appropriate trade countries to which exports are made. network. National standards are in the process of being Agro-processing in Mozambique has been not developed and harmonized with the region on been able to absorb the agricultural products, which the basis of international standards. When these leads to export of basic raw materials and to the de- are in draft form, notification has been given of pendence on imports of final consumer goods of their existence in line with Annexe 3 mentioned agricultural origin. above. Because of the level of poverty, the need to sat- With regard to technical regulations in general, isfy basic requirements and to be aware of quality they need to be revised, since some of them are is not a determining factor in trade for domestic out of date, and this revision is proceeding in var- consumption. Export markets are more and more ious areas, including agriculture and fisheries. rigorous with respect to quality, but Mozambican There is no exhaustive inventory of the technical products have not yet faced export rejection regulations in force in the country. INNOQ has because of lack of quality. been working with the different sectors to identify Studies have been conducted to evaluate agricul- priorities for standardization and the relevant in- ture products with potential for generating a viable ternational standard available to develop this and promising rural agroindustry and to explore work. The purpose is to ensure that basic stan- mechanisms to promote them. Other studies are dards for the implementation of these regulations also being done to analyze the market potential for are available. agriculture products in local and foreign markets. The appointment of an enquiry point for the TBT It is expected that results of the studies together Agreement was not accompanied by the availabil- with the other initiatives analyzed in this study will ity of the necessary infrastructure to fulfil these help solve some of the existing problems and functions. Ignorance of the contents of the agree- develop agriculture and agroindustry. 136 Bridging the Standards Divide: A Case Study and Action Plan for Mozambique The case studies show that, in general, that all the disseminate information about TBT and SPS Agree- sectors of the economy need to improve to be com- ments. New technical regulations are not being petitive. This improvement requires not only the notified to WTO. application of standards but also investments in There are several organizations participating in technology and human resources. the process of developing standards and technical The analysis of the public institutions involved regulations. Public organizations have legal powers on the regulatory system and in the standards to enforce their obligation with respect to SPS setting system, shows that they do not have ap- requirements. propriate infrastructure and they lack qualified Mozambique is a member of some international personnel. Financing problems are also an im- organizations (ISO, CODEX, OIE, and OIML) that portant constraint. However, the Directive IN- are involved in standards settings and SADC struc- NOQ 1, based on international rules, is a good tures that work on standards settings and related basis for the development of the standardization activities. subsystem. The participation in regional and international The legal framework is not adequate and needs standards setting organizations is limited to offi- to be updated or some new legislation and regula- cials from various government organizations. Lan- tions need to be introduced. This has started guage, inadequate financial and technical capaci- through the revision of some laws and technical ties, and a lack of awareness regarding SQAM regulations related to animal and plant health. issues are among the constraints that affect the There is limited capacity to enforce the existing participation. technical regulations and the quality inspections at The private sector is organized into several busi- the border and in shops are not efficient because of ness associations. The Confederation of Business the lack of infrastructure and personnel. Laborato- Associations of Mozambique-CTA, is an organi- ries are not well equipped and they face the same zation covering more than 1,300 firms from almost problems as the other public institutions. all the productive and service sectors. The adoption of the ISO 9000 series of standard Nongovernmental organisations (NGOs) play an is under way. Currently few firms implement them important role in sector development, designing, because of a low level of awareness. APCER and and implementing projects and activities in specific SABS are providing certification services. Certified fields and locations. companies utilize accredited laboratories and cali- The organization of annual conferences of the bration services from South Africa, but the costs are private sector since 1995, considered a forum of high. reference on economic and business issues in The HACCP system is being implemented in a sys- Mozambique, has improved the dialogue between tematic way only in the fisheries export subsector. government and the private sector. The matrix pro- The Ministry of Industry and Trade is responsi- duced at the last annual conference mentioned ble for the implementation of trade policy. The standards and quality issues, suggesting that work country is member of bilateral, regional, and inter- should be undertaken to review and establish qual- national organizations, in particular the SADC and ity standards for farm produce to improve agricul- the WTO. tural marketing and rural development. The need The country has established an interministerial to strengthen INNOQ was recognized. committee that deals with the implementation of The need for the private sector in specific to par- the SADC Trade Protocol and other matters related ticipate in activities related to standardization and to trade policy. This committee also has represen- quality is addressed in the quality policy currently tatives of the private sector; which helps to achieve under discussion in the country. common approach to trade issues. The private sector is facing various problems re- The country already has an inquiry point nomi- lated to the high costs of production, problems of nated for the implementation of the TBT Agree- access to bank loans, unfair competition from im- ment and is in the process of nominating an ported goods, outdated customs tariffs and others enquiry point for the SPS Agreement. A committee with a negative impact on performance. is coordinating issues related to the SPS Agree- The involvement of the private sector in both the ment. Some awareness seminars were held to formulation of standards and in other activities 137 Standards and Global Trade: A Voice for Africa related to the provision of services to improve qual- to markets of Mozambican export products, the ity is very limited. following need to be done as a matter of priority: The development of important projects, such as the MOZAL aluminum smelter demands extra * Develop an appropriate regulatory system in- effort from firms regarding the quality of their cluding food safety issues, and effective control products and influences their attitude toward mechanisms for import and export goods; quality. * Develop an appropriate standards setting system In general, institutions do not possess informa- including facilities for training, metrology, ac- tion on the real costs associated with quality con- creditation, testing and certification; trol of their products, nor on the possible costs of * Strengthen the country's participation in regional improving production processes. The existing leg- and international standards setting bodies; islation does not yet require producers and super- * Improve the response of the country on issues visors to demonstrate that they have complied with related to WTO, mainly SPS and TBT Agreement; the requirements it establishes. * Support the development of selected sectors to improve exports. Action Plan The action plan to approach each of these ob)ec- tives is described below in a table format. The cost- To improve the standards and regulatory system ing of this plan at this stage is a very difficult task, and to ensure that it follows the internationally as the actions are very general, and the main actors approved requirements and thus facilitates access should develop a more detailed analysis of each. 138 -~~ - Cd~~ cC Cd, C ) o- Q ) 0 ~ ~ ~ _ 0. >) 0 '" 0 0. ui ., a -) - - L 4-1 v ~~~-0 C0 ~0 > C LU Q u - a) 0 a) E C w r )~~~~~z. 7 5 C> a z O C C 0 C 0 0~~~~~~~~~~~~~~~ C 0 C 0 Mt( Cd d E-Cdo C o - 0 (0 .Q M (0 LU a 0) C~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~V 0~~~~~~~~~~~~~~~~~~~~~~~fe 0 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~eo < 0~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~a ~ u, C yC OC Li a) a) c-LU~ Z c z~~0 (0 M0 0 C 0 C ,A 0 _r_ -LMa) (0 d,CI0 o ~ ~ 0 '.-~~-- (0.- CO (0~~~~~ ~~~~~ UU M < a) :5 ~~~~~~~~~~~~~~~~~C~~~~~~U) I-0F a) -- -~~~~0 = ~ F - 1 C c M -0 Fu0M C M - - C - 0 l C ) 1 M C (0 aVe' ~~~~~~~a c - C COcV - 0 C ' CL Cd o .,*E 0 -C M o 0 [I0C) C 2 ~~~~~~C ~ ~ ~ ~ 0 ) C - -i; i1 00 r ( 4 0. . .. 0 C M -- - n E'0oM - CO VCM M '0 0 do 0~L )0~ o 0 ~~~~~~~~~~n Ill - '- CO- C ~~~ E ~~~W 0CU0)COa)20o C -, ~~ 0 0)C~- - 3 CwUCO a)0 Io C . - 0 i c T(0 ) -~ M ) . a r0 -0 - C ' ~~~~~ 0~~~~~~~~~~~ a~~ M - ) -C C U~~~~~~~~~~~~~~~~~~~~~~;- 0 0 (Li 0 E J., oi 'a - L6 +4 C > 0 0 m .2 =, VI ui LL ea m rn 0 u Cy LU 0 ai C: 0 x z U z Z 0 P 0 u -j- LL CL 0- CD 0 0 0 c 0 .0 C( a) 0 u m LI o m v M z C =) U C u 0) M M z c LI z c z - -i -E -J c r m j=- - !n -V) u c .-0 M0 Q -0 u iz c 0 u m c C ro c lc-_m 0 C) CL -LL (V C u < E Lv LU 0 0 -0 < V) CL u c E E 0 o E 0 .0 o e L- >lZ 0) 0 u 0 0 a- c 0 < -o= -0 m - u a 0 VI c -C L" m - 2 m .Q 2 IfE LU 0 0 c c CL .01 :5 c 75 'S mm < E a r CL) E cLo z ai 41 M m Lu i 11 V)w c 0 Q) c C: < c kA 0 0 V) Id - - 'Z 0)m m i V c -5 0 L. Q, c Ln ce c 0 0 c w 0 C > > aj M < 0 -o > 0 m 'O W Z C 0) cu w c v (u -, u I - '5 w > c E - 2 -0 (v 5u m c E 2 0 a o - 0 -0 CL -C C: :3 -0 0 x -0 E A r 0 c C .0 0 o %A 0 r c v -J C > 0 c o 0 u 140 o 0 z u Z * o c a < E) 0 U~~ _ _ 0 C c C - .0 E u c E c Z E a o~~~~~~~~ Z o - ,E,o O-c - 0 0 E o .- C W E m 0 g . ~ ~ a . ., , z . a).0 - u S -~ 0 n - E S m cE 0~~~~~~~~~~~~~~~~~~, o .2o 'oE C ~~ 0 W 0 c ~~~ C E ) Vcu 'ECC 5 > *) ° C .C -u 12 zD3u@ * 0 S 0 0 00 - o 0~~~~~~~~~~~~~~~~~~~0 c :-~~ ~~a c uo _ _ n .- W- ' = c c- C W 2 0 "0 -t_ a) a Z,,c 0 E 0~~; ~ - - 2 0 .0 -Q- Q~~~~~~~~~~~~~)-~ oc 'z ~ ~ ~ ~ ~ ~ ~ ~ ~ ' 0 0 0- 0 m CU C -z,- m CY~~~~~~~~~~~L = m -z c E - o c:w~~~~~~~~~~~~~41 i CL L . ,, Z)r X~~~~~~~~~~V c . D f e -a , 00-E 4E 2 0 ., E O V ,ZC , 4- o~ ] ~ ~~~~~~~~~~~ ~ .aC) X r _ = __ , z _ r - _ _ ~ _ _: _ _ _ _ c .° Cy c.< > N ;~~ ~ C aJ g >o'1 -0 C ,g C C ;, I S~~~~~ ~~~ e) ZE X, a , 1-u 142~~~~~~LE C0 ) ls E tfl> 0 0~~. 0 U z - . - . -0 N - = =l ~~ C ~~~~U-V .2 ~ ~ ~~ c .2 i~~~~~~~~~~~~~~~~~~~~~Ci ~~~ ,0~~7 o C-~ - a _ _ ~ l = .0o2 - -. Cvf- r O o C n -0 Ca e 8 '. ° B 0 : '* 2 75 U . . > j V . * I 0 0 a - 0 °~~~~~ VI e E° wmcm 0 0 ._ o a N u ~~~ q) 0 -0 c Mwa 8 i'* d * < u O U ~ .0C , @ C C . z 0 C .2 2 E0 0 V - C C . E E z ° E () 0 - C, Z° ~ ~ ~ .~ _- 5 - E - E - u) ( ~~~- ~~~- 0 E O E00 tO N MC ) Ca)~~~~~~~ ) a M -. a) u - u - 0 C~~~~~~~~0z - 0F :3~ ~ ~~~~~4 I^J V i L' r f° , <: c u .U- c XI Z 0 , Z O o Q , '. C j U'; u Cc u cr io , o o -o 0 gF _tZgnnFCf:gvf w 2F u 0 c f -0 v + @ E x m o x 0 0 E E-o o I s~~~ ra o lz E = <'Q >W 0M o E- v =;n ,0 _ , 9 v vw n .: c r : 0 u 3) ._ I) O n o O o~0 C U C E2 ES a>)E ~~ e~ ~~~ - m I 0)- = u C E a 144 ~ ~ ~ o-owcOo"oo_ o 0 -70 r-oN 3 - 0 0 -u 0 m c 0 Q 0 0< 0 E - 0 C c) - u > C) 0 0 Q C c ~ _ U 2CC m CJC) c 0 0 r 0C 2: _ C o ~O 0) C)C: 0 0 CC V C- ( ~Eoo. E E~ 0 E u V 0 00 - W & CE oiE CE ~ ~ 0 ,mo-a0~Oca c E Co o C C O t~ 0, - 0 C L LCI CU - U _N - l C0 oa 0) C) _ )V C E CO a) ~ E CEr fl 0 0 C)) C - C- 0 CZ a .- .C 4Q > - _C 20 m-a a- c a -C m E w o a) a-z E5 CU Cfl*~ E~ ~ a-a--co V LI) 0)' ) EZ 2 %u E,m uo C) E~p E E C O 3 g 0007Ec- C) C~~~~~~~~~~~~~~~~~~~~~~~~~~~ C) C)~~~~~~~~~~~~~~~~~~~~~~~~~~~w 0C 0 > ~~~~~~~ C~ C) ~~~~~~~~~~~~~C )<- 0~~~0c c-E ,m L EziOw ~ ~ ~ 2 0 >, o o cr E a- 0 E~~,u4 .4- 0 ; C,L C C Cz C 4-SO 0 -Z U 0 CC a, 0 ~~~ C~~C V - - u E~ la 0 C: . , 0 j - 4-A CY a, 0 a, 'J U 0 0 c 07 o c~~~~~~. U -0 cn 0 m W ~ E C - ~~~~~~~ -~~~~~~~~~~~~~~~~~ .~~~~~. ~~~~~~ 0 0 0~~~~~~~~~ m * ~ 0 ) o 44 4" I C .2 c u 0 a aE c .- c,N-0 4~ M -' > U.- C ~~~~~~~~~~~~~~~~~~~~C0wMa) 0 146~~~~~~~~~~~~~~' o o o o c o . c E . - l ,, - ! c i2 DL c ) a- o - .0 a 'C V) C )- 0 c D v __ 0 E * C E z 5 o g 0 o D a) . 0 ~~ ~ 0 a) emH C cu a)C(m co) a) CO 0 a) a O. c C a)-* ) * * *) '0o ' U~~~~~~~~~~~~~~~0c C H m. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~.- 0~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~H~ ~ ~ ~ ~ ~~~~~~~~~~~~~~~~~~~c0 0 W ) C C * E c ~~C a)C~~~~~ 40 O) a 00 o U~ - w CU~~~~ -.~c 0 a - 0 0 '0 -0 ru E Od a. u. I- O~ 0 0 4.1 0.~~~~~~~~~~ "0 C O~~~~~ LE _ _ _ = _ _ Q - - .° O _ c°0° > 0 O , ~ ~ ~ ~ ~ ~ ~ ~ .. -) - -.- 10~~EC o ) E a )I' n u 'ses ,Ov In ' c w~~~~~~~~O e c In Q C ___ A0L O t4 M~~~~~~4 c 0) C > c 0 CU 4-~~~~~~ co- w c 0- - c -0 c ~ 0 - C )0 00 -O - )C. tn I 0, ( 0 C -~ c . 0~ ~ ~ ~ )) 4) 0CU e r0~,A O- ~ 0 2 0 0 148 Bridging the Standards Divide: A Case Study and Action Plan for Mozambique References . 1 997a. Politica e estrat6gia industrial, ResolucAo no 23/97 de 19 de Agosto AGOA at: http://agoa.gov 1 997b. Estrategia para o Desenvolvimento do APHIS Trade Support Team 1998. APHIS and the SPS Caji. Agreement: Rights and Obligations under WTO and 1 997c Cria,co do Instituto de Fomento do NAFTA. Second edition Cal6-INCAJU. Decreto no 43/97 de 23 de Dezem- Assembleia da Rep6blica, 1999. Lei do Caju. Lei no bro, BR no. 52, I sene, 2° suplemento. 1 3/99 de 1 de Novembro, BR no 43, I sene, 1 998a Politica e estrat6gia comercial, Res- 20 suplemento. oluc,3o no 25/98 de 1 de Julho. - 2000. Programa Quinquenal do Governo . 1 998b Aprova o Regulamento do Licencia- 2000-2004. Resolui5o no, 4/2000 mento da Actividade Comercial Decreto no 43/98 Assembleia Popular. 1990 Lei das Pescas Lei no 3/90 de de 9 de Setembro, BR no 36, I serie, 40 suplemento 26 de Setembro, BR no. 39, I seie, 20 Suplemento. . 1 998c. Aprova o Regulamento do Licencia- Associac,o Comercial de Mocambique, no date. Estatu- mento da Actividade Industrial Decreto no. 44/98 de tos da Associac,o Comercial de Mocambique. 9 de Setembro, BR no 36, I sene, 40 suplemento Associac,o de Fruticultores do Sul de Mocambique. . 1 999a Aprova o Regulamento da Comercial- 1995, BR no. 25, III sene de 21 de Junho Cnac,o da izac,o da Castanha de Caj6. Decreto no 86/99 de Associac3o de Fruticultores do Sul de Mocambique. 23 de Novembro, BR no 46, I sene, 20 suplemento Banco Standard Totta de Mocambique. 2001 Relat6no . 1999b Linhas de Ac,C3o para Erradicac,3o da e Contas de 2001. Pobreza Absoluta. Bank of Mozambique a: http.//www bancomoc mz . 2001. Regulamento de lnspec,co e Garantia b, Department of Economic Research and de Qualidade dos Produtos de Pesca Decreto no. Statistics Recent Macroeconomic Developments- 1 7/2001 de 12 de Junho, BR no 23, I s6ne, Monthly Issues (1999, 2000, 2001, and 2002). suplemento c, Department of Economic Research and Coughlin, P. 2001. SADC Study of the Textile and Statistics. Statistical Bulletin-quarterly issue (1999, Garment Industries-Mozambique. 2000, 2001, and 2002) CPI at. http://www.mozbusiness.gov.mz Banze, P 1999. Regulamentac5o na area de Sementes CTA. 1998. Sumario da Confer6ncia final do sector Bawden, R, M. Kherallah, and D. Meinville. 2001. The privado para discussio do Protocolo Comercial da Impact of Improved Grades and Standards on the SADC. Export Potential of Targeted Agricultural/Fishery CTA at: http://www.cta org.mz. Commodities in Mozambique Phase one Report Customs of Mozambique at Biggs, T., J. Nasir, and R Fisman, R 1999 Structure and http://www.alfandegas.org.mz/. Performance of Manufacturing in Mozambique. Departamento de Florestas-Faculdade de Agronomia e CAIM. 1991. Estudo de Viabilidade T6cnico Econ6mico- Engenharia Florestal-Universidade Eduardo Mondlane. Prolecto de Produc,o de Sumos, Concentrados e Seg- 2002. Iniciativa para desenvolvimento de critrios e mentos. CAIM, Ltd. indicadores nacionais de maneio sustentavel e certifi- Centro de Promoc5o de Investimentos. 2002. Projectos cac,o florestal Aprovados por Sector Departamento de Higiene Ambiental. 1998. Manual de Cerina Mussa, MIC, Memorando sobre o processo de Inspeccoes no Ambito da Higiene Alimentar. Projecto negociaa,o e implementacAo do Protocolo Comercial TCP/MOZ/6611 (Cooperacao FAO-MISAU) da SADC. Departamento de lnspecS3o de Pescado. 2002. Proposta Comiss5o Permanente da Assembleia Popular. 1982. Lei de Plano de Actividades do DIP-MP/2002. sobre Crimes Contra a Saucde Piblica no Ambito da Departamento de Sanidade Vegetal. 2001 Lista dos Higiene Alimentar. Lei no 8/82 de 23 de Junho, BR Produtos Registados no. 24, I seie, 30 suplemento. Departamento de Sementes 2000 Procedimentos Confedera,co das Associaco6es Econ6micas de Mo,am- para Avaliac5o e Registo de Vanedades na Lista bique. 2001. 6a Conferencia Anual do Sector Privado Oficial. em Mocambique. DFID-Department for International Developments Conselho de Ministros. 1982 Requisitos higienico- 2002 Ministerial Round Table- Closer cooperation sanitarios de produ,co, transporte e comercializa,co between the EU and developing countries on de g6neros alimentfcios, regras gerais de inspec,3o product standards e fiscaliza,co e as infraccoes correspondentes que Direc,co Nacional da Agricultura. 1987 Estrategia do tenham a natureza de contravenc,o e respectivas Desenvolvimento de Citrinos (resumo). punic6es. Decreto no. 12/82, BR no 24 de 23 de . 1993. Programa Nacional de Desenvolvimento junho, I srie, 30 suplemento. de Fruteiras. 1995. Polftica Agraria e Estrat6gia de Imple- . 1996. Estrategia de Desenvolvimento das mentar5o-Resolu,co no 11/95 de 31 de Outubro culturas de Cereais e Leguminosas de Gr5o (Draft I). 1996. Politica pesqueira e respectivas estrat& 1996. Estrat6gia de Desenvolvimento das gias, Resolu,Co no. 11/96 de 28 de Maio. culturas de rafzes e tuberculos. 149 Standards and Global Trade: A Voice for Africa . 1997a. Estrat6gia de Apolo 3 Produc5o Agricola. . 2002b. Criar uma agro-ind6stria rural viavel: 1997b. Estrat6gia de Apoio a Produi;o apresentacZo no Seminario de Disseminac;o dos Agrfcola (6ltima vers5o). Resultados da Primeira Fase do Estudo sobre a Agro- . 1 997c. Estrat6gia do Subsector de Sementes Industna Rural em Mocambique. 1997d Estrat6gia do Subsector de Sementes . 2002c. Recomendac6es Preliminares das . 1999. Regulamento Interno do Sub-Commit6 Potenciais combinai8es de produtos/mercados de Registo e Libertas5o de Variedades (pnmeiro relat6rio/"lnception Report") - 2001 a. Regulamento sobre qualidade dos Henson, S., R. Loader, A. Swinank, M Bredahl, and N. fertilizantes. Lux. 2000. Impact of Sanitary and Phytosanitary 2001 b. Relat6rio Anual da DINA apresentado Measures on Developing Countries-Report for the na V Reuni5o Anual. U.K. Department for International Development - 2001c. Relat6no Final da Campanha Agrrcola (DFID). 2000/2001. Apresentado na V Reuni5o Anual da Henson, S., K Preibisch, and 0. Masakure. 2001. Re- DINA. view of Developing Country Needs and Involvement - 2001 d. Srntese da V Reuni5o Anual da DINA, in International Standards-Setting Bodies. Centre for Bilene-Gaza de 7-10 de Agosto de 2001. Food Economics research, Department of Agricultural - 2001e. Sintese final do Semin6no Nacional and Food Economics, The University of Reading sobre sementes em Bilene de 14 a 16 de Marco de INCAJU. 2001. Normas de Comercializac3o da Castanha 2001. de Caju para a Campanha 2001/2002. - 2002. Sintese do 11 Conselho Coordenador. INCAJU 2002a Relat6rio Anual de Actividades do - 2002. Regulamento de Pesticidas (nova INCAJU-2001 apresentado no 11 F6rum Nacional do vers5o). Caju. Direcc5o Nacional de Estatistica. 1987. Informas3o INCAJU. 2002b. Documentos do 11 F6rum Nacional do Estatfstica 1986. Caj6 DirecZio Nacional de Estatistica. 1988. Informac3o INIA. 2002. Relat6no Anual de Investigai;o de Caji em Estatfstica 1987. Mocambique (apresentado no 11 f6rum Nacional do Direcc5o Nacional de Florestas e Fauna Bravia. 1999 Lei Caj6). de Florestas e Fauna Bravia. INNOQ. 2001a. 1a Conferencia Nacional sobre a Polftica Direccjo Nacional de Pecuaria. 2000 Relat6no Anual. de Qualidade (Procedings). DireccZo Nacional de Pescas 1996. Regulamento da INNOQ. 2001 b. Semana de Qualidade (Procedings). Pesca Marftima-Decreto no. 16/96 de 28 de Maio, INNOQ 2002. Plano Estrat6gico para a Qualidade. BR no. 2, I sene de 28 de Maio Instituto de Algodao de Mocambique. 2002a. Compara- DirecSZo Nacional do Comrrcio Interno. 1995. Balanro 3o de Tipos de Fibra de Algod3o Nacionais com os Anual da Comercializaco Agrfcola 99. Internacionais. DireccZo Nacional do Comercio Interno. 1996. Balanco . 2002b. Fabricas de Descarociamento de Anual da Comercalizasao Agrkcola 95 Algod5o. Direcc5o Nacional do Comrcio Interno. 1997. Balanco - . 2002c. Ponto de Situa~jo das Campanhas do Anual da Comercializac5o Agricola 96. Algod3o 2000/2001 e 2001/02. DireccAo Nacional do Com6rcio Interno 1998. Balanso . 1998. Estrategia para o Desenvolvimento do do Plano Econ6mico e Social de 1997. Algod3o (proposta). DireccAo Nacional do Comrrcio Interno. 1999. Balanco . 2001. Cotton Subsector Assessment (volume 1, Anual da Comercializac5o Agrfcola 98. Draft report). DirecrZio Nacional do Comercio Interno. 2001. BalanSo 2002d. Ponto de Situac5o das Campanhas do Anual da ComercializasAo Agraria 2000 Algod3o 2000/01 e 2001/02. Direci5o Nacional do Com6rcio Interno. 2001. Plano de Instituto Nacional de Estatfstica-Mocambique. 1996a. AcS3o da Estrategia da ComercializaS5o Agrkcola para Estatfsticas Industriais. 2000/2004. . 1999a. Estatfsticas Industriais. Dixie, G (Accord Associates), for TechnoServe 1 996b Anuario Estatfstico (Statistical Year- Mozambique. 2001. Species Selection for the Middle book). East and Indian Markets for Mangoes and Citrus. . 1 999b. Anuario Estatfstico (Statistical Year- FAO at: http //www.fao.org. book). Food safety forum at http //www.foodsafetyforum org. - . 2000. Anuario Estatistico (Statistical Yearbook). Freire, M and R Banze. 2001. CaracterizaSZo da Situ- Instituto Nacional de Estatistica. 2001 a. A Coniuntura as3o Actual de Sector de Sementes em Movambique. Econ6mica. no. 10, Fevereiro. Frutimel, Limitada, BR no. 1, III s6rie de 7 de Janeiro. . 2001 b. Censo Agro pecuario 1999-2000- Criaco da Frutimel, Ltda. Apresentac,3o Sumana dos resultados (quadros e Gabinete de Promoio do Sector Comercial Agrario graficos). 2002a. ldentificac3o de Opc6es e viabilidade para a Instituto Nacional do Ac6car. 2000a. 0 Sector do promocAo da Agroindistria Rural em Mocambique- Ac6car em Mocambique. Situac5o Actual e Termos de Referencia. Perspectivas Futuras. 150 Bridging the Standards Divide: A Case Study and Action Plan for Mozambique - 2000b. 0 Sector do Acucar em Mocambique- Agregados Familiares Rurais nas Zonas Afectadas Balanco do PES 2001 e Perspectivas para 2002. pelas Cheias do Ano 2000 no Centro e Sul de - 2001. 0 Subsector do Acucar em Mocam- Mo,cambique. Relat6rio de Pesquisa No. 40 P, Marco bique Situac5o Actual e Perspectivas Futuras. de 2000. - 2002 Balanco do PES 2001 e Perspectivas para Minist6no da Agricultura e Pescas. 1998 Regulamento 2002. Interno do Comite Nacional de Sementes-Diploma International Capital Corporation (Mocambique) LDA e Ministerial no. 11/98 de 11 de Fevereiro. Boletim da ENTERPLAN. ldentificac;o de Opi6es e Viabilidade Rep6blica no. 6, I sene de 11 de Fevereiro de 1998. para a Promoc;o de Agro-lnd6stria Rural: Proposta . Lista Nacional de Variedades-Despacho. Bole- T6cnica tim da Rep6blica no. 38, I seie de 20 de Setembro Intertek Testing Services International Limited. 2001. de 1995. Directrizes para Exportadores, Programa de lnpeccjo . Programa Nacional de Desenvolvimento Pr6-Embarque para Mocambique Agrario (PROAGRI) 1 998a 2003. IPEX. 1998. Direct6no dos exportadores mocambicanos Ministeno da Agricultura. 1992. Regulamento da In- IPEX at. http://www.ipex.gov.mz. speccAo Fitossanitaria e de Quarentena Vegetal e IPPC at http //sedac.ciesin.org/entri/register/ seus Anexos, Diploma Ministerial no. 1 32/92 de 2 de reg-099.rrr.html. Setembro, BR no. 36, 1 sene. ISO 2001. Memento ISO Publication. Ministeno da Industria e Comrrcio. 2000. Estatuto Jaeger P 1 998a. The Indian Market for East African Organico, Diploma Ministerial no 161, A/2000 Pigeon Peas (Calanus caoan). TechnoServe Minist6no da Saude 1998. Manual de Inspecc6es no Mozambique Ambito da Higiene Alimentar-Projecto - 1998b The Market in Europe for East African TCP/MOC/6611 (Cooperac3o FAO-MISAU). Pigeon Peas (Cajanus calan) TechnoServe Minist6no de Agricultura e Pescas. 1992. Regulamento Mozambique. de lnspeccao Fitossanit6ria e de Quarentena Vegetal- - 1999. Indian Pulse Buyer Visit to Mozambique. Diploma Ministerial no. 134/92. TechnoServe Mozambique. Minist6no de Agricultura 1977 Breve Monografia Keyser, I. C. 1998. Cotton Subsector Analysis- Agrana Mozambique. TechnoServe, Moiambique. Minist6nos da Agricultura e do Com6rcio. 1991. Regula- KPMG, http //www.kpmg.co.mz/artigos-port/ mento de lmportac5o de Sementes-Diploma Minis- economia-Molo.htm. 2002. Desempenho Econ6mico terial no. 95/91 de 07 de Agosto BR no. 32, I sene de Mo;ambique em 2000. de 7 de Agosto de 1991. LOUMAR, undated. Economic Feasibility Study for a Ministry of Fisheries at http://www.mozpesca.org. Citrus and Pineapple Industry. Minist6nos da Sa6de e da Agricultura. Regulamento de Machungo, C. 2002. Perspectivas de Produclo no Pesticidas-Diploma Ministerial no. 88/87 de 29 de Ambito do Piano Director 2004 apresentado no 11 Julho. BR no. 39, I sene de 30 de Setembro de 1987. F6rum Nacional do Cal6. Minist6rios da Sa6de e da Ind6stria e Com6rcio 1978. Memorendum of Agreement on Co-operation in Stan- Caderneta do Controle Sanitario. Portaria no. 11/78, dardization, Quality Assurance, Accreditation and BR no 6, I sene de 14 de Janeiro. Metrology, in the Southern African Development Minist6nos da Sa6cde, das Financas e Secretaria de Community. Estado do Trabalho. 1982. Processo de Emiss5o e MIC. 2002. Rapid Market Appraisal-Terms of Revalidacao do Boletim de Sanidade Estabelecido Reference. pelo Decreto no. 5/80 de 25 de Outubro. Diploma MICTUR. 1999 Estrat6gia da assistencia ao Pafs Ministerial no. 73/82, BR no. 37, I seie de 22 de 2001-2003. Setembro. MIC, Departamento de Planifica~ci. 2000. Mapa de Mozambique Official Home Page- produc6es. http://www.mozambique.mz Minist&io da Agricultura e Desenvolvimento Rural. Mucavele, F. 2000. Analysis of Comparative Advantage 1997. Balanco da Campanha Agrfcola 2000/01 e and Agricultural Trade in Mozambique. SD Publica- perspectivas da Campanha 2001/02. tion Series, Office of Sustainable Development - 2001a. Regulamento sobre a Produclo, Bureau for Africa, Technical Paper no. 107, Com6rcio, Controle de Qualidade e CertificacAo de November 2000. Sementes-Diploma Ministerial no. 184/2001 de 19 Muendane, C., Minist6no da Agricultura e Desenvolvi- de Dezembro. Boletim da Repiblica no. 51, I sene mento Rural, Gabinete de Promocr o do Sector de 19 de Dezembro de 2001. Comercial Agrario. 2002. ldentificac5o de Opcoes e - 2001 b Regulamento sobre fomento, producAo Viabilidade para a Promocjo da Agro-Industria e Comercializacao do Tabaco-Diploma Ministerial Rural em Mocambique-ja fase: Relat6rio Preliminar. no. 176/2001 de 28 de Novembro, BR no 48, I National Institute of Statistics: http://www ine gov.mz. serie. Negr5o, A.S., TechnoServe. Prolecto de Comercializacao Ministeno da Agricultura e Desenvolvimento Rural, de Banana de Manica. Direcc5o de Economia. 2000 Caracteristicas dos OIE: http://wwwoie.int/eng/oie. 151 Standards and Global Trade: A Voice for Africa Otsuki T., J. S. Wilson, and M. Sewadeh. 2001. A Race . 1 998c. AnAlise do Subsector do Milho. to the Top? A Case Study of Food Safety Standards 1 998d. Sunflower Subsector Report. and African Exports World Bank Research Paper. TSG Inc -The Services Group/Sociedade Austral de De- www.worldbank.org/whiep/trade/standards/html senvolvimento, SARL 1999. Avaliando os custos e Patrick Lemaitre Consultant and CIRAD. 2001. Cotton beneficios da zona de comrcio livre da SADC, Subsector Assessment, Volume 1 Draft Report Mocambique. Patrocfnio M. L. Q. M. 1997. Compila;Ao da Legislacao UNDP 2000. Human Development Report 2000. Pecuaria desde 191 3 at6 a Presente Data. UNICEF/ICCIDDD. 2000 Harmonisation of Policies and Pereira, C R, M Michaque, and F Kanji, UEM-FAEF- Standards for Salt-Background Information for GNRB 2002 Estrategia e Capacita,co na Area de SADC, COMESA, ARSO. Certificacao Florestal. UNIDO 1999. Programme Document Integrated Indus- PODE, 2001. Project Brochure. trial Development Programme to Facilitate Private Presidencia da Rep6blica. 2000. Atnbuicoes e com- Sector Development in Mozambique. petMncias do Ministerio da Ind6stria e Com6rcio, - . 2001 b. Assistance for Food Action Plan for Decreto Presidencial no. 15/2000. Improved Processing and Food Safety-Final Techni- Rebello da Silva, G., L S Carrilho, and R. Tibana. 2001. cal Report (based on the work of Ravi Awashi). Mozambique country paper presented at the Nairobi UTRE. 1995. lnformacao sobre Citrinos de Maputo workshop for the preparation of the study "Bridging Wilson, I. S. and T Otsuki 2001. Global Trade and Food the Standards Divide' Challenges for Improving Safety: Winners and Losers in a Fragmented System. Africa's International Market Access." World Bank, 2001. Cashew production and marketing in SADC, Protocol on Trade. the smallholder sector in Mozambique SADC SQAM at: http://wwwsadc-sqam.org. . 2001. Mozambique country economic memo. SIDA. 2000 Final report. Assistance to the National . 2001. Mozambique country economic memo- Institute of Standardisation and Quality (INNOQ)- randum growth prospects and reform agenda. project number 2104 0040 01 001. Report no. 20601 -MZ Singh Y K. 1995 Proposta do Projecto de Fruteira. 2001 Africa's integration into the world Trad- Snikars, F. H. 2002. Propose programme of action for ing System: challenges in market access, standards enhancing the participation of developing countries and regulatory reform. Project action plans and and economies in transition in international stan- country study Terms of reference dardisation-Africa of action (draft). SIS Forum A B. . 2001 Bridging the Standards Divide: Chal- TechnoServe, Inc 1998. PIGEON PEA Subsector Report. lenges for Improving Africa's International Market - . 2001. A Vision for the Fruit Industry in Access. Draft Terms of Reference for Country Action Mozambique-Building a Globally Competitive Plans and Studies. Case study and action plan for Tropical Fruit Industry Mozambique. Technoserve, Inc. Mocambique. 1998a Analise do Sub- World Bank at: http.//www.worldbank.org. sector do Amendoim. WTO. 2001. Trade Policy Review. - 1998b An6lise do Subsector do Caj6-USAID http://www.mol co mz/economia Grant no. 656-G-00-98-001 1-00. http://www.africapolicy.org List of Relevant Contacted Persons Alexandre Carreira SGS Mofambique, Lda Amelia Mondlane National Sugar Institute-Ministry of Agriculture and Rural Development Ana Machalela Institute for the Promotion of Cashew at Ministry of Agriculture and Rural Development Bonifacio Saulosse Provincial Directorate of Industry and Trade, Nampula Cardoso Muendane Consultant SORGAZA Company Carmen Ramos Consultant Verde Azul Company Egidio Paulo Directorate of Commerce, Ministry of Industry and Trade Felisberto Ferrao Mozambican Institute of Export Promotion Felisberto Manuel AMAPIC Fernando Rodrigues National Directorate of Livestock at Ministry of Agriculture and Rural Development Gabriel Paposseco Mozambican Cotton Institute-Ministry of Agriculture and Rural Development Issufo Nurmamade Sanam-Sociedade Algodoeira de Namialo, Lda Joao Aragao AGT, Nampula 152 Bridging the Standards Divide: A Case Study and Action Plan for Mozambique Joaquim Santos National Directorate for Rural Extension at Ministry of Agriculture and Rural Development Jorge Salvador Technical Unit for Trade at Ministry of Industry and Trade Jorge Tinga Clusa, Nampula Jose Alcobia Association of Fruit Producers From South of Mozambique Jose Varimelo Department of Plant protection at Ministry of Agriculture and Rural Development Luisa Ribeiro Arthur Department of Fisheries Inspection at Ministry of Fisheries Luisa Santos Faculty of Agronomy and Forestry Engineering Maria dos Anjos Hauengue Department of Environmental Health at the Ministry of Health Nordino Ticongolo ABIODES Rita Freitas Mozambican Institute of Export Promotion Roberto Tibana Consultant Rodrigues National Directorate of Livestock at Ministry of Agriculture and Rural Development Salvador Jorge Technical Unit for Trade at Ministry of Industry and Trade Sergio Chitara Confederation of Mozambican Economic Associations Setina Titosse National Directorate of Agriculture at Ministry of Agriculture and Rural Development Ventura Macamo National Directorate of Livestock at Ministry of Agriculture and Rural Development Annex A Main Legislation transmit toxic substances in quantities larger than In this annex some laws and technical regulations the legally fixed limits; it is presumed that the trans- are presented and the institutions responsible for port of imitation, spoiled and corrupt foodstuffs is the application and control of the legislation are done for the purpose of commerce whenever these indicated. foodstuffs are those traded by the recipient. The DHA of the Ministry of Health is the insti- tution responsible for the application of this law. Legislation Related to the Health Crimes against public health in the context of Decree No. 5/80 of 22 October, Council of food hygiene, Act-Law No. 8/82 of 23 June, Ministers. This decree makes it compulsory for all Standing Commission of the People's Assembly. workers of different professional categories who are This is the basic law for the control of foodstuffs in involved in the preparation, handling and trade of the country, the application of which covers all sec- foodstuffs, as well as workers who deal regularly tors that directly or indirectly relate to foodstuffs, with children, to obtain a health certificate. including the consumers. The law rests essentially The DHA of the Ministry of Health is the insti- on the possibility that offences might produce dan- tution responsible for the application of this law. ger or harm and not in the effective production of the said danger or harm to the health of the Hygiene and sanitary requirements in the pro- consumer. duction, transport and trade of foodstuffs, De- The following are regarded as crimes against pub- cree No. 12/82 of 23 June, Council of Ministers. hlc health: to produce, sell or display for sale, pur- This document contains the hygiene and sanitary chase, transport or store for commercial purposes requirements for the production, transport and imitation, spoiled or corrupt foodstuffs; to produce, trade of foodstuffs, as well general rules on inspec- sell or display for sale, purchase, transport or store tion and supervision and the corresponding of- for commercial purposes, kitchen utensils or table- fences that have the nature of contravention, and ware, containers, any other equipment or ob)ect their respective penalties. that come into contact with foodstuffs in their The decree assigns to the Ministry of Health the normal course of use and from this contact may task of establishing hygiene and sanitary quality 153 Standards and Global Trade: A Voice for Africa requirements for import and commerce of food- The DHA of the Ministry of Health is the insti- stuffs in Mozambique as well as to establish the tution responsible for the application of this law. physical and chemical characteristics, criteria of pu- rity and maximum permitted dosage of chemical Regulations on food additives in respect of the additives. importation, production, marketing and use of The DHA of the Ministry of Health is the insti- food additives, Ministerial Diploma No. 100/87 tution responsible for the application of this law. of 23 September, Ministry of Health. According to these regulations, all additives and technological Regulations on the hygiene requirements of aids in the preparation of foodstuffs must comply food establishments, Ministerial Diploma No. with the physical and chemical characteristics set 51/84 Ministry of Health. These regulations out in Codex Alimentarius specifications. The list establish the minimum and compulsory hygiene of authorized food additives and their maximum requirements of food establishments used for the dosage in the foodstuffs in which their use is production, transport and marketing of food- authorized is appended. stuffs. These regulations cover food establishments, means of transport, equipment, utensils, storage of Order in Council No. 11/78 of 14 January, foodstuffs, establishments for food consumption, Ministry of Health and Ministry of Industry and restaurants and similar establishments, establish- Trade. This order determines that all establish- ments for the sale of foodstuffs, means of transport ments where foodstuffs are manufactured, handled for transporting foodstuffs, places and installations, or sold must possess a "sanitary control" register. bars, cafes and bakeries. They include the minimum compulsory requirements for establishments pro- Dispatch. 13 November 1980, Ministry of Health. ducing and packaging foodstuffs. The regulations Determines which workers in the different branches also specify the health personnel with competence of professional activity listed in the dispatch must to carry out inspections and the hygiene standards carry a health certificate, and this became compul- for staff. sory in Decree No. 5/80, of 22 October, for the The Ministry of Health is the institution respon- exercise of certain professional activities. sible for the application of this law. Issue and renewal of the health certificate, Min- Regulations on Imported Foodstuffs, Ministerial isterial Diploma No. 73/82 of 23 June. Ministry Diploma No. 80/87 of 1 July, Ministry of Health. of Health, Ministry of Finance and Secretary of These regulations specify the conditions and pro- State for Labour. This document establishes who cedures for the importation of foodstuffs, namely regulates and supervises the mechanisms for con- specifications of the identity and quality of the ducting the medical examinations and of inspec- foodstuff, inspection and quality testing, certifi- tion of compliance with the regulatory standards in cates, supervision, infestation, inorganic contami- this matter, at the same time attributing responsi- nants and micro toxins. The regulations establish bility to the competent authority. that the standards to be applied on the importation of foodstuffs must be according to those established Pesticide Regulations. Ministerial Diploma No. by Codex Alimentarius. These regulations indicate 88/87 of 29 July. Ministry of Health and Ministry also that it is mandatory the inspection and qual- of Agriculture. The pesticide regulations are aimed ity testing on origin of all imported foodstuffs, by at disciplining and controlling the registration, im- entities with recognized capacities or accredited to portation, production, packaging, labelling, stor- realize this work, the expenses of this are of the age, marketing and sale, transport and elimination buyer's responsibility. of pesticides and related chemicals. In addition to Furthermore, these regulations indicate that a toxicological classification, the upper limits of foodstuffs for export must be manufactured ac- residues tolerated in food, inspection and penalties cording to the standards in force in the country of are specified. destination, and the manufacturing firm can con- Approval of new regulations on pesticides is in sult the Codex point of contact regarding the said process and will revoke the regulations approved standards. in 1987. These provide for a technical advisory 154 Bridging the Standards Divide: A Case Study and Action Plan for Mozambique committee on pesticides, seeds and fertilisers to be Regulations are currently being prepared for the created to make recommendations to the Ministry application of the Forestry and Wildlife Act, and to of Agriculture and Rural Development on ques- harmonise it with the Land and the Environment tions relating to agricultural pesticides and related Acts. veterinary and public health chemicals, for normal With regard to forests, a study was conducted re- and for emergency situations. cently on forestry certification that is based on the The DHA of the Ministry of Health together with establishment of standards and codes of good prac- DINA of the Ministry of Agriculture and Rural tice. Forestry certification provides information on Development are the institutions responsible for the management practices used in a given forestry the application of this law. unit and the attribution of a certificate to the for- est or product gives the consumer assurance that it Dispatch of 05 October 1996-Ministry of comes from a forest that is managed according to Industry and Trade and Ministry of Health. This the established requirements. prohibits the importation of wheat flour contain- The National Directorate of Forestry and Wildlife ing potassium bromate. (DNFFB) of the Ministry of Agriculture and Rural Development (MADER) is the institution respon- sible for the application of this law. Legislation Related to Cereals and lodised Salt Ministerial Diploma No. 120/87 of 21 October. The Cashew Act-Law No. 13/99 of 1 November, State Secretariat for Food and Light Industries. Assembly of the Republic. The Cashew Act passed This MD establishes technical regulations where the in November 1999 establishes that the Council of standards of quality for wheat and wheat flour and Ministers must formulate a policy on the promo- for maize and maize meal are stated. tion of cashew production and processing, with the aim of recovering the stock of cashew trees by pro- Ministerial Diploma No. 7/2000 of 02 November viding incentives to organisations to become in- 1999. Minister of Industry, Trade and Tourism volved in the planting of and research into cashew and the Minister of Health. This MD enforces the trees, and the technological development and eco- iodisation of salt and compliance with the Mozam- nomic and financial recovery of existing cashew bican Standard on iodised salt. The referred MD processing firms and the creation of industries to fixed the level of K103 between 25 and 55 PPM and, use cashew by-products. with regards to the technical specifications it refers The Ministry of Agriculture and Rural Develop- that they need to follow the Mozambican Standard ment-INCAJU is the institution responsible for on salt. the application of this law. Regulations on cashew nut marketing, Decree Legrisulati Pretductio Forestry and No. 86/99 of 23 November, Council of Ministers. In line with the Cashew Act, the regulations on The Forestry and Wildlife Act-Law No. 10/99 cashew nut marketing of 1999 (Decree No. 86/99 of of 7 July. Assembly of the Republic. The Forestry 23 November) establish the procedures and condi- and Wildlife Act establishes the principles and ba- tions for cashew nut marketing and set the annual sic norms for the protection, conservation and sus- surcharge on the export of unprocessed cashew nuts. tainable use of forestry and wildlife resources. This The Ministry of Agriculture and Rural Develop- law contains the classification of the forestry and ment-INCAJU is the institution responsible for wildlife stock, the forms of protection of resources, the application of this law. the conditions and rules for forestry exploitation and hunting, for the replacement of these re- Decree No. 8/91 of 23 April-Council of sources, forestry and wildlife management and su- Ministers updates the legal framework of the pervision. For the export of forest and wildlife cultivation, marketing and industrialisation of products, the law covers the promotion of the pro- cotton in Mozambique and revokes Decree law cessing industry to increase the export of manu- No. 45179 of 5 August 1963. This decree gives the factured goods. Mozambique Cotton Institute the responsibility for 155 Standards and Global Trade: A Voice for Africa the promotion and supervision of cotton cultiva- the production, improvement and trade in seeds, tion and technical and financial assistance to the and the system of quality control and certification growers. It specifies the procedures for marketing of seeds. This decree announces the creation of the seed cotton, for the ginning and balmg operations National Seed Committee as the body to monitor in cotton gins, for the marketing and export of and advise the Ministry of Agriculture on matters baled cotton, as well as penalties. relating to seeds. The Ministry of Agriculture and Rural Develop- Regulations on Cotton Cultivation, Ministerial ment-National Directorate for Agriculture is the Diploma No. 91/94 of 29 June, Ministry of institution responsible for the application of this law. Agriculture. The Mozambique Cotton Institute (IAM) is responsible for the application and control Regulations on seed imports. Ministerial of the regulations on cotton cultivation, which Diploma No. 95/91 OF 7 August. Ministry of specify who are the economic operators and the Agriculture and Ministry of Trade. These regula- concessions for cotton production, their registra- tions derive from the then significant quantities of tion and the procedures for growing cotton and seeds being imported to meet the country's needs, marketing seed cotton and cotton fibre. Some tech- since domestic seed production was not sufficient, nical aspects regarding the characteristics of the was of inferior quality, without standard certificates soil, crop operations, ginning and phytosanitary and was of nonadapted varieties. The objectives of control are indicated. These regulations require cot- these regulations were to ensure the importation of ton fibre destined for the domestic market to be good quality seeds of varieties adapted to the accompanied by a certificate of origin and classifi- different ecological zones; to discourage the impo- cation, whereas in the case of exports, there should sition of seed imports when the country is pro- be a national certificate of origin issued by the clas- ducing sufficient quantities of acceptable quality; to sification laboratories in the Mozambique Cotton coordinate and support the organisations that im- Institute (IAM). For this purpose, the seller must port seeds; to establish the basis for a more effec- present documentation with information on the tive control of seed imports. These regulations ginnery, the variety, the sector of production, the indicate the conditions, specifications of quality, li- year of production and other data that identify censes and system of coordination for the impor- the provenance of the product and its packaging. tation of seeds. The specifications required in the seed order, the characteristics of the seed from a list Regulations on the Promotion, Production and of 30 species, the wording of a request for a license Marketing of Tobacco, Ministerial Diploma No. of plant health by the importer and the wording of 176/2001 of 28 November, Ministry of Agricul- the seed import authorisation from the Ministry of ture and Rural Development. These regulations Agriculture's National Seed Service are contained in include the classification of operators and the re- an annexe. The Orange International Seed Lot Cer- quirements for their registration in the Provincial tificate, the Field Inspection Certificate and the Directorate of Agriculture and Rural Development, Phytosanitary Certificate must be presented. and indicate the procedures and tariffs for the pro- duction, marketing, inspection and supervision of National list of varieties, Dispatch of 17 August tobacco. For the export of leaf tobacco, the regula- 1995-Ministry of Agriculture and Fisheries. The tions require that a certificate of origin and a plant list includes the names of the varieties, the user and health certificate issued within a given schedule ac- the growing cycle of 27 varieties of maize, 12 of rice, company the product. The preparation of technical 12 of sorghum, 4 of wheat, 26 of cowpea, 20 of com- standards for the cultivation, curing and storage of mon beans, 1 of pigeon peas, 8 of Soya, 16 of tobacco and the type of seed is planned. groundnut and 6 of sunflower. Norms for the production and trade of seeds, Internal Regulations for the National Seed Decree No. 41/94 of 20 September, Council of Committee, Ministerial Diploma No. 11/98 of 11 Ministers. This decree is regarded as the basic February-Ministry of Agriculture and Fisheries. law on seeds. It contains definitions of seed and its These regulations describe the organization, func- classification, and procedures and obligations for tioning and responsibilities of the Committee and 156 Bridging the Standards Divide: A Case Study and Action Plan for Mozambique its bodies. From its nature and responsibilities, the standards (isolation, percentage of atypical plants Committee is a consultative and advisory body in and number of inspections) and laboratory stan- the Ministry of Agriculture and Fisheries and dards (percentage of purity, percentage of germi- should give its opinion on seed supply plans, the nation and percentage of humidity). national list of varieties and legislation on seeds, among other subjects. Legislation Related to Phytosanitary Regulations on the production, trade, quality Inspections and Plant Quarantine control and certification of seeds, Ministerial Regulations on Phytosanitary Inspections and Diploma No. 184/2001 of 19 December- Plant Quarantine, Ministerial Diploma No. Ministry of Agriculture and Rural Development. 134/92 of 2 September, Ministry of Agriculture. These regulations complement the Norms on the The purpose of these regulations, covering plants, Production and Trade of Seeds, approved by De- plant products and agricultural products, and the cree No.s41/94 of 20 September, the Regulations on means of cultivation, packaging and transporting Seed Imports-Ministerial Diploma No. 95/91 of 7 them, is to prevent the introduction and spread of August and the National List of Varieties-Dispatch harmful organisms, especially from things in quar- from the Minister of Agriculture and Fisheries on antine, to control pests and diseases, to supervise 17 August 1995. These regulations contain defini- and control fields, forestry plantations, nurseries tions of words and expressions related to seeds, the and places for storing and selling plants, and plant classification of seeds, procedures for the recogni- health control of imports and exports. tion, registration, introduction, dissemination and The importation of plants covered by these reg- marketing of new varieties and seed certification. ulations requires a Plant Health Import Permit, a They also cover licensing of producers, seed im- plant health certificate of origin or provenance in provers, importers and exporters of seeds; quality accordance with the International Plant Protection control with the required documents, control Convention (IPPC) standards. For the export of mechanisms, production inspection and supervi- plant material for commercial purposes, the DSV sion, improvement, distribution, sale, import and checks the production site of this material in order export of seeds; the duties and obligations of in- to issue a plant health certificate. Where plants are spectors and supervisors; indication of tariffs; and to be exported for personal use, they are inspected penalties. before a certificate is issued. The regulations include Seed imports are governed by the Regulations on the conditions/type of plant material to enter the Seed Imports-Ministerial Diploma No. 95/9 1 of 7 country, lists of harmfuil organisms and their hosts August and there are new provisions in the current and the requirements for quarantine of whole grain regulations, particularly with regard to genetically maize to be imported or in transit from countries modified varieties (GMO). Genetically modified va- with the Large Grain Borer (LGB) Prostephanus rieties must not be imported and a declaration from truncatus. the appropriate authorities of the exporting country The application of these regulations is the respon- to this effect is required to confirm that the seed is sibility of the Department of Plant Health (DSV) in not a genetically modified variety, the Ministry of Agriculture and Rural Development. Other documents required are the Orange Inter- national Seed Lot Certificate (or in authorised cases LgsainRltdt ihre a certificate of integrity) and the plant health cer- LgsainRltdt ihre tificate. Seed exports require authorisation and for Regulation on Inspection and Guarantee of Qual- that purpose information is needed on the species ity of Fishing Products (Decree 17/01 of 12 June, and variety, on the quantities, where they may be Council of Ministers, BR no. 23, I Series). This inspected, their destination and certificates. They regulation is the basis for quality control, and was must meet field and laboratory standards for certi- drafted to be equivalent to the European Union fled seed and be properly packaged. Directives 91/493/CEE and 92/48/CEE with regard A list is appended to these regulations of 79 to sanitary conditions in the productive units during species and varieties, their common and botanical operations and product quality. This regulation has names, the weight of a lot, category of seed, field a number of aims: to be a guiding instrument for 157 Standards and Global Trade: A Voice for Africa the development of a processing industry; to update Legislation Related to Custom and modernise national legislation in accordance with the requirements of the international market; Presidenia Cree 4/2000 of1march to set legal boundaries for the responsibilities of the M ustoms ystem. bies customs system is made up of the existing bodies fisheries inspectorate and the role of the processing and legislation and others that may be created in industry; to serve, together with the maritime the future. Its functions include the following: fishing regulation, as an instrument for fisheries ' . . . ~~~~~propose measures and changes in fiscal and cus- management and administration; and to be a sec- toms policy relating to foreign trade, implement toral instrument that also has implications for other them, punish infringements, collect customs du- sectors such as health, customs and commerce. ties and other taxes and tariffs, inspect and con- trol the entry and exit of goods to and from Law on Fishing (Law 3/90 of 26 September, Peo- Mozambique, and give opinions on international pIe's Assembly, BR no. 39, l Series). treaties and conventions. Fisheries policy and implementation strategy (Res- Decree 3/2000 of 17 March-Council of Ministers. olution 11/96 of 28 May, Council of Ministers). According to its statutes, approved in March 2000, Maritime Fishing Regulation (Decree 16 of 28 Mozambique Customs is a state body of a paramil- itary nature, which operates throughout the territory May, Council of Ministers, BR no. 21). of the Republic of Mozambique to inspect and po- lice the customs, taking measures when necessary Technical Regulations in the Process of Approval with regard to people and goods in frontier zones. Internal Regulations for the Sub-Committee for Decree 4/2000 of 17 March. Council of Ministers. the Registration and Release of Varieties Pre- This Decree refers to the Customs Staff Statute. pared in September 1999. These regulations cover the organisation, functioning and responsi- Decree 56/98 of 11 November. Council of Min- bilities of the Sub-Committee on the Registration isters. The licensing of foreign trade operations to and Release of Varieties, a consultative and advi- and from Mozambique and respective instruments, sory body to the National Seed Committee, with namely the Import and Export Registration Forms, responsibilities for offering opinions on the regis- are abolished. tration and release of varieties. The forms used by the Customs at the date of publication of this Decree for customs clearance, Regulations on Fertiliser quality prepared in permits and other documents related to clearing September 2001. The aim of these regulations is goods through customs are also abolished. to protect the consumers and vendors of fertilisers, The Single Document is created as the form to making sure that they comply with certain require- be used for customs clearance of all goods entering ments, namely the registration of producers, im- or leaving Mozambique, regardless of the customs porters and vendors, labelling, limits of nutrients schedule to which they are subject, with the and harmful substances. It is thought that the spec- exception of goods in transit. ification of methods of inspection and sampling will be based on Mozambican manuals of fertiiser Decree 59/98 of 24 November. Council of Min- inspection and analysis. isters. The introduction of the Single Document The regulations propose the creation of a by Decree 56/98 of I1 November overtakes various Mozambican unit responsible for the application of articles on stamp duty contained m Decree 31883 the regulations. It would be in charge of the ad- of 12 February 1942. ministration of and compliance with the provisions of the Regulations on fertiliser quality. Decree 61/98 of 24 November. Council of Min- These regulations also foresee the creation of a isters, Pre-shipping inspection of imported Mozambican advisory fertiliser committee, com- goods-Amendment to the text of Article 1 of posed of representatives of different institutions Decree 21/90 of 18 September. The pre-shipping and the private sector. inspection of imported goods is designed to assist 158 Bridging the Standards Divide: A Case Study and Action Plan for Mozambique customs activities. At the same time, as capacity is Dispatch. Ministry of Planning and Finance, built in the customs, systematically submitting all Office of the Minister. On international fairs: goods to pre-shipping inspection loses relevance. common general procedures for imports for inter- This practice is therefore limited to imports that are national fairs and exhibitions. at higher risk from evasion of duties. This decree establishes that all imports under the definitive im- Dispatch. Ministry of Planning and Finance, port or bonded warehouse customs regimes, and Office of the Minister. Considering the impor- that do not fall within the norms of the simplified tance of the rehabilitation the sugar factories for regime laid down in Decree 56/98 of 11 November, national development, and the specific nature of are subject to pre-shipping inspection. The selec- Imports for this productive activity, it was deter- tion of goods for pre-shipping inspection and the mined that the system defined in this dispatch type of intervention will be decided randomly from applies exclusively to goods that are exempted for among the imports that offer greatest risk of eva- investment projects to rehabilitate the sugar facto- sion of duties. Pre-shipping inspection includes ries, in the terms of Decree 74/99 of 12 October. analysis of price, quality, quantity, packaging, spec- The importer must request exemption from the ifications and other conditions set out and agreed Customs Regimes Department of the National between the contracting parties and in accordance Directorate of Customs, and obtain the form that with current domestic legislation. grants exemption. Goods with this status will also be exempted from pre-shipping inspection. In Ministerial Diploma 206/98 of 25 November. order to clear the goods through customs the im- Ministry of Planning and Finance, Goods Clear- porter must present the Single Document, appro- ance Regulation. Updates the norms regulating priately filled in, and the 1.2. authorisation form. goods clearance, following the introduction of the Special counters to deal with customs clearances Single Document and the Simplified Single Docu- under this regime will be created-one in the Ma- ment, through Decree 56/98 of 11 November. puto International Road Terminal and the other in the Beira Customs. Ministerial Diploma 207/98 of 25 November. The Customs may request a post-disembarkation Ministry of Planning and Finance, Pre-Shipping inspection should doubts arise about the declared Inspection Regulation. Specifies the types of in- value of the goods or their customs classification, tervention in pre-shipping inspections, namely and in such cases the cost of the services will be Simple Inspection, Basic Inspection and Full paid by the Importer. If the post-disembarkation in- Inspection. spection and the Customs agree that the goods have been under-valued a fine will be charged in the Decree 62/99 of 21 September. Industrial Free terms of Article 13 of Ministerial Diploma 207/98 Zones Regulation. Industrial Free Zones repre- of 25 November. sent a regime in which the goods that are in or In addition to the customs legislation in force, the circulate within these zones, and which are ex- Customs have drawn up specific regulations to clusively destined to produce for export, as well facilitate the implementation of international agree- as the resulting export goods themselves, are ex- ments and conventions, such as: empted from all customs, fiscal and para-fiscal obligations. Ministerial Diploma 170/2001. Regulation on the issuance of certificates of origin and validation of Ministerial Diploma 14/2002 of 30 January, invoices for textiles and garments to be exported to Office of the Minister. Industrial Free Zones the USA within the framework of African Growth Customs Regime Regulation. Specifies the cus- and Opportunity Act-AGOA toms regime, contains the customs control norms that must be observed by operators and companies Ministerial Diploma 2/2002-06-02. Amendment in the Industrial Free Zones. of Article 15 of the regulation on the issuance of certificates of origin and validating invoices for tex- Ministerial Diploma 12/2002 of 30 January, Office tiles and garments to be exported to the USA within of the Minister. Bonded Warehouses Regulation. the framework of AGOA. 159 Standards and Global Trade: A Voice for Africa Annex C Resume of the Main International The scope of ISO covers standardization in all and Regional Standards Organizations in fields except electrical and electronic engineering which Mozambique Participates standards, which are the responsibility of the International Electrotechnical Commission (IEC). ISO brings together the interests of producers, users Codex Ahmentarius Commission was established (including consumers), governments and the scien- on 1962, to implement the joint FAO/WHO Food tific community, in the preparation of International Standards Programme. The purpose of the Pro- Standards. gramme is: ISO work is carried on through 2,858 technical bod- ies. More than 30,000 experts from all parts of the * Protecting the health of the consumers and en- world participate each year in the ISO technical work suring fair practices in the food trade; which, to date, has resulted in the publication of * Promoting coordination of all food standards 13,025 ISO standards. (ISO Memento 2001) work undertaken by international governmental and nongovernmental organisations; * Determining priorities and initiating and guid- International Plant Protection ing the preparation of draft standards through Convention (IPPC) and with the aid of appropriate organisations; The objectives of the International Plant Protection * finalising standards elaborated under c) above Convention (IPPC) are to maintain and increase m- and, after acceptance by governments, publishing ternational cooperation in controlling pests and them in a Codex Alimentarius either as regional diseases of plants and plant products, and in pre- or world wide standards, together with interna- venting their introduction and spread across tional standards already finalised by other bodies national boundaries. under b) above, wherever this is practicable; Summary of provisions: * Amending published standards, after appropriate survey in the light of developments. a) Parties undertake to adopt the legislative, techni- cal and administrative measures specified in the The Codex Alimentarius is a collection of interna- Convention; tionally adopted food standards presented in a uni- b) Specific and regional agreements to be made in form manner. conjunction with the Food and Agriculture Or- The publication of the Codex Alimentarius is in- ganisation of the United Nations (FAO); tended to guide and promote the elaboration and c) Each Party to set up an official plant protection establishment of definitions and requirements for organisation to: foods to assist in their harmonization and in doing so to facilitate international trade. * Inspect areas under cultivation and consign- ments of plants in international trafficfor exis- International Organisation for tence or outbreak of plantpests or diseases; Standardisation (ISO) - Issue certificates relating to thephytosamtary con- dition and origin of plants and plant products; ISO (International Organization for Standard- * Carry out research on thefield ofplantprotection. ization) is a world-wide federation of national standards bodies, at present comprising 138 d) Parties to regulate very strictly the import and members, one in each country. The object of export of plants and plant products, by means, ISO is to promote the development of standard- where necessary, of prohibitions, inspections ization and related activities in the world with and destruction of consignments. a view to facilitating international exchange of goods and services, and to developing coopera- International Office des Epizooties tion in the spheres of intellectual, scientific, tech- nological and economic activity. The results of The OIE is an intergovernmental organisation cre- ISO technical work are published as international ated by the International Agreement of 25 January standards. 1924, signed by 28 countries. 160 Bridging the Standards Divide: A Case Study and Action Plan for Mozambique Objectives 2. Mobilise the people of the region and their institutions to take initiatives to develop eco- a) Transparency-To guarantee the transparency of nmc oiladclua isars h ein animal disease status world wide; anomdc, social and cultural the implhe region, b) Scientific Information-To of the programmes and projects of the SADC; c) Internatinatl Soltdarity-To provide expertin 3. Create appropriate institutions and mecha- c)dIromoteinternational Solidar Toliroide eerthseo nisms for the mobilisation of requisite resources and promote international solidarit,yfor the con- frteipeetto fteporme n trol Of animal diseases; ~for the implementation of the programmes and trol of amlmal diseases; .............. the operations of the SADC and its institutions; Sanitary safety-To guarantee the sanitary safety of 4. Develop policies aimed at the progressive elim- world trade by developing sanitary rules for interna- ination of obstacles to free movement of capi- tional trade in animals and animal products. tal and labor, goods and services, and of the peoples of the region generally among member States; Southern African Development 5. Promote the development of human resources; Community (SADC) .............. 6. Promote the development, transfer and mastery Originally known as the Southern African Devel- of technology; opment Coordination Conference (SADCC), the 7. Improve economic management and perform- Organisation was formed in Lusaka, Zambia, on ance through regional cooperation; April 1, 1980, by Governments of the nine South- 8. Promote the coordination Promote the co- ern African countries of Angola, Botswana, ordination and harmonisation of the interna- Lesotho, Malawi, Mozambique, Swaziland, Tanza- tional relations of member States; nia, Zambia and Zimbabwe. 9. Secure international understanding, coopera- The Declaration and Treaty establishing the South- tion and support, mobiise the inflow of public em African Development Community (SADC) was and private resources in the region; and signed at the summit of Heads of State or Govern- 10. Develop such other activities as member States ment on August 17, 1992, in Windhoek Namibia. may decide in furtherance of the objectives of SADC Headquarters in Gaborone, Botswana and the SADC (http://www.sadc_squam.org). working languages are English and Portuguese. Current member states are Angola, Botswana, SADC Protocol on Trade Democratic Republic of Congo (DRC), Lesotho, Malawi, Mauritius, Mozambique, Namibia, Sey- The signatories of the SADC Trade Protocol con- chelles, South Africa, Swaziland, Tanzania, Zambia sidered that trade in goods and services and the en- and Zimbabwe. hancement of cross-border investments was major The SADC Treaty commits member states to the areas of cooperation among the Member States of fundamental principles of: the Community and recognized that the develop- ment of trade and investment is essential to the eco- * Sovereign equality of member States; nomic integration of the Community. With the * Solidarity, peace and security; implementation of the SADC Trade Protocol was * Human rights, democracy and rule of law; also expected that new opportunities will be create * Equity, balance and mutual benefit. for a dynamic business sector, the customs co- operation and combat illicit trade within the Over the past two years SADC has undertaken an Community would be strengthen. exercise to restructure its institutions and an Extra- The signatories of the Trade Protocol also noted Ordinary Summit adopted a report on this on the provisions of the Abuja Treaty calling for the es- March 9, 2001 in Windhoek, Namibia. tablishment of regional and sub-regional economic groupings as building blocs for the creation of the SADC Aims African Economic Community; was mindful of the results of the Uruguay Round of Multilateral Trade 1. Harmonise political and socio-economic poli- Negotiations on global trade liberalization and rec- cies and plans of member States; ognized the obligations of Member States in terms 161 Standards and Global Trade: A Voice for Africa of existing regional trade arrangements and bilat- the environment orofconsumers, withoutprejudice eral trade agreements. to the rights of any Member State and taking into The objectives of the SADC Trade Protocol are: account international standardisation activities, Member States shall, to the greatest extent practi- 1. To further liberalize intra-regional trade in goods cable, make compatible their respective standards- and services on the basis offair, mutually equitable related measures, so as to facilitate trade in goods and beneficial trade arrangements, complemented and services within the Community. by Protocols in other areas. 4. Member States accept as equivalent technical 2. To ensure efficient production within SADC re- regulations of other Member States, even if these flecting the current and dynamic comparative regulations differ from their own, provided that advantages of its Members. they adequately fulfil the objectives of their 3. To contribute towards the improvement of the regulations. climate for domestic, cross-border and foreign 5. A Member State, shall upon request of another investment. Member State, seek through appropriate measures, 4. To enhance the economic development, diversifica- to promote the compatibility of specific standards tion and industrialisation of the Region. or conformity assessmentprocedures that are main- 5. To establish a Free Trade Area in the SADC Region. tamned in its territory, with the standards or con- formity assessment procedures maintained in the Main articles under the SADC Trade Protocol territory of other Member States. related to standards and related activities are: Annex V Part four Concerning Trade Development Article 16 Article 6 Sanitary and Phytosanitary Measures Harmonization of standards and quality assurance 1. Member States shall base their sanitary and phy- 1. In order to improve quality and competitiveness tosanitary measures on international standards, of SADC products and achieve the diversification guidelines and recommendations, so as to harmo- of the market for such products, Member States nize sanitary and phytosanitary measures for shall promote harmonized standards and appro- agricultural and livestock production. priate quality assurance systems within the Com- 2. Member States shall, upon request, enter into con- munity, in accordance with the provisions of this sultation with the aim of achieving agreements on protocol. recognition of the equivalence of specific sanitary 2. Members States and the private sector shall take and phytosanitary measures, in accordance with measures to ensure that SADC exports meet the the WTO Agreement on the Application ofSanitary quality and standards, in accordance with speci- and Phytosanitary Measures. fications set by International Standards Organi- sation (SADC, Protocol on Trade). Article 17 Standards and Technical Regulations on Trade Memorandum of Understanding (MO U) in 1. Each Member State shall use relevant international Standardisation, Quality Assurance, Accreditation and Metrology (SQAM) standards as a basisfor its standards-related meas- ures, except where such standards would be an The Ministers responsible for the Industry and ineffective or inappropriate means to fulfil its Trade Sector in the Southern African Development legitimate objectives. Community (SADC), agreed in 1998 on the imple- 2. Member State's standards-related measures that mentation of a Memorandum of Understanding in conform to an international standard shall be pre- Standardisation, Quality Assurance, Accreditation sumed not to create an unnecessary obstacle to trade. and Metrology (SQAM). 3. Without reducing the level of safety, or of protec- The decision to implement this Memorandum tion of human, animal or plant life or health, of came from the following: 162 Bridging the Standards Divide: A Case Study and Action Plan for Mozambique SADC Treaty has set objectives such as achieving Metrology (SQAM) shall take place in the Region development and economic growth (Article and this framework is referred to as the SADC 5(1)(a)), achievingcomplementaritybetween na- SQAM Programme. tional and regional strategies and programmes The SADC SQAM Programme encompasses (Article 5(1)(e)) and promoting and maximising standardisation, accreditation, certification, con- productive employment and utilisation of re- formity assessment, testing, inspection, metrology sources in the Region (Article 5(1)(f)); and related matters. SADC Treaty has also set actions to achieve its ob- The objectives of the SADC SQAM Programme jectives, such as creating appropriate institutions are the progressive elimination of Technical Barri- and mechanisms for the mobiisation of requisite ers to Trade (TBTs) amongst the Member States and resources for the implementation of programmes between SADC and other Regional and Interna- and operations of SADC and its institutions tional Trading Blocks, and the promotion of quality (Article 5(2)(c)), to develop policies aimed at the and of an infrastructure for quality in the Member progressive elimination of obstacles to the free States. movement of capital and labor, goods and serv- In order To implement the SADC SQAM Pro- ices, and of the peoples of the Region in general, gramme, the following structures were created: among Member States (Article 5(2)(d)) and to im- prove economic management and performance a) SADC SQAM Expert Group (SQAMEG) through regional cooperation (Article 5(2)(g)); b) SADC Cooperation in Measurement Traceabil- SADC Protocol on Trade, on Article 33 calls upon ity (SADCMET) Member States to take all appropriate measures c) SADC Cooperation m Legal Metrology (SAD- to ensure the carrying out of the obligations stip- CMEL) ulated therein; d) SADC Cooperation in Standardisation (SADC- The SADC Protocol on Trade has set specific STAN) provisions on Non-Tariff Barriers to Trade e) SADC Cooperation in Accreditation (SADCA) (NTBs, Article 6) and on Standards and Techni- cal Regulations on Trade (Article 17); SQAMEG The Ministers were aware also about the im- portance of cooperation in the areas of Stan- The objectives of SQAMEG are to coordinate dardisation, Quality Assurance, Accreditation regional activities of SQAM and provide a fo- and Metrology (SQAM) for the elimination of rum where conformity assessment can be dealt NTBs, both in terms of the SADC Protocol on with. Trade and in terms of the commitments by Mem- ber States with respect to the World Trade Or- ganisation (WTO) Technical Barriers to Trade SADCMET (TBT) Agreement; The objective of SADCMET is to coordinate Identified also that cooperation in SQAM is not just metrology activities and services in the Region, in essential in the Industry and Trade Sector, where order to provide regional calibration and testing it is mainly driven by the provisions of the SADC services, including regulatory bodies, with readily Protocol on Trade and the WTO TBT commit- available traceability to the SI units of measure- ments, but in all SADC Sectors; ment, through legally defined and regionally and And they also took in consideration the role SQAM internationally recognized national measurement can play in enhancing the quality of life of the standards. citizens of the Member States through the assurance of the quality of the goods and serv- SADCMEL ices being produced. The objective of SADCMEL is to facilitate the The objective of the MOU is to establish the harmonization of the national Legal Metrology formal framework in which the cooperation regulations of the Member States and between amongst the national institutions in Standard- SADC and other regional and international trading isation, Quality Assurance, Accreditation and blocks. 163 Standards and Global Trade: A Voice for Africa SADCSTAN products and systems, including quality and envi- The objective of SADCSTAN is to promote the co- ronmental management systems) in the Region, ordination of standardisation activities and services and provide Member States with accreditation as a in the Region, with the purpose of achieving harmo- tool for the removal of TBTs in both the voluntary nization of standards and technical regulations, with and regulatory areas. the exception of Legal Metrology regulations, in sup- port of the objectives of the SADC Protocol on Trade. Membership The national SQAM member organisations, one per SADCA Structure per Member State, shall be designated by The objective of SADCA is to facilitate the creation the Minister responsible for industry and trade. of a pool of internationally acceptable accredited (SADC Protocol on Trade, Memorandum of laboratories and certification bodies (for personnel, Understanding and SADC web page.) 164 S TA NY S A D T) c was one of the 118 countries that STANDARDS, were signatories to the Uruguay TIE C F-I NI I CA.L Round Agreement (URA) after the protracted negotiations that S) TTTKcbegan in 1986 was finally con- REGULATIONJS I 1 1 cluded in 1994 at Marrakesh in Th T~ W~ ~ h U T (7uf Morocco, AND PlROVDUCT The World Trade Organiza- tion (WTO) recognizes and gives Q ,U A L I 1 credence to the standards, codes, and guidelnes of the Codex Ali- mentarius Commission (CAC) as adequate for the protection of Institutional Evidence from Nigeria human life and health related to the application of Sanitary and Phytosanitary (SPS) measures. The Federal Government of Nigeria established the codex INCE EARLY 1960s, NIGERIA~S TRADE POLICY contact point (CCP) through a decision of the then HAS BEEN AND CONTINUES TO BE INFLUENCED Federal Executive Council. The country, thus, al- by several factors with domestic concerns and ob- ready had a CCP and a National Codex Committee jectives, globalization trends, and its involvement in (NCC) prior to the beginning of the WTO in 1995. regional and multilateral trade agreements playing The emergence of the democratic system of admin- an prominent role. Between the early 1960s and istration in April 1999 further marked a major the mid-1980s, the trade policy in Nigeria was ba- change in the structure of the policy-making process sically inward looking with particular focus on the (including trade policy) in Nigeria. development of an industrial base through a series The level of Nigeria's participation m international of protectionist frameworks. The economic de- standards development and the impact that such pression of the early 1980s coupled with the wide- participation generates for the process of setting in- spread structural changes within the economy ternational product norms are, to a large extent, a necessitated a shift in trade policy outlook that ac- function of the interests and involvement of public companied the structural adjustment program and private sector representatives in the activities of (SAP) of 1986. From an exclusive inward-looking the National Codex Committee. Compliance with in- posture, Nigeria's trade policy became more out- ternational standards is an important challenge for ward-oriented, mainly as a means of diversifying Nigerian firms (producers and exporters) if they are Nigeria's productive base to reduce the exclusive de- to take advantage of the market access opportunities pendence on the oil sector and on imports. Nigeria of the WTO and AGOA. The current administration's 165 Standards and Global Trade: A Voice for Africa efforts to make the private sector lead the economy of relative macroeconomic instabilhty characterized can be seriously jeopardized if quality standards are by a few years of fair output performance and a long not strictly adhered to. Thus, the issue of conformity period of price instability, unemployment, and eco- with international standards in the production and nomic recession.'As shown by the annual growth rate export of non-oil commodities poses a serious con- of the real GDP (Appendix A (Table 3.28)), Nigeria cern to both the public and private sectors. If the pri- suffered stagnating and declining output in the 1980s vate sector were to jump-start the economy to move relative to the other decades. Whlle Nigeria experi- on the path of sustainable growth, the sector must be enced negative output growth in only two of the years equipped and empowered to face the challenges of in the 1970s and positive growth throughout the international competitiveness. 1990s, a large part of the 1980s was characterized by The study draws conclusions about the current large negative output growth. Specifically, from an status of laws, regulations, capacities and programs impressive level of 24.5 percent and 21.4 percent in relating to standards and technical regulations in 1970 and 1971, respectively, the real GDP growth rate Nigeria. It also identifies areas needing priority at- decreased (though still positive) to 5.5 percent in tention at the national level, and provides recom- 1973. Except for 1975 when a slight decrease occurred mendations on key steps to be taken by government in the real GDP growth rate, the entire mid-1970s and private organizations and relevant international show an impressive output growth rate performance development agencies to alleviate the negative im- largely because of the commercial exploitation of pact, and to strengthen the positive influences so as crude oil and the global oil boom of the period. to face the challenges to trade facilitation posed by The largest output contraction in Nigeria was ex- SPS measures and technical barriers to trade. perienced in 1981 when the real GDP decreased by an unprecedented magnitude of 26.8 percent from Economic Context: Economic and Trade its 1980 level. The output decrease in the next three Profile of Nigeria (1970-2000) years of this great recession was fairly reduced by adopting various fiscal measures and restraints. An Introduction important exception to the poor output perform- This section broadly describes the overall economic ance in the mid-1980s is the annual growth rate conditions and recent economic performance of in real GDP of 9.4 percent recorded in 1985. Fol- Nigeria using an array of macroeconomic and trade lowing the adoption of the structural adjustment indicators. In addition, it provides the changing pat- program (SAP) in 1986, the real GDP grew by tern of the structure of the economy, including im- 9.9 percent, 7.4 percent, and 8.2 percent in 1988, ports and exports, their structure and the main 1989, 1990, respectively, only to decrease to 4.7 per- sources and directions of trade, the tariffs applicable cent, 3.0 percent, and 1.3 percent in the years 1991, to the country's main exports in its primary external 1992, and 1994, respectively, largely because of markets, as well as Nigeria's position in regional trade political instability and uncoordinated and lopsided agreements and preferential access agreements. Fi- implementation of the economic reform process. nally, the section summarizes the locus and respon- Since 1995, the growth rate of the real GDP has lev- sibilities for trade policy m the country, the main eled off at the lower level. From 2.2 percent in 1995, structures for mteraction between the country and it grew slightly to 3.4 percent and 3.2 percent in the World Trade Organization (WTO), and the co- 1996 and 1997, respectively, only to decrease slightly ordination systems to deal with trade matters as they to 2.4 percent and 2.7 percent in 1998 and 1999. relate to issues both within government, and between As expected, Nigeria's poor output growth per- government and the private sector. formance is replicated by a relatively stagnant real GDP per capita. From an average of N1,320 in Nigeria's Economic Performance and 1970s, the real GDP per capita decreased to an av- Trade Structure erage of N945 in the 1980s only to improve slightly in the 1990s when it averaged N1,050. While the Nigeria's Macroeconomic Performance. The last plummeting real GDP per capita can be attributed three decades in Nigeria can be described as a period to poor output growth, other factors also account l Most of the discussions in this section are based on data contained in the Appendix. 166 Standards, Technical Regulations, and Product Quality: Institutional Evidence from Nigeria for its stagnant posture. Of particular significance utilization in the manufacturing sector include mad- among these factors is Nigeria's population in- equate infrastructural facilities, for example, electric- crease. It should be noted that taking the effects of ity, water supply, telecommunication, and so on; high the Naira depreciation on the real GDP per capita cost of inputs because of domestic currency depreci- into consideration would show a deteriorating and ation; unstable and unpredictable government fiscal unpalatable income per head situation. policy prescriptions; depleted production capacities Basing the price stability assessment on the of installed equipment because of poor maintenance reported inflation rate, the performance of the and servicing culture; and inadequate support by Nigerian economy has been mixed, though mostly government for its production boosting incentives, unimpressive. Of the 31 observed series (years), 10 and so on. (about 32 percent) were characterized by single- Another important dimension for assessing the digit mflation rates. The periods during which there overall performance of the Nigerian economy is its was single-digit inflation 1982 (7.7 percent), 1985 fiscal operations. Throughout the period under con- (5.5 percent), 1986 (5.4 percent), 1990 (7.5 percent), sideration, the fiscal operation of the federal gov- 1997 (8.5 percent) and 2000 (6.9 percent). High in- ernment was persistently in deficit except in a few flation rates were recorded in 1993 (57.2 percent), periods. From N2 billion in 1980, the deficit in the 1994 (57.0 percent), and 1995 (72.8 percent). While federal fiscal operations grew steadily to N8 billion some attempts can be made to provide causal ex- in 1986 and to N107 billion and N285 billion in planations for a few episodes of price increases; to 1993 and 1999, respectively. Measured as a propor- do justice to others becomes very difficult. The price tion of the GDP, the deficits are 8 percent, 12 per- increase in the mid-1970s is attributable mainly to cent, 11 percent, and 16 percent of the GDP in 1978, the monetization of the windfall from the oil boom 1982, 1986 and 1993, respectively. While the fiscal of the period. Such monetization includes general surplus recorded in the 1970s is a clear case of im- increases in both private and public salaries and proved financial fortunes (mainly from crude oil ex- other emoluments, and the award of several proj- ploitation), the NI bllion and N32 billion fiscal sur- ects. While the high rates of inflation recorded in pluses recorded in 1995 and 1996 (AppendLx A Table the late 1980s are due to the large depreciation of 3.29) are controversial because payments for a large the domestic currency associated with the economic number of projects executed by local contractors reforms of the period, the price increases from the and certified as satisfactory by the appropriate au- early 1990s to 1996 can be described as resulting thorities were not made during the two years, from cost-push and depreciation factors, augmented thereby not showing a true and fair view of the ac- by other supply constraints that resulted from in- tual performance of the federal fiscal operations. frastructural inadequacy and political instability. To finance the fiscal deficits, the federal govern- Capacity utilization of the Nigerian manufacturing ment of Nigeria in most cases resorted to borrowing subsector for 1970-2000 is also shown in Appendix from both internal and external sources. Nigeria's A (Table 3.28). From an average of 75 percent in the external debt that averaged 2.5 percent of GDP in 1970s, the manufacturing capacity utilization deteri- the 1970s became overbearing in the late 1980s to orated to 50 percent, 40 percent, and 38 percent in the extent of outstripping the overall GDP by 7 per- 1983, 1987, and 1992, respectively. Throughout the cent and 15 percent in 1989 and 1990, respectively 1990s, this important statistic fluctuated between 29 (Appendix A Table 3.29). To service its external debt and 42 percent giving an average of 35 percent. While stocks of US$27.5 billion and US$28.5 billion in 1992 the low capacity utilization in the manufacturing sub- and 2000, respectively, Nigeria requires 65.4 percent sector can be attributed to a large variety of domes- and 35.0 percent of its earnings from export of goods tic factors, a school of thought (mostly comprising and nonfactor services. Overcoming the debt over- manufacturers) has continued to hold the Nigerian dues and sustainmg its external debt-servicing capa- liberal trade policy posture as being responsible. This bilities constitute major challenges to the Nigeria's school maintains that the influx of a variety of house- balance of payments and its trade policy formulation hold goods and consumables poses an enormous and implementation processes. challenge to, and unwarranted depletion of demand for domestically produced goods. Some of the do- Nigeria's Trade Performance. Appendix A (Table mestic factors that have contributed to low capacity 3.30) shows some indicators of Nigeria's trade 167 Standards and Global Trade: A Voice for Africa performance. Nigeria's total exports of merchandise sive importations are 25 percent in 1981, 39 percent increased steadily in the 1970s up to 1980 when it in 1995,37 percent in 1999, and 36.5 percent in 2000. started to experience a slight decline. Specifically, Usmg the ratio of total trade to GDP as a meas- from a level of about N2 billion in 1973, Nigeria's ure of the degree of openness, the Nigerian economy total exports increased to N14 billion in 1980 only could be described as relatively open, with the 1990s to decline to Nil billion in 1981 and further to N7.5 being characterized by a higher degree of openness billion in 1983. The resuscitated increasmg trend in than the earlier decades. Specifically, while the de- export that started in 1984 was short-lived by an- gree of openness for the entire period (1970-2000) other slight decline in 1986. Except in 1998, when averaged 49 percent, the decade (1990-99) recorded total exports fell to N752 billion from N1,242 bil- an average of 66 percent (Appendix A Table 3.30). lion in 1997, they continued to increase up to 2000. While the year 2000 recorded the highest degree of As a ratio of GDP, the export performance becomes openness of 110 percent, the lowest value of 21 per- dlluted. Except in a few instances, the export GDP cent was recorded in 1986. The spectacular per- ratio was less than 30 percent until 1995. Between formance of the Nigerian economy m terms of 1995 and 2000, the ratio of exports to GDP averages openness during the 1990s must also be viewed in 48.7 percent, though it stood at only 27.6 percent in relation to Nigeria's involvement m regional and 1998. Despite the need for caution in the interpre- multilateral trade agreements and the market access tation these exports figures because of the effects of that is associated with those agreements. currency depreciation, the sudden increase in the ra- tio of exports to GDP in 1995 and thereafter sug- The Changing Structure of the Nigerian Econ- gests some causal linkage with the emergence of the omy. The Nigerian economy experienced radical WTO and the embedded Uruguay Round of agree- structural changes during the 1970s and 1980s. ments of which Nigeria is a signatory. These changes were particularly significant in the The total value of Nigeria's merchandise imports external sector of the economy. For instance, agri- follows almost a similar pattern of growth as exports. culture was the most important sector of the Specifically, both exports and imports moved in tan- Nigerian economy in the 1960s. It provided the dem up to 1980, though with exports persistently largest share of the country's gross domestic prod- outstripping imports. Between 1981 and 1983, im- uct (GDP), employment, and export earnings. ports actually exceeded export. In particular, the This picture changed dramatically in the 1970s, as value of total imports increased from N5 billion in crude petroleum became the economy's leading 1976 to N10.8 billion and N8.9 billion in 1982 and exports sector. The resulting heavy reliance on 1983, respectively, from N12.8 billion recorded in crude petroleum exports made the economy 1981. Because of the stringent measures adopted by highly vulnerable to external shocks, which were the new military administration, Imports decreased periodically transmitted through sharp changes in by about 19 percent to 147.2 billion in 1984, stag- the world demand for and prices of petroleum nated at almost the same level in 1985 and fell again products. In other words, the agricultural-based by another 15 percent to N6.0 billion in 1986. From Nigerian economy of the 1960s was considerably 1986 onward, the value of imports increased steadily less vulnerable to external shocks than the petro- except in 1996. For instance, imports that stood at leum-dominated economy of the 1970s and around N18 billion in 1987, increased to N30.9 bil- beyond (Oyejide 2001). lion, N87 blllion and N755.1 billion in 1989, 1991 Table 3.1 shows the share of the major sectors in and 1995, respectively. In 2000, the total value of im- real GDP for selected years. From 16.3 percent in ports was N963.0 billion. As a ratio of GDP, exces- 1982, the share of oil in real GDP increased to sive importation constituted a serious threat to the 33.4 percent in 1990 and declined to 24.8 percent economy in general and to the balance of payments in 1994. Between 1981 and 1998, the share of oil in in particular between 1977 and 1982 and since 1991. real GDP was an average of 28 percent. This value For these periods, it ranged between 20 percent and is in sharp contrast with the near 0 percent contri- 38 percent. For other periods, ratio of imports to bution of oil to the real GDP in the 1960s. GDP could be described as relatively reasonable, As shown in Table 3.1, the fortune of agricul- rangmg between 8.3 percent and 19 percent. Mea- ture (including livestock, forestry, and fishing) in sured as a ratio of GDP, the worst periods of exces- real GDP that suffered significant setbacks in the 168 Standards, Technical Regulations, and Product Quality: Institutional Evidence from Nigeria Table 3.1 Composition of Nigeria's Real GDP for Selected Years (percent) Average (1981- Activity Sector | 1982 1986 1990 1994 1998 1998) 1. Agriculture (including crops, livestock, forestry and fishing) 30.9 k 38.6 32.6 38.2 38.9 33.8 2. Crude petroleum 1 16.3 13.6 33.4 24.8 27.9 28.1 3. Mining and quarrying 1.7 0.3 0.3 0.2 0.1 0.5 l 4. Manufacturing 9.6 8.7 5.5 6.9 5.4 6.8 5. Building and construction 4.8 2.7 1.7 1.1 0.9 2.1 6. Transportation 4.8 5.2 2.0 3.4 2.9 3.3 7. Wholesale and retail trade 12.8 ' 13.2 13.9 17.4 16.1 2 13.9 8. Others 19.1 17.7 10.6 8.0 7.8 11.5 Total real GDP (percent) I 100 100 100 100 100 100 Share of oil in real GDP 1 16.3 II 13.6 i 33.4 24.8 27.9 28.1 Share of non-oil 83.7 86.4 66.6 75.2 72.1 71.9 Source: Derived from Appendix A (Table 3.31). 1970s because of crude oil exploitation, improved in the 1970s, the share of agriculture in export relatively in the late 1980s, mainly as a result of earnings has depleted to incredibly low levels. the economic reforms, which attempted to diver- From 30 percent in 1970, the share of agricultural sify the productive base of the economy. From products in export earnings decreased steadily to 30.9 percent in 1982, the share of agriculture in 4.7 percent and 2.2 percent in 1975 and 1990, real GDP increased to 38.6 percent in 1986, de- respectively. In fact, since the mid-1970s, the share clining slightly to 32.6 percent in 1990, and con- of agricultural products in export earnings has 'tinued its increasing trend from 1994. The share stagnated at around 2.0 percent. The share of min- of manufacturing in real GDP declined continu- eral products (mostly crude oil) in export earnings, ously during the period under consideration from on the other hand, improved extraordinarily from 9.6 percent in 1982, and fell to 8.7 percent and 5.5 the early 1970s. The share of mineral products in percent in 1986 and 1990, and increased slightly total exports that stood at 57.7 percent in 1970 in- to 6.9 percent in 1994. There was a similar de- creased sharplyto 92.7 percent in 1975. Since 1980, clining trend in the building, construction, and it has continued to fluctuate within the range of 96 transportation sectors. percent and 98 percent, thereby rendering other Another important structure of the Nigerian commodities highly insignificant in the items to be economy that underwent change was the iincreasing exported. share of wholesale and retail trade in real GDP. From The fact that the structure of Nigerian exports 12.8 percent in 1994, the share of wholesale and re- has remained at the 0 percent level of manufactured tail trade in real GDP increased steadily to 17.4 per- exports between 1970 and 2000 is of great interest. cent and dediried slightly to 16.1 percent in 1998. In other words, Nigerian exports have been domi- nantly in the primary sector. This primary-prod- Composition of Nigerian Exports and Imports. ucts-oriented export base has major implications An important contributor to the radical shift in the for both the value added of such exports and the structure of the Nigerian economy that com- vulnerability of the entire economy to external menced in the 1970s was the changing structure of shocks. The SAP package of the late 1980s was a sig- its exports. In the 1960s, agricultural products con- nificant attempt aimed at arresting the undesirable stituted the bulk of Nigeria's commodity exports. situation. Also of special importance to Nigeria's With the advent of oil in commercial quantity trading relation with the rest of the world and L~~~~~~~~~~~~~~~~~~~~~~X3 Standards and Global Trade: A Voice for Africa particularly, its involvement in regional and multi- and imports during 1971-98 are shown in Appen- lateral trade agreements, is the contribution of tex- dix A. (Table 3.34). tile and clothing to Nigeria's total exports. Trade in Even though there was a relative improvement in the textile and clothing sector has come to consti- Nigeria's trade with the rest of Africa especially in tute the most controversial of all the issues in mul- the 1990s, Europe (European Union), and North tilateral trade negotiations. Nigeria's share of this America (particularly the United States) dominated sector, and the global market accessibility, are of both as the destination of Nigerian exports and the great significance to its overall development. source of its imports. Together, Europe and the Throughout the period under consideration, the United States accounted for 80 percent, 77 percent, share of textiles in total exports stood at almost and 73 percent of Nigerian exports in 1971, 1980, 0 percent. and 1995, respectively, while Nigerian exports to the The composition of Nigerian imports between rest of Afnca stood at 2.2 percent, 3.0 percent, and 1970 and 2000 remained almost the stagnant except 9.2 percent during the same years. As shown in Ap- for a few changes that are incomparable with those pendix A (Table 3.34), the trend of the United States' of exports. As shown in Appendix A. (Table 3.33), share of Nigerian exports contrasts sharply with that four product lines jointly constitute the bulk of of Europe's share. While the United States' share in- Nigeria's total imports. These are food (including creased from 29 percent in 1975 to 39 percent and live animals), chemicals, manufactured goods, and 54 percent in 1980 and 1990, respectively, EU's share machinery and transportation equipment. declined from 62 percent in 1971 to 38 percent, 36 Together, these four product lines were responsi- percent, and 34 percent in 1980, 1990, and 1995, re- ble for 86.6 percent, 89.7 percent, and 87.6 percent spectively. Nigerian exports to the Asian countries of Nigeria's total imports in 1970, 1985, and 2000, improved relatively in the 1990s. From its near 0 per- respectively. Within these major product lines cent share in the 1970s and 1980s, Nigerian exports themselves, some fairly remarkable changes can be to Asian countries increabed to 6.3 percent and 14 identified over the historical period. From a level of percent in 1995 and 1998. 7.6 percent and 8.0 percent in 1970 and 1975, re- The relatively steady improvement in Nigerian ex- spectively, the share of food and live animals m total ports to the rest of Africa and Asia, especially in the imports increased to 15.8 percent and 17.0 percent late 1990s, also applies to its imports from the two in 1980 and 1985, respectively, only to decrease regions. From nearly 1 percent in between 1971 and sharply to 7.6 percent in 1990, largely because of early 1990s, Nigerian imports from the rest of Africa the protectionist policies in the form of the outright increased to 2.8 percent and 3.7 percent in 1995 ad ban on some food items. The share of chemicals in 1998, respectively. From 5.4 percent and 7.5 percent total imports that was 7.0 percent in 1975 increased in 1971 and 1985, respectively, the share of Asian steadily to 19.7 percent in 1990 and to 22.9 percent countries in Nigerian imports improved remarkably in 1999. A significant contributor to the increasing to 17.4 percent and 22.3 percent in 1995 and 1998, share of chemicals in imports is the importation of respectively. Together, the countries of the European refined petroleum products since the late 1980s Union (EU) contributed 60 percent, 58 percent and largely because of underutilization of the installed 51 percent of Nigerian imports in 1975, 1990, and capacities of the refineries in the country and their 1995, respectively, while the United States accounted closure in some instances. The share of manufac- for 11 percent, 6.3 percent and 12 percent during tures in total imports remained almost the same be- the same period. tween 1970 and 2000, ranging between 22 percent In general, Nigeria's trade with the Middle East and 30 percent. and the former Communist States (especially Russia) has been highly insignificant. Directions of Nigeria's Trade. Questions regard- ing the destinations of a country's exports and the sources of its imports matter for the country's trade Nigeria's Main Exports policy, especially as they relate to regional and mul- tilateral trade agreements whose negotiations are Given that the United States and the European usually influenced by such questions (Oyejide Union (EU) jointly account for three-quarters of 2001). Data on the direction of Nigerian exports Nigerian exports, the analysis of the structure of 170 Standards, Technical Regulations, and Product Quality: Institutional Evidence from Nigeria Table 3.2 Structure of Applied MFN Tariffs in the United States (percent) Full Implementation Indicators 1996 1998 1999 of UR 1. Bound tariff lines' 100.0 100.0 100.0 I 100.0 2. Duty-free tariff lines 21.4 1 13.8 29.7 36.4 3. Specific tariffs/all tariffs 24.4 1 14.3 12.9 |1 .2 4. Simple average bound tariff rate n.a. 5.9 5.7 4.7 5. Simple average applied tariff rate 6.4 5.9 5.7 4.7 - Agricultural products 10.0 10.3 10.7 8.2 - Industrial products 5.7 5.0 4.7 4.0 6. Domestic tariff "peaks "b 4.0 4.9 5.0 6.9 7. International tariff "peaks"ic 8.9 7.7 7.4 5.2 a. Two tariff lines, applying to crude petroleum, are not bound. b. Domestic tariff "peaks" are defined as those exceeding three times the overall simple average MFN rate. c. International tariff "peaks" are defined as those exceeding 15 percent. Source: wTO (1999): Trade Policy Review: United States-I 999 (p. 47). tariffs applicable to Nigerian major exports, which 1998 and 1999, respectively, coincide with the av- is the focus of this section, is directed mainly at erage applied tariff rate. It is expected that this rate these two economic blocs. will decline to 4.7 percent with the full implemen- tation of the UR agreements. However, while the United States' Tariffs Structure (1996-99). Table applied MFN tariff average for industrial products 3.2 provides a few summary indicators of the overall is slightly lower than the overall average, the applied structure.of tariffs applicable in the United States. MFN tariffs average for agricultural products is al- Based on the 1999 tariffs schedule, there are 10,173 most double the overall average between 1996 and tariff lines (at the HS 8-digit level) in the United 1999. A major trade policy implication of this dis- States, with different tariff rates applicable to the parity between applied rates on industrial and agri- same tariff lines depending on whether MFN or pref- cultural products is that a higher tariff protection erential rates are involved. Following the Uruguay is granted to the latter, which by implication im- Round, all U.S. tariff lines, except two, are bound and poses some market restraints on Nigerian agricul- all applied MFN rates coincide with bound rates, tural products. thereby guaranteeing a high degree of tariff pre- Also of importance to the degree of protection dictability. Of particular significance to Nigerian ex- granted to the domestic production of Nigeria's ports is the exclusion of two of the 10,173 tariff lines main exports in the United States, is the imposition from the MFN tariff bindings. Coincidentally, the of specific (and compound) duties, which are a comr- two unbound tariff lines cover crude petroleum, a mon feature of the U.S. tariffs. In 1999, these forms product of which the United States is actually the of tariffs accounted for 12.9 percent of all tariffs in largest importer from Nigeria. An important impli- contrast to the proportion of 24.4 percent in 1996 cation of the exclusion of crude petroleum products (Table 3.2). Specific tariffs are imposed mainly on in the MFN tariff bindings is to weaken the degree agricultural products, footwear and headgear, a of tariff predictability on these items. number of textile materials, and a few other items. As shown in Table 3.2, 29.7 percent of tariff Even the application of ad valorem equivalents lines in the United States are duty free, consider- (AVEs) of specific duties such as quotas in an at- ably more than in 1998 (13.8 percent) and 1996 tempt to ensure their transparency, they neverthe- (21.4 percent). With the full implementation of the less tend to increase the effective tariff protection UR agreements, this ratio is expected to rise to 36.4 while at the same time being regressive. Overall, spe- percent. As noted earlier, the overall simple average cific duties tend to impose a greater impact on ex- bound tariff rates of 5.9 percent and 5.7 percent in ports from developing countries than those of X7X Standards and Global Trade: A Voice for Africa Table 3.3 Protection in Selected Agricultural and Textile Sectors in the United States, 1999 (percent) Ave. Max. Dom. Tariff Specific I-HS Chapter/Description Tariff Tariff Peaks Tariff Agriculture 04 Dairy produce, etc. 22.3 232.2 42.2 50.2 1 7 Sugar and sugar confectionery 15.7 168.7 18.2 51.5 18 Cocoa and preparations 14.7 191.5 19.2 43.6 19 Preparations of cereals, etc. 19.0 151.7 30.9 26.5 21 Miscellaneous edible 14.9 109.8 22.7 44.3 24 Preparations 53.3 350.0 25.0 51.8 Tobacco, etc. 54 Textile 13.3 n.a. n.a. n.a. 55 Man-made filaments 1 3.2 n.a. n.a. n.a. 61 Staple fiber 1 3.7 n.a. n.a. n.a. Clothing Source WTO (1999) Trade Policy Review United States-I 999 (pp 159, 164) industrial countries since developing countries ex- which 2,132 (20.4 percent) belong to agriculture, port relatively low-priced products (WTO 1999). 8,257 (79.2 percent) to nonagriculture, and the bal- The incidence of increasing tariff protection for ance of 39 (0.4 percent) lines belong to petroleum. agricultural products also applies to the clothing As shown in Table 3.4, the overall simple average and textile materials. Table 3.3 shows the level of applied MFN tariff rate for 1999 in the EU was tariff protection in the agricultural and textile sec- 6.9 percent, just slightly below 7 percent for the tors in the United States for 1999. The MFN tariff bound tariff rate. As was the case with the United on cocoa and cocoa preparations, one of Nigeria's States, the simple average applied rate for agricul- main agricultural products, exceeded the overall av- tural products exceeds the overall average by a wide erage of 5.7 percent to 9 percent. On textile and margin of 10.4 percent. Specifically, while the sim- clothing materials, the average applied tariff was ple average applied tariff rate for agricultural prod- 13.5 percent, also far in excess of the overall aver- ucts was 17.3 percent, it was just 4.5 percent for age. Related to the high average applied tariff rates nonagricultural products and in fact only 2.9 per- on agricultural and textile products is the use of tar- cent for petroleum products. The range of applied iff quotas on some broad categories of agricultural tariffs, in terms of the minimum and maximum products. Between 1996 and 1999, the use of tariff rates, is also more important on agricultural prod- quotas covered 1.9 percent (some 198) of all the tar- ucts (from 0 to 236.4 percent) than on nonagricul- iff lines in the United States. The unprecedented tural products (from 0 to 26 percent). higher protection made possible by the use of tar- Table 3.4 further shows the MFN bound and ap- iff quotas is best evident when compared the sim- plied tariffs on selected products in the EU in 1999. ple average in-quota MFN tariff rate of 9.5 percent, The structure of the simple average tariffs on these the corresponding average out-of-quota MFN tar- products has some specific implications for iff is 55.8 percent (WTO 1999). Nigerian exports. For instance, the low simple av- In spite of the disparity between the overall av- erage tariff of 2.9 percent on petroleum products erage applied tariff of 5.7 percent and the average coupled with its low dispersion (from 0 to 4.7 per- nominal MFN tariff for agriculture of 10.8 percent cent) indicates weak effective tariff protection for in 1999, some 42 percent of the duties on agricul- the EU's petroleum sector, thereby constituting a tural goods are non-ad valorem. source of market access for Nigerian crude oil, which incidentally is the largest source of foreign Tariffs Structure in the European Union. Com- exchange earnings for the country. Another main pared to 10,173 in the United States, the 1999 EU implication for Nigerian exports is the wide dis- tariff schedule consists of 10,428 tariff lines of parity between the simple average tariff on cocoa Standards, Technical Regulations, and Product Quality: Institutional Evidence from Nigeria Table 3.4 MFN Bound and Applied Tariffs in the EU on Selected Products by HS Chapter, 1999 No. of 8- MFN _ MFN 1999 HS Digit HS Bound Simple Code Lines Description Rate Average Maximum 10,428 Total 7.0 6.9 236.4 2,1 32 WTO Agriculture 17.3 236.4 8,257 WTO Nonagriculture (excluding petroleum) 4.5 26.0 39 Petroleum 2.9 4.7 10 55 Cereals 47.3 47.3 179.7 17 47 Sugars and sugar confectionery 17.6 17.6 72.2 18 27 Cocoa and cocoa preparations 12.3 12.3 76.2 1801 1 Cocoa beans 0.5 0.5 52 162 Cotton 7.4 7.4 9.0 54 88 Man-made filaments 7.8 7.8 9.5 55 168 Man-made staple fibers 8.1 8.1 9.5 61 171 Apparel and clothing 12.3 12.3 13.0 accessories, knitted or crocheted 97 7 Works of art, collectors' pieces, and antiques 0.0 0.0 0.0 Source' WTO (2000) Trade Policy Review. European Union-2000 Vol 1 (pp 44, 173-8) beans, which is 0.5 percent and on its derivatives equivalents (AVEs). Another important trade pol- (cocoa and cocoa products), which is 12.3 percent. icy implication of the EU's tariff on agricultural On account of this wide margin, the export of raw products arises from the nature of the duty regime cocoa beans to the EU is given greater market ac- itself, in which a band of entry prices is established cess whereas the export of its derivatives, which for each period of importation during the year, in- could generate higher added value, is strongly dis- creasing in the peak European harvesting period couraged with a high tariff protection. (WTO 2000). The duty-free access granted to the works of art, Table 3.5 shows the applied MFN tariffs of selected collectors' pieces, and antiques could be interpreted sectors in the EU in 1999. As shown by the reported from two perspectives. One is to grant greater mar- simple average tariffs and the associated ranges, the ket access for these items and encourage their pro- mining and quarrying, and electricity, gas, and wa- duction, especially by African countries. The other ter sectors were heavily liberalized with either zero perspective is to consider this duty-free access as an or close to zero average tariffs. The tariff protection avenue for stimulating the depletion and extradition for the manufacturing sector and agricultural man- of works of arts and antiques accumulated by ufactures was exceedingly high, whereas basic agri- Africans across centuries. Therefore, the zero tariff on cultural products were less protected. works of art and antiques could be described as dam- aging for the Africans, particularly in the long run. Nigeria's Preferential Access Agreements and Its On the structure and average tariffs imposed on Status in International and Regional Groupings. agricultural products by the EU, a few implications Nigeria is involved, in varying ways in the full range for Nigerian exports exist. The first is that the EU's of formal trade relations with other countries in the non-ad valorem duties, which constitute about framework of bilateral, regional, and multilateral 10 percent of the tariff lines, apply mostly to agri- trade cooperation arrangements and agreements. cultural products. As the EU applies non-tariff bar- Embedded in some of these frameworks are agree- riers such as quantitative restrictions (QRs) alone ments for Nigeria's preferential access to partici- or in combination with ad valorem creates confu- pating countries. Even though Nigeria has main- sion in estimating tariff on such products because tamed bilateral trade agreements with a number of of the need to convert the duties to ad valorem African, European, and Caribbean countries, these m73 Standards and Global Trade: A Voice for Africa Table 3.5 Applied MFN Tariffs in the EU by ISIC Rev. 2 Category, 1999 Applied Rate ISIC | No. of Simple Code | Lines Description Average Range 1 653 Agriculture, hunting, forestry and 9.1 0-179.7 fishing 11 475 Agriculture and hunting 10.0 0-179.7 111 475 Agriculture and livestock production 10.0 0-179.7 2 137 Mining and quarrying 0.2 0-8 220 9 Crude petroleum and natural gas 1.0 0-8 production 3 9637 Manufacturing 6.9 0-236.4 311 1438 Food products 21.4 0-236.4 3112 156 Dairy products 41.6 i 0.3-146.1 3116 116 Grain mill products 36.5 2.7-212.3 3119 46 Cocoa and cocoa confectionery 1 3.9 0-76.2 321 1059 Textiles 8.5 0-13 3212 98 Made-up textile goods except wearing 10.3 2-13 apparel 3213 226 Knitted and crocheted fabrics 11.7 6.5-13 3311 133 Saw mills and woodmills 2.6 0-10 35 1795 Chemicals, petroleum, coal, rubber, 4.7 0-41.7 plastics 353 62 2 Petroleum refineries 2.1 0-6.5 355 105 Rubber products 5.5 0-17 4 1 Electricity, gas, and water 0.0 L 0-0 Source WTO (2000). Trade Policy Review European Union-2000 Vol 1, pp 182-4 arrangements have not included trade preferences Another important agreement that has granted and therefore, have had no significant impact on Nigeria preferential access to other developing Nigeria's direction of trade or its trade policy (Oye- countries (African and non-African) is the Global jide 2001). System of Trade Preferences (GSTP). As noted by Regional and multilateral trade alignments have, Oyejide (2001), the benefits that would have ac- by contrast, offered Nigeria the opportunity for pref- crued to Nigeria with the tariff preference arrange- erential access to markets of participating countries. ment within the GSTP have been substantially The first in this category is the Nigeria's participa- eroded by the reduction in its applied tariffs, which tion and membership of the Economic Community began after the mid-1980s. of West African States (ECOWAS), which was set up The establishment of the African Economic primarily as a preferential trade arrangement within Community (AEC) by the OAU member nations in the context of a series of trade and investment lib- 1991, which provides for the creation of a pan- eralization commitments. Despite the lopsided and African economic and monetary union over time is lackluster attitude of the member nations in the im- another arrangement that would have offered a plementation of the trade liberalization scheme preferential and free access opportunity for Nigeria (TLS) contained in the ECOWAS treaty, the regional to African countries. With no concrete measures grouping has nevertheless created both preferential taken so far to implement the trade component of and wider market access for Nigeria and other mem- the AEC Agreement, utilizing the preferential access ber nations. An assessment of whether Nigeria has opportunity will remain elusive for Nigeria for actually utilized this opportunity of preferential ac- some time. cess, which has remained a contentious issue in its The Lome Convention between the EU and the trade policy trend. African-Caribbean Pacific States (EU-ACP), and the Standards, Technical Regulations, and Product Quality: Institutional Evidence from Nigeria succeeding Cotonou Economic Partnership Agree- manufactured products, it is useful to distinguish ment, which granted the ACP countries including among several sectoral components. In relation to Nigeria nonreciprocal duty-free access to EU, are the imports, the primary objectives were to protect ex- most significant opportunity of preferential access to isting domestic industries and reduce the country's the industrial countries that Nigeria has had. For a dependence on imports, by ensuring the availability variety of reasons, there has been great difficulty for of intermediate inputs and capital goods that could Nigeria to take full advantage of the benefits offered not be obtained from domestic sources. In relation by the EU-ACP preferences. to the export sector, the central objective of trade pol- Nigeria's preferential access to the United States icy was the expansion and diversification of non-oil, has been constrained in the past for two main rea- and particularly manufactured exports. The indus- sons. One is its exclusion from the beneficiaries of trial focus of the trade policy with respect to exports the U.S. generalized system of preferences (GSP), a included the desire to increase the local content of program that grants preferential duty-free entry to manufactured products on the assumption that an some 4,468 products (as of July, 1998) from speci- increase in the level of locally sourced raw materials fied countries and territories, because of its mem- and intermediate products is important for raising bership of the Organization of Petroleum Export- capacity utilization of domestic industries. By com- ing Countries (OPEC). The other factor that has parison, the focus of trade policy with respect to agri- limited Nigeria's access is the restriction imposed culture was to discourage food imports and encour- on its export of textiles and clothing products to age local production of agricultural raw materials for the United States since 1990. With the recently local industry (Oyeiide 2001). enacted African Growth and Opportunity Act The emergence of the democratic system of ad- (AGOA) the preferential access opportunity that a mmistration in April 1999 marked a major change number of African countries (especially South in the structure of the policy-making process (in- Africa) have started to enjoy, Nigeria's access to the cluding trade policy) in Nigeria. Based on sugges- U.S. market is expected to improve remarkably. tions and submissions of the relevant ministries and agencies, the National Assembly approves proposals that become law after presidential assent. Changes in Locus and Responsibilities f T O trade and investment policies, including changes in tariff levels and import prohibitions that are gener- Since early 1960s, Nigeria's trade policy has been ally formulated in the context of the annual budget, and continues to be influenced by several factors also undergo the same legislative procedure before with domestic concerns and objectives, globaliza- their implementation. Overall, the principal min- tion trends, and its involvement in regional and istries and agencies responsible for the administra- multilateral trade agreements playing an prominent tion of trade and investment policies in Nigeria are role. Between the early 1960s and the mid-1980s, the presidency, the Federal Ministry of Finance, the the trade policy in Nigeria was basically inward Nigerian Customs Service, the Federal Ministry of looking with particular focus on the development Commerce (FMC), the Federal Ministry of Industry, of an industrial base through a series of protec- and the Central Bank of Nigeria. tionist frameworks. The economic depression of Regarding its interaction with the WTO, the Fed- the early 1980s coupled with the widespread struc- eral Ministry of Commerce (FMC) is the main co- tural changes within the economy necessitated a ordinating agency. The FMC is the main channel shift in trade policy outlook that accompanied the through which trade issues and legislation are dis- structural adjustment program (SAP) of 1986. cussed between Nigeria and the WTO. Also, the From an exclusive inward-looking posture, Nige- minister of Commerce and Tourism represents and ria's trade policy became more outward-oriented, leads the country's delegations at WTO meetings, mainly as a means of diversifying Nigeria's produc- particularly at the periodic trade policy review tive base to reduce the exclusive dependence on the meetmgs. There are other agencies that coordinate oil sector and on imports. trade policy matters in Nigeria with the FMC at the With the broad objective of promoting economic apex. For instance, interministerial meetings are pe- efficiency in the process of expanding non-oil ex- riodically held on a case-by-case basis when re- ports and reducing the import content of locally quired to harmonize trade issues that cut across 175 Standards and Global Trade: A Voice for Africa ministries. Also, the National Council on Trade and thus, already had a CCP and a National Codex Com- Tourism, which meets annually, coordinates inter- mittee (NCC) prior to the beginning of the WTO governmental trade issues that affect federal, state, in 1995. The Standards Organization of Nigeria and local governments. Between government and is the secretariat of the National Codex Commit- the private sector, trade issues are coordinated tee while another regulatory agency, the National through various "umbrella" bodies collectively Agency for Food, Drugs Administration, and Con- identified as the organized private sectors (OPS). trol (NAFDAC) currently holds the chairmanship. The Nigeria Economic Summit Group, the Nigerian The Standards Organization of Nigeria, which rep- Association of Chambers of Commerce, Industries, resents Nigeria in its obligation as a member of the Mines, and Agriculture (NACCIMA), Manufactur- International Standards Organisation (ISO), is the ers Association of Nigeria (MAN), the Association CCP that serves as the secretariat of the National of Nigerian Exporters, the Nigerian Association of Codex Committee and arranges the meetings of that Small-Scale Industrialists, and Export Commodity committee. Its functions include the receipt and dis- Associations comprise the OPS. Through the OPS, semination of documentation and information on these various groups give advice on policies, and in codex and related issues. In addition to the com- some instances, pressurize for change in particular munication function, it is the main repository of trade policy legislation and the position considered Codex documents distributed to relevant persons detrimental to their primary interest. and organizations, acts as the link between the pub- In addition, the private sector through the OPS lic and private sectors as well as between ministries is represented at various levels for the purpose of in the public sector, coordinates all Codex activities, initiating, formulating, and in a few instances ad- and maintains a library of codex standards, codes of ministermg trade policies. The OPS performs these practice, and other documents. roles through its interaction with the FMC. The National Codex Committee advises the gov- ernment on food standards and related issues, Nigeria's Participation in International particularly in the context of its CAC work and Standard Development formulates national position papers on codex texts Nigeria's Participation and Influence in circulated by Codex circular letters. The Committee NigeriasParticipationaand Influencesin is also expected to educate ministers of various ministries, which have influence on food safety and The World Trade Organization (WTO) recognizes consumer protection policy with regard to its and gives credence to the standards, codes, and Codex related work. The National Codex Commit- guidelines of the Codex Alimentarius Commission tee has four technical committees to deliberate on (CAC) as adequate for the protection of human life and arrive at informed positions on Codex issues. and health related to the application of Sanitary and These include the General Purpose Committee, Phytosanitary (SPS) measures. The implication of Animal and Animal Product Committee, Plant and such recognition is that national governments need Plant Product Committee, and Miscellaneous to harmonize their regulations with those of CAC, Committee. as its final texts will apply in cases of trade disputes The National Codex Committee participates in involving SPS measures. The Codex Alimentarius Codex work in three ways. These include organiz- Commission is the standards setting agency for the ing and attending local and regional workshops and WTO agreement on sanitary and phytosanitary seminars; regional cooperation on codex issues; at- measures (SPS) and it advises developing countries tending Codex meetings at the international level in setting up codex contact points and national to present Nigeria's position on deliberated Codex codex committees for ease of coordination of SPS- issues; sending written views to the Codex Secre- related issues. The codex contact point (CCP) is the tariat when national representatives cannot attend focal point for codex activities in a member coun- meetings; and organizing quarterly meetings to try. However, the focal point of WTO issues in consider and approve submissions by the Technical Nigeria is the Federal Ministry of Commerce. Committees of the National Codex Committee. It The Federal Government of Nigeria established is expected that the NCC convenes and approves the codex contact point (CCP) through a decision responses to Codex circular letters and reviews gov- of the then Federal Executive Council. The country, ernment positions on the provisional agenda. 176 Standards, Technical Regulations, and Product Quality: Institutional Evidence from Nigeria The level of Nigeria's participation in interna- work. For example, an individual firm's participa- tional standards development and the impact that tion in CAC meetings is limited to multinational such participation generates for the process of organizations, which sponsor their personnel to setting international product norms are, to a large meetings of their interest. At the CAC level, private extent, a function of the interests and involvement sector participation in the absence of government of public and private sector representatives in the officials generates limited impact as the private sec- activities of the National Codex Committee. The tor representatives attend as observers. NCC is composed of the Ministries of Health, Agri- Issues on the agenda of a characteristic NCC meet- culture and Rural Development, Commerce, For- ing include a report from the Secretariat of the NCC; eign Affairs, and Science and Technology; Standards a delegate's report of the Codex Alimentarius Com- Organization of Nigeria, NAFDAC, the academia mittee meetings, and a discussion of Nigeria's partic- and research institutes such as National Institute for ipation in and delegation to any forthcoming Codex Food Science and Technology (NIFST), as well as Committee meeting. As required by the CAC, the the private sector represented by Manufacturers NCC considers CAC agenda items and accordingly Association of Nigeria, NACCIMA, the National As- passes resolutions in the form of Nigeria's positions. sociation of Small Scale Industrialists (NASSI), and For example, the NCC considered the supplementary the Consumer Protection Council. Table 3.6 shows Agenda 7 (a) of the 16th session of the Codex Com- the proportion of representation of the different rel- mittee on General Principles scheduled in Paris for evant agencies and ministries. On the average, a typ- 23-27 April 2001, which sought the amendment of ical NCC meeting has 25 percent representation Rule 1 of the Rules of Procedure of the CAC to per- from the Standards Organization of Nigeria fol- mit the entry of the European Contmmission as a lowed closely by the academia and research insti- member of the CAC. Another instance is the consid- tutes (24 percent), NAFDAC (22 percent) and the eration of agenda item 5 (b) of the 29th session of private sector (18 percent). Government ministries' the Codex Committee on Food Labeling scheduled representation averaged only 9 percent at NCC in Ottawa, Canada for 1-4 May 2001, on the labeling meetings while agencies involved in law enforce- of foods and food ingredients obtained through cer- ment constituted 3 percent. The structure of repre- tain techniques of genetic modification or genetic sentation thus indicates irregular attendance of gov- engineering. ernment ministry officials at NCC meetings with the In the first example, the NCC resolved that probable implication of inadequate commitment to Nigeria should not support any amendment to the resolutions and budgetary issues. specific rules of the procedure, especially as it is The low rate of participation of government of- merely to allow the EC to become a voting mem- ficials has a constraining influence on the degree of ber of the CAC. Such a position was taken because commitment of the private sector to NCC and CAC the views of the EC, even as an observer, were often Table 3.6 Participation at National Codex Committee Meetings Number of Representation Average (Persons)' Representation Institutions Represented April 2001 2001 (percent) Government ministries 1 1 3 9 Standards Organization of Nigeria 5 .1 3 5 25 NAFDAC 4 4 3 22 Academia and research institutes 5 4 [ 3 24 Private sector 2 2 l' 6 18 Law enforcement agencies (e.g., police, customs, etc.) - - 2 3 Total 17 l 14 22 100 a. There were two meetings in April. Source: Standards Organization of Nigeria. 1 77 Standards and Global Trade: A Voice for Africa respected and accommodated and that such standards in general. Tables 3.7 and 3.8 show that amendment could set off similar demands from the staff of the NCC Secretariat attended Codex- other sources in the future. In the second case, the related programs thrice in 1994 and twice in 1997. NCC resolved that "all foods and food ingredients NCC activities are entrenched in a monitoring obtamed through certain techniques of genetic mechanism established by the CAC, which enjoins modification/genetic engineering shall be labeled to the NCC to hold quarterly meetmgs to consider comprehensively inform the consumer on such ge- Codex-related issues, discuss and approve Nigeria's netic modification and/or engineering that has position, and review government positions on the taken place on the food or food ingredient." This provisional agenda. Accordingly, the Nigerian NCC resolution was circulated at the meeting as Nigeria's meets quarterly as shown by the dates on NCC comments on the proposed draft amendment to the reports. For example, the NCC met in April and general standard for the labeling of prepackaged August 2001 as well as in January 2002. The CCP foods (FAO-WHO 2001a). has also created a Codex Library as a unit in SON The CCP (i.e., Standards Organization of where Codex materials are stored and a library staff Nigeria) in line with the requirements of the CAC is assigned to monitor the unit. organizes and provides training for its staff through Usually, the CAC sends requests for comments on local and international workshops and seminars draft standards to Codex Contact Points. For ex- to fulfil its obligation to Nigeria's membership of ample, a Codex Committee, say, on Fresh Fruits and the CAC in particular, and to ensuring product Vegetables, may adopt a proposed standard in Table 3.7 Staff Training in 1 994 [ Rank of Trained Staff Program Sponsor Venue Director General International seminar UNIDO Colombo, Srilanka on implementation of ISO 9000 standards in NAM countries Director General Executive Committee SON Rome of UN Codex Alimentarius i Commission Chief Standard Standardization Swedish Govt./SON Stockholm, Sweden Officer I management and techniques Senior Technical Field of textiles 1 Turkish Govt./SON 1j Turkey Officer processing and finishing of cotton textiles Internal Auditor II International Auditing SON University of Ibadan, Accounting Govt. Nigeria Establishments l Higher Technical Laboratory methods National Resources Ghana Officer 1 for the analysis of Institute, UK non-grain starch Staple food crops Higher Technical Laboratory methods National Resources Ghana Officer 1 for the analysis of Institute, UK non-grain starch staple food crops Source Bankole (2001) Standards, Technical Regulations, and Product Quality: Institutional Evidence from Nigeria Table 3.8 Staff Training in 1997 Rank] Venue Director General ISO General Assembly SON Geneva Meeting, September Director General Codex Alimentarius Committee SON Geneva Meeting, 19-29 July Director General Group Meeting of Experts on SON n.a. Standardization and its Implication j on Trade in Developing Countries under, ITC 27-31 October Deputy Director Workshop on management of SON n.a. Pension Schemes of Parastatals and other Organizations funded by FGN, May Chief Technical Officer ISO 14000 Standards Workshop SON South Africa Chief Technical Officer ISO General Assembly Meeting, SON Geneva September Assist. Chief Personnel Workshop on Gender Sensitization SON CMD, Lagos Officer and Awareness 27-28 August Assist. Chief Personnel Codex Alimentarius Committee, SON Geneva Officer 19-29 July Assist. Chief Personnel ISO General Assembly Meeting, SON Geneva Officer September Principal Standards Nationwide Training on ISO 9000 SON n.a. Officer Standards Principal Standards Workshop on Gender Sensitization SON CMD, Lagos Officer and Awareness, 27-28th August Standards Engineer Training course in OES Technology SON Switzerland July/August Standards Officer Workshop on Spectrophotometer SON n.a. in Industrial Measurement for Quality Assurance, 5-7 August Standards Officer Seminar on Volume of/Flow I SON/PTB Nairobi, Kenya chart Course, 23-27 June Standards Officer NIFST National Workshop, SON Lagos 2-3 July Standards Officer NIFST National Workshop, SON Lagos 2-3 July Principal Standards DGQ Quality Management SON Pretoria, South Africa Officer Course, August/September Senior Standards Nationwide Training on ISO 9000 SON n.a. Officer Standards Senior Standards Nationwide Training on ISO 9000 SON n.a. Officer Standards Senior Standards Nationwide Training on ISO 9000 SON n.a. Officer Standards - Source Bankole (2001). Standards and Global Trade: A Voice for Africa respect of a particular product. It then sends a re- follow-up actions almost impossible. Currently, the quest for comments from the CCP of member NCC secretariat coordinates the attendance of na- countries. Such requests elicit reactions in the form tional delegates at Codex meetings and expects par- of replies that may be as short as two lines. Nige- ticipants to submit meeting reports to the national ria's reply through its CCP to a request for com- secretariat for further follow-up action, a missing ments on the draft codex standards for cassava (at requirement in the past. Hitherto, representatives of Step 6) indicated that it was satisfied with the pro- government from ministries sent to attend meet- posed draft standard for cassava in its current level ings did so on their own, without recourse to the (at Step 6) and had no objection regarding the stan- national secretariat, creating problems of nonac- dard (FAO-WHO 2001b). creditation and refusal of entry visas. Haphazard at- There have been cases where Nigeria's reactions tendance can be attributed to funding problems to a proposed draft standard were accommodated generated by the frequency of these interna- in the process of developing international stan- tional meetings. For instance, there was at least one dards. In particular, the Nigerian delegation to the meeting every month from July to December 2001 24th session of CAC in July 2001, in Geneva, at different locations (Table 3.10). Switzerland, expressed the view that the reduction Nigeria sends a maximum of six persons to any of the lead content in cocoa butter, from 0.5 mg per one of the meetings that it wishes to attend. The kilogram to 0.1 mg kilogram was not justified. The funding implication is enormous for a country that CAC therefore adopted 0.5 mg per kilogram as the is experiencing slow growth. Therefore, regional co- maximum level for lead in cocoa butter. Apart from operation appears to be an attractive option to deal this, the Nigerian delegation participated in the with the funding of participation at international CAC meetings where certain draft standards were Codex meetings to maximize the benefit of in- adopted (Table 3.9). volvement and commitment to the work of the Thus, while Nigeria's participation arguably commission. Another dimension to the funding appears notable in international standards devel- problem is the source of funding of NCC opera- opment, yet there are many constraints on the tions in Nigeria. Funding is required to circulate country's more effective and fuller participation in Codex documents among members of the NCC Codex work. Haphazard attendance at Codex meet- who are widely dispersed, for the day-to-day run- ings and nonavailability of meeting reports make ning of the Secretariat, to pay sitting allowances to Table 3.9 Nigeria's Participation in International Standards Development Draft Codes/Standards 1 Nigerian Delegate's Action Draft code of practice for bottled/packaged Supported drinking waters Draft revised standard for honey Supported Draft maximum levels for lead: 0.1 mg/kg for cocoa butter Not supported; CAC reverted to 0.5 mg/kg 0.1 mg/kg for vegetable oils Supported 0.02 mg/kg for milk Supported 0.1 mg/kg for milk fat Supported Draft maximum level for aflatoxin in Supported milk-0.5 p,g/kg Draft recommendation for the labeling Objected to the term "modern of foods obtained through certain biotechnology." CAC returned draft to techniques of genetic modification step 6 for further country comments Draft Revised Codex Standard for Cocoa Supported Butter-exclusion of the use of n-hexane as processing aid Source: National Codex Committee, 2001. Standards, Technical Regulations, and Product Quality: Institutional Evidence from Nigeria Table 3.10 Frequency of Codex Alimentarius Commission Meetings Meetingc Date Venue 24th session of the CAC l 2-7 July 2001 Geneva, Switzerland 34th session of the Food Hygiene 8-13 October 2001 Bangkok, Thailand Committee 19th session of the Cocoa Products 3-5 October 2001 Switzerland and Chocolate Committee 23rd Session of the Committee on 26-30 November 2001 Berlin, Germany Nutrition and Foods for Special l Dietary Uses 1 3th session of Committee on 4-17 December 2001 Charleston, South Carolina Residues of Veterinary Drugs in Food Source: NCC Reports. NCC members during meetings, to transport and risk assessment, before attending these meetings accommodate members during quarterly meetings, puts Nigeria in a disadvantageous position as the and to procure and maintain equipment. Funds can ability to confidently justify national positions in be obtained locally from the private sector and gov- deliberations and comments are severely con- ernment budgetary allocations but the magnitude strained. In addition, lack of awareness among of funds required needs assistance from interna- policy makers of the importance of Codex work tional organizations. Inadequate flow of informa- impinges on their commitment. High level of ad- tion among NCC members is quite problematic vocacy is thus required for policymakers to appre- for the work of the NCC on the one hand and its ciate the roles that safe and good quality food and ability to take informed official positions on Codex agricultural products play in the development, matters on the other. Late receipt of documents health, and economic well-being of a nation as this and letters is an important constraint in this re- would then stimulate their interest in the funding gard. Nigeria depends on surface mails from FAO, of Codex work. WHO, and Codex and this creates problems asso- ciated with late receipt of documents. Adequate Experiences of Local Private Sector in the funding of NCC operations witl go a long way in redressing the situation and make the CCP or NCC ForNation of Industry "Codes of Practice" at the functional. ~~~~~~~National, International, or Regional Level functional. While the above analysis shows a modest con- The Nigerian private sector does not appear to fully tribution by Nigeria to Codex work, much of it understand the relevance of standardization in the appears to be based on limited scientific evaluation enhancement and advancement of their businesses. as a result of the quality and operationalization of Most have only complied with official regulations the laboratories. For example, was Nigenia's claim to avoid punitive actions and sanctions. According (that a maximum level of 0.5 mg per kilogram of to a senior staff member of SON, "companies lead in cocoa butter is adequate) based on scientific have been closed down due to persistent non- research or on expert opinion? According to re- compliance with product standard specification sponses elicited from the CCP, Nigeria needs.to and regulations in line with laid down guidelines." carry out scientific research to find out why the lead Indeed, some companies are not aware of available content of cocoa is as high as manifested in the co- national standards and do not make enquiries be- coa butter content in the country. The ability of cause of their preoccupation with profitability and Nigeria to conduct appropriate risk analysis and as- consumers' complicity in terms of their compla- sessment before responding to Codex request for cency regarding product standards. Some compa- comments is suspect and thus poses a serious con- nies adhere to their own private/company stan- straint on its effective participation in Codex work. dards, which in comparison, are below national Lack of adequate preparations, such as scientific standards. An example was cited in discussions with Standards and Global Trade: A Voice for Africa a senior staff member of SON about a multina- ence, which provides it with the opportunity of tional company, which did not comply with certain fine-tuning its strategy to benefit fully from the regulatory aspects of a product standard. The com- global standards arrangement. Already, Nigeria has pany was prevented from further production of the the National Codex Committee and the Codex product in 1994 and advised to upgrade the prod- Contact Point, which analyze Codex-related issues uct standard to the national standard. Because the for most effective and beneficial participation. company did not positively respond to the advice Nigeria's performance is hampered by its incapac- it was stopped from producing the product. Many ity for risk analysis and assessment that is required firms and farmers have only come to terms with the to justify national positions and technical com- need to comply with internationally accepted and ments on proposed draft standards. Usually, these recognized standards and technical regulations comments depend on background papers and in- consequent on the unpalatable experience arising formation from research institutes and universities from the rejection of their products in the export in the country. Inadequate funding and noncom- market. mercialization of research findings from these in- Despite such negative experiences, especially of stitutions greatly impinge on their work because of exporters, the local private sector has also invested obsolescence of equipment, which severely con- resources by getting involved in the formation of strain the extent of risk assessment required in industry "codes of practice" directly at the national modern scientific enquiry into product or process level and indirectly at the international level. Apart standards. from their active participation in the formation of One of Nigeria's main strengths is the certifica- codes of practice through membership of the NCC, tion of the NAFDAC laboratory by the World most Nigerian industrial standards have the private Health Organization to test shrimps for export sector as technical product committee members. A (NCC Report 2001). Given the observed export case in point is the standard for milk powder whose potential of fish and shrimps and the existence of technical committee comprises, among others, UAC other laboratories in the country, the certification Foods Limited, Fan Milk, Carnco Foods (Nig.) Lim- should enhance the ability of the NCC to ensure ited, and Foremost Dairies Limited (NIS 287,1992), that export products are subject to official stan- constituting about 30 percent of the technical com- dards conformity tests as well as to convince ex- mittee membership. These are large companies in port destination countries of Nigeria's prepared- Nigeria. While at the national-level private sector ness in the area of demonstrating equivalence for participation is substantial it is not the case with particular standards. The attendant weakness that international development of industry codes of it is not obligatory for exporters to apply for tests. practice for two reasons. Many large companies In January 2002, SON advertised in a newspaper are multinational companies, which have foreign that "Prospective exporters wishing to have their affiliation and technical assistance arrangements. products certified, shall send applications to SON Two, when private companies attend international not later than two weeks before shipment, with meetings relating to standards setting they do so information on name and address of exporter and haphazardly, perhaps because of their observer sta- importer, product and importer's specification, tus as only public officials are recognized and lead and an indication of the standard to which the delegates to these meetings. product is manufactured (NIS, British standard, or company standard)." Since it is not mandatory Nigeria's Strengths and Weaknesses in to apply for certification, some category of ex- Participating in the International Standards ports said to experience a high incidence of re- Setting Process jection may actually have not been certified. Sec- ondly, the timing of application by exporters is Nigeria's strengths and weaknesses in participa- often too short that goods, especially fish and tion in the international standards setting process shrimps, may have been exported before test re- can be assessed through its current level of partic- sults are released. Finally, there are private labo- ipation in Codex work and the infrastructure on ratories whose operations should enhance that of ground to do so effectively. First, the country's official laboratories but lack of modern equip- main strength consists in its participation experi- ment is their limitation. 182 Standards, Technical Regulations, and Product Quality: Institutional Evidence from Nigeria Domestic Legislation or Regulations and To export regulated produce, a prospective ex- their Relation to International Norms porter writes to the Director General (NAFDAC) Introduction an application accompanied with the stipulated fee per consignment of intended export attaching evi- A review of the laws of the Federation of Nigeria dence of registration of the regulated product with shows that it contains a number of legislation that NAFDAC. In the case of fish and fishery products, affects standards requirements in food safety, ani- the evidence that is required is registration as an ex- mal health, and plant protection. There are those porter of seafood together with a registration cer- pertaining to importation. Specifically, the follow- tificate granted by the Nigerian Export Promotion ing standards-related legislation is found in the Council. Other details of the product required in- Federation: Agriculture (control of importation) clude name and full address of the manufacturer; Act Cap 12 of 31 March, 1964; Export of Nigerian batch numbers; date of manufacture; expiry date or Produce Act Cap 119 and Export Produce (Federal best before date; destination of intended export; Powers) Act Cap 120 of 5 October 1961; Import and certificate of analysis of the product batch by (Prohibition) Act Cap 172 of 7 December 1989; batch. Produce (Enforcement of Export Standards) Act The agency issues an export certificate with the Cap 371 of 1 December 1959; Live fish (Control of full details of the product(s) batch by batch to be Importation) Act Cap 209 of 1 February 1965; exported if the company involved maintains the Quarantine Act Cap 384 of 27 May 1926; and An- standards requirements of good manufacturing imal Diseases (Control) Cap 18 of 24 February practice (GMP) and the regulated produce passes 1988. Besides this legislation, there were two decrees NAFDAC laboratory tests. It is important to note setting up the Standards Organisation of Nigeria that for fish and fishery products, the report on (SON) and National Agency for Food and Drug Ad- their status, and the results of the NAFDAC labo- ministration and Control (NAFDAC). The decrees ratory tests on the products are forwarded to are No. 56 of 1971 and No. 15 of 1993 amended by the Federal Department of Fisheries and Federal decree No. 20 of 1999, respectively. Ministry of Agriculture and Natural Resources for further action and issuance of export certificate. There are other guidelines and procedures for Nature and Sta tuards of LocalLaws,Regulations, the registration of locally manufactured processed and Standards foods. Application for registration of processed Food Safety. The law regulating and standardizing foods should be accompanied with a bank draft food production for export and import is Decree payable to NAFDAC covering the prescribed fee for No. 15 of 1993 as amended by Decree No. 20 of preproduction inspection. Preproduction inspec- 1999 setting up NAFDAC. The decree provides that tion is carried out to assess whether manufactur- no processed food, drug, drug products, cosmetics, ing facilities, personnel, and location of the plant medical device, or packaged water shall be manu- are satisfactory. The registration procedure is factured, imported, exported, advertised, sold, or halted at this stage if the facilities are not satisfac- distributed in Nigeria unless it has been registered tory. If successful, a certificate of recognition as a in accordance with the provisions of the decree or producer of the product is issued to the company. regulations made under it. The purpose of NAF- This enables the producer get the product regis- DAC's control on export of regulated products is to tered. Preregistration inspection and sampling of ensure that products exported from Nigeria are the product for NAFDAC laboratory analysis are wholesome, safe, and of good quality so that the also undertaken. Final vetting of reports and image of the country is not tarnished in the inter- preparation of briefs for consideration by the Food national trade arena. It is in this way that the coun- and Drug Registration Committee are carried out try's foreign exchange earnings can be enhanced. by the agency. Only registered regulated products can be lawfully A processed food, for instance (regulated prod- exported from Nigeria. Therefore, whether the uct), will not be manufactured in Nigeria, unless the product is locally manufactured or imported, it is factory is inspected, and a certificate of recognition expected to have satisfactorily undergone the regis- is issued by NAFDAC. In the case of imported prod- tration processes. ucts, there must be evidence of registration of such 183 Standards and Global Trade: A Voice for Africa a product by the competent health authority of the goods or things. Any person found guilty will be country of manufacture, that is, product license or liable for conviction. certificate of registration; and there must be evi- dence from the competent health authority that the Nigeria's Standards and Regulations Pertaining sale of the product does not constitute a contraven- tion of the cosmetics laws in the country, that is, free sale certificate. Export Trade. There are four major acts that gov- ern export trade in Nigeria. These are: Export of Nigerian Produce Act Cap 119, Export Produce AnimCal Health. The8 Anovimal Dise (control) and (Federal Powers) Act Cap 120 of 5 October 1961, Act Cap 18 of 1988 provides for the control and Epr Icnie n iclaeu rvsos prevntin ofanial dseaes wth he ojec of Export (Incentives and Miscetlaneous Provisions) preventin oAct Cap 118 of 11 July 1986, and Export (Prohibi- preventing the introduction and spread of infec- among aimals, tion) Act Cap 121 of 16 February 1989. tions and contagious diseases among animals, The first two acts on export of produce were en- hatcheries, and poultries in Nigeria. To achieve acted shortly after independence. At this time, pro- the above objectives, the Act prohibits the im- portation of an anmlhthn. gso olr duce like cocoa, groundnut, and palm oil were the portation of an nmlhmain trading commodities, which earned foreign into the country except where there is a permit exchange for the country. Therefore, ensuring that issued by the Director who shall state the condi- q quality of produce conformed to standards in the tions under which the animals may be imported. international markets was a major concern to pol- Such an imported animal, may be examined, dis- icymakers. The Export of Nigeria Produce Act re- infected, or inoculated and quarantined, at the pealed the Nigerian Central Marketing Board Act, risk and expense of the owners as instructed by which empowers the Minister to prescribe grades the Director. The law also provides that any im- porttio ino Ngera o anyanial rodct,for and standards of quality for produce purchased by portation into Nigeria of any animal product, for the commodity boards for exports; grant, withhold example, semen, or egg or biologics, is prohibited or cancel boards foretion and canacqir ' ' '~~~~~Dieco or cancel licenses in his discretion and can acquire unless a permit has been granted by the Director subject to the provision of any state marketing law who may attach conditions, as he deems fit. Puni- and produce for exports, and require any holder of tive measures including seizure or destruction, or v ' ~~~~~~a license for the export of produce and any com- any other form of penalty will be applied by the mity bor the ervant oroagent any ch Director or by an authorized officer. However, it modity board and the servants or agents of any h holder or board to furnish him with such statistics, is expected that any punitive actions taken must estimates, returns, or other information relating to be reported immediately to the Magistrates hav- in jurisdiction.tehe le gistog es f he produce as in his opinion are necessary for the dis- charge of his functions under the Act. The Act pro- provide specific sanctions that may be imposed hibits the export of any produce without license. On an offender. Any attempt to contravene or in the case of con- travention, the offender will be liable to a term of Plant Protection. The appropriate legislation for imprisonment. protecting plants in Nigeria is the Agriculture (Con- The Export Produce (Federal Powers) Act Cap trol of importation) Act Cap 12 of 31 March 1964. 120 was to further strengthen the powers of the The Act provides for the regulations of the impor- minister in relation to certain produce intended tation of articles for the purpose of controllng for export. The Act empowers the minister for the plant diseases and pests. The Act empowers the purpose of external trade to prescribe grades and Minister for Agriculture to designate any officer in standards of quality of any produce intended for the public service of the Federation as an author- export. The Act contains provisions that specifically ized officer for the purposes of this Act. The Act prescribed grades and standards for rubber and empowers the Minister to make regulations pro- sundry produce regulation. hibiting restriction or laying down of conditions for The beginning of the structural ad)ustment the importation from any or all countries of plants, program (SAP) in 1986 provided the platform to seeds, oil, containers, straw and other packing ma- encourage the diversification of exports culminat- terials, artificial fertilizers, and any other similar ing in the promulgation of the Export (Incentives 184 Standards, Technical Regulations, and Product Quality: Institutional Evidence from Nigeria and Miscellaneous Provisions) Act Cap 118 of 11 fresh, except those caught and landed by vessels li- July 1986. The Act provides incentives to exporters censed and authorized by the appropriate Nigerian such as the establishment of the Export Develop- authority; expired food products (whether in cans ment Fund, Export Expansion Grant Fund, and the or any other packages); all imported foodstuff items Export Adjustment Scheme Fund. The Export De- (including fruits and vegetables), for which the velopment Fund is to be used to provide financial Minister of Health or the Director and Chief Exec- assistance to private sector exporting companies to utive of the Federal Environmental Agency has is- cover expenses in respect of export promotion ac- sued a certificate of contamination with any toxic tivities. The Export Expansion Grant Fund is to be or nuclear substance or any other harmful waste. used to provide cash inducement for exporters who have exported a minimum of N50,000 worth of Industry-Specific Standards Governing Agricul- semimanufactured or manufactured products to tural Produce and Trade. The importance of agri- enable them to increase the volume of export and cultural produce to the country's economy is diversify export products and market coverage. The responsible for the passage of the Act permitting Export Ad)ustment Scheme Fund is expected to trade in agricultural produce as early as 1 December serve as a supplementary export subsidy or as an 1959. The Produce (Enforcement of Export Stan- additional fund dealing with the huge costs of pro- dards) Act Cap 371 of 1959 provides for the in- duction arising mainly from infrastructural defi- spection of commodities for export from Nigeria at ciencies and other factors beyond the exporter. To ports of shipment, for the purpose of enforcement ensure that produce conforms to international stan- of grades and standards of quality in respect of such dards and regulations, the Act authorizes the ex- commodities, and for issues incidental to the exe- portation of all raw or unprocessed commodities cution of the powers conferred by this Act. The Act whether mineral or agricultural, to be covered by provides for various punitive measures for attempts the export license issued by the Export Licensing to contravene or the contravention of the provisions Authority. The Act repealed the monopoly of ex- of the Act. The Act repeals the provisions of the Pro- portation granted to the commodity boards. Since duce Inspection Act 1950 as it applies to ports or the operation of the Act, there have been several shipment of produce and to the port of Lagos. It complaints about substandard produce exported contains subsidiary legislation, which is specific to from the country. The blame has been in the scrap- cotton lint and cotton seed, copra, and coffee for ex- ping of the marketing Commodity Boards. port and regulations. It also established produce in- In 1989, as a result of the shortage of basic food- spection boards for benniseed, capsicums, cassava, stuffs in the country, the Export (Prohibition) Act starch, cocoa, copra, cotton seed, cotton lint, fruit, was promulgated to prohibit the exportation of fruit produce (other than oils), ginger, groundnut, certain foodstuffs from the country and to make groundnut cake, palm kernels, palm oil, rubber, and provisions for the trial of offenders by the tribunal soy beans-products to which the Act applies. established under the Special Tribunal (Miscella- neous Offences) Act. The prohibited foodstuffs Nature and Status of Mandatory Technical include beans, cassava, tuber, maize, rice, yam tuber Regulations on Nigeria's Main Light among 57 items, as well as their derivatives. The ban Manufacturing Industries is also extended to mnclude imported food items. All standards and other mandatory technical regula- Import Trade. The import trade is governed by tions that affect Nigeria's light manufacturing in- Import (Prohibition) Act Cap 172 of 7th Decem- dustries are under the purview of the Standards ber 1989. The Act provides for the prohibition of Organization of Nigeria (SON) Act Cap 412 of 1 Jan- importation into Nigeria of certain foodstuffs, es- uary, 1970, and the National Agency for Food and pecially those contaminated by toxic substances, Drug Administration and Control (NAFDAC) De- and the penalty for the contravention of the Act. cree No. 15 of 1993, amended by Decree No. 20 of The importation of the following goods into Nige- 1999. Both the SON and NAFDAC are the enquiry ria was prohibited either by way of trade or other- points regarding standards and technical regulations wise: meat (whether frozen or fresh); chicken in Nigeria. The country is a member of ISO through (whether frozen or fresh); fish (whether frozen or the SON that sets standards for processed food, 185 Standards and Global Trade: A Voice for Africa beverages, medical devices, drugs, and other chemi- (a) All local legislation relating to standards or cals (including raw materials). Nigerian standards technical regulations predates the SPS Agree- specify production process, quality characteristics, ment and is aimed at conforming to interna- and mandatory testing procedures. The SON adapted tional norms; otherwise the export would be the ISO 9000 series of standards (9001, 9002, 9003) re)ected. In some cases, exporters impose stiffer in 1993 after six years of implementation of the se- standards or are self-regulated. ries by the ISO. The SON formulates, enforces, and (b) Enforcement seems weak, which has led to the momtors various food standards and provides tech- rejection of Nigeria's produce and products nical advice to industries. New companies are re- abroad (see below). quired to lodge copies of product standards with the (c) Through Nigeria's participation in interna- SON for clearance for importation of machinery. tional standards-setting all efforts are made to SON's quality standards appear to arise from a ensure that the country complies with the dic- series of structural analysis and organization. The tates of international norms. The detail was establishment has ten steps in the certification of provided in the section on participation in products: international standards development. * Setting up management quality steering com- mittee SPS Organizations, Infrastructure, and - Appointment of a management representative Their Effectiveness and quality assurance manager Nigeria's Organizations Involved in - Establishing quality system coordinatmg com- Assuring SPS Standards mittee * Training Quality auditors and other employees Nigeria's drive for accelerated growth and develop- handling quality-related jobs ment impels it toward envisaging and ensuring - Appointment of lead auditor adequate diversification of its export base into non- * Development of traditional export commodities. Its manufacturmg - Quality Manual (QM) sector through which this diversification dream is - QualityAssuranceProcedureGuides(QPG);and expected to be actualized strives to imbibe and - Obtaining approval and Implementation adopt best manufacturing practices (BMP) to in- * Submission of application, QM, and QPG to SON crease the country's foreign exchange earnings and * Conducting internal quality audit to improve the quality of life of Nigeria's citizens by * Conduct awareness session and training increasingly recognizing the importance of indus- * Preassessment audit by SON trial standards. The expectation that increasing * Complete implementation of corrective actions consumer income will generally lead to a higher de- and recommendations mand for foods, drugs, and other essential health- * Final assessment by SON related commodities makes standard measures to * Granting ISO Certification ensure safe and wholesome food and drug a neces- sity. Both technical competence and an effective Regulated products comprising processed food, bev- food control management system are necessary to erages, tobacco, cosmetics, drugs, drug products, ensure that regulatory measures keep pace with the and chemicals must be registered with NAFDAC to continuously changing socioeconomic situations to protect and promote public health. NAFDAC rec- provide vital means by which the food system is op- ognizes testing and certification procedures of most timally maintained. An efficient regulatory system conformity assessment bodies in foreign countries. increases consumer protection from health hazards and commercial fraud arising from information asymmetry. It is thus imperative that Nigeria's san- Enforceenatinan N onform its with itary and phytosanitary (SPS) measures are based International Norms not only on international standards and Codex The following observations can be generated about guidelines in which they exist but also they should the enforcement and conformity of standards to be consistent with the key principles of the SPS international norms. Agreement. 186 Standards, Technical Regulations, and Product Quality: Institutional Evidence from Nigeria Nigeria's challenges in meeting the crucial obli- intended use. This function is carried out through gations of the need to institute a regulatory stan- the various laws and regulations that govern the dards regime have remained the responsibility of manufacture, importation, exportation, advertise- the various regulatory agencies set up by the gov- ment, distribution, sale, and use of regulated prod- ernment. These agencies include the Standard Or- ucts. These laws, regulations, and guidelines, among ganization of Nigeria (SON), the National Agency others constitute the core of Nigeria's sanitary and for Food, Drug Administration, and Control (NAF- phytosanitary standards harmonized with those of DAC), the Plant Quarantine Service (PQS) of the the Codex Alimentarius Commission and other rel- Ministry of Agriculture, and the Livestock Health evant and recognized international bodies, and are Department of the Federal Ministry of Agriculture, applied and enforced by NAFDAC. NAFDAC as well as the Federal Department of Fisheries, and adopts the Codex standards where a national stan- Ministry of Health. dard does not exist for a particular product. The SON since its inception in 1971 has remained The application and enforcement mechanism of the fulcrum of standardization, quality assurance, SPS standards by NAFDAC includes an inspection and testing in Nigeria for ensuring compliance with and monitoring procedure covering food produc- government policy on the quality and safety of both tion and consumption. This is done by applying the locally produced and imported products. As the Hazard Analysis Critical Control Point (HACCP) Codex Contact Point for Codex Alimentarius Com- principle and the code of practice and general prin- mission in Nigeria, the SON has been involved in ciples of food hygiene to manufacturing processes activities relating to food standardization with em- in Nigeria. The packaging and labeling provisions phasis on the application of sanitary and phy- are also an integral part of the control mechanism tosanitary measures to facilitate trade and ensure a to ensure compliance with laboratory analysis re- satisfactory health status among the population. sults and advertisement requirements enumerated Also, as the secretariat of the National Codex Com- in the appropriate guidelines. mission (NCC) comprising representatives from organized private sector such as the Association of Food, Beverages, and Tobacco Employees (ATBTE), Effectiveness and Constraintsfacing National Consumer Protection Agency, National Agency for Food, Drug Administration and Control (NAF- NAFDAC and SON are linked to the WTO through DAC), Ministry of Commerce, and other relevant the Codex Alimentarius Commission. They are government agencies, SON coordinates with other both member agencies of the National Focal Point stakeholders in the NCC, the implementing com- (NFP) on Multilateral Trade anchored in the Fed- mittee of Codex provides guidelines relating to in- eral Ministry of Commerce (FMC). This focal point formation dissemination on new regulations or re- is responsible for WTO issues in addition to other quirements and other issues. The committee also trade-related issues. Both NAFDAC and SON are coordinates the National position for presentation the enquiry points for WTO in Nigeria while the at every Codex Alimentarius Commission meet- FMC is the notification authority. The WTO ex- ings, and NCC quarterly meetings as well as NCC pects the enquiry points to provide relevant docu- delegates' meeting in preparation for the scheduled ments on adopted or proposed SPS regulations, Codex Alimentarius Commission meetings. Thus, procedures for control and mspection, quarantine the responsibility for preparing food standards in treatment, pesticide residues, and food additive Nigeria lies with SON in consultation with the food approval. industry, relevant ministries, consumer organiza- The effectiveness of a particular regulating agency tions, academic and research institutions, and other can be viewed in light of its inputs into a broader interested parties. policy framework arrangement and its ability to ini- NAFDAC was established as a parastatal of the tiate, formulate, and implement rules and measures Federal Ministry of Health by Decree No. 15 of 1993 in accordance with its statutory mandates. NAF- and as amended by Decree No. 19 of 1999. The DAC's communications with the WTO through the mandate of the agency is to promote and protect FMC can be described as quite effective with the public health by ensuring that regulated products agency's participation in the Trade Policy Review are of good quality, safe, and adequate for their Mechanism (TPRM) of the WTO conducted in 187 Standards and Global Trade: A Voice for Africa 1998. The Agency continues to articulate its con- separate budgetary vote to run the national codex cerns through the FMC about the complex WTO secretariat to conduct necessary codex work. The procedures for establishing dumping. The proce- budget constraint also prevents relevant members of dures to establish dumping are sufficiently compli- staff of NAFDAC, SON, and other government agen- cated and sophisticated that it has been difficult for cies such as the CCP and NCC from attending most Nigeria to establish dumping according to WTO of the codex meetings scheduled in foreign countries. principles and disciplines. Not only this, NAFDAC Table 3.11 shows budgeted and actual recurrent and agrees with most developing countries that imple- capital expenditures of SON over 1992 to 1997. For mentation difficulties of some of the WTO Agree- most years, budgeted figures are not available and the ments limit their effective participation in world actual figures are discontinuous. This makes com- trade negotiations and their simplification should parison difficult. However, for years that data are be the focus of future rounds of negotiations. available, both the recurrent and capital expenditures As a WTO enquiry point, NAFDAC is accessible grew over those years. The ratio of budgeted to actual to investors and other interested parties through the expenditure is particularly low in 1997, less than notifications it sends to the notification authority 10 percent for recurrent expenditure and about as its laws are reviewed or changed. SON is the 15 percent for capital expenditure, a situation sus- Codex Contact Point and the secretary of the NCC, pected to have been the case in the pre-1997 period. while NAFDAC chairs the meetings. The CCP re- In spite of budgetary inadequacies, SON and ceives and circulates all Codex working documents NAFDAC have progressed in the direction of strict and circular letters for comments. The CCP is the enforcement of their regulatory powers through in- link between the country and the CAC in Rome. All vestigation, seizure, and destruction of substandard correspondence to the CAC is routed through the domestically produced and imported goods. The CCP and vice versa. While the CCP generally strives recent thrust of rules enforcement has indeed been to perform its roles, it needs to be more effective: bolstered in the democratic regime whose anticor- circulation of codex documents is not efficient and ruption stance seems to have generated the political NCC meetings are irregular. Not only can the con- will and support for the work of SON and NAF- straints be traced to lack of political will or gener- DAC. Instances of destruction of substandard and ally low commitment to the standards issue, but fake pharmaceuticals and other imported goods lack of infrastructure also limits the effectiveness of and arrests were widely reported along with paid the NCC. The NCC has no adequately furnished advertisements on new rules and fake goods. Table and equipped secretariat, which also requires com- 3.12 presents a list of imported substandard food petent staff and facilities such as fax machines, tele- and drugs, which were advertised and destroyed in phones, computers, email, Internet facilities, and so 2001 and 2002. on, for it to be functional and effective. The predominant constraint is nonavailability of Risk Assessment. Risk assessment is an integral funds and the main culprit in this financial con- part of risk analysis of food safety and the CAC is straint that the CCP and NCC face is the absence of in the process of producing necessary guidelines as Table 3.11 Budgeted and Actual Recutrent and Capital Expenditure Recurrent Expenditure Capital Expenditure Actual Ratio of ActualI to Actual Ratio o cult Year Budget (N million) Budget (percent) Budget (N million) Budget (percent) 1992 n.a. 10.6 n.a. n.a. 6.7 n.a. 1993 n.a. 12.5 n.a. n.a. 8 n.a. 1994 n.a. 20.0 n.a. n.a. 9 n.a. 1995 n.a. n.a. n.a. n.a. n.a. n.a. 1996 n.a. n.a. n.a. n.a.2 n.a. . n.a. 1997 379.8 37.6 9.9 1 1307 183 1 4 Note: n.a. is Not available. Source: Bankole (2001). Standards, Technical Regulations, and Product Quality: Institutional Evidence from Nigeria Table 3.12 Summary of Fake and Substandard Goods Advertised and Destroyed Registration Status Periocl Commodity Type Source with NAFDAC 2002 Pharmaceuticals Incomplete manufacturer's Not registered address; imported 2002 Ditto Imported Not registered 2002 Food: table salt Unknown Not registered 2002 Pharmaceuticals Unknown Not registered 2002 Pharmaceuticals Imported Not registered 2002 Pharmaceuticals Imported Not registered 2001 Food: Instant noodles Imported Not registered Source: The Guardian (2001, 2002). part of Codex requirements for internationally authenticated the license to manufacture the product traded foods. Risk analysis involves three elements in the exporting country to qualify for NAFDAC's namely, risk assessment, risk management, and risk registration. A Certificate of Analysis showing evi- communication. Under the risk analysis frame- dence of registration by the competent health au- work, CAC is the risk manager while advisory ex- thority in the exporting country is also required. Sam- pert committees such as the Joint Export Commit- ples and data of potential import products must be tee on Food Additives and Contamination (JECFA) sent to NAFDAC's laboratories at least three months and the Joint Meeting on Pesticide Residues before the product arrives in Nigeria. This aids in the (JMPR) are the risk assessors. Neither NAFDAC nor achievement of the objective of identifying and black- SON have started conducting risk assessment for listing companies engaged in the exportation of fake lack of adequate training in the area. However, their and counterfeit drugs and substandard goods to interests in training programs on risk assessment Nigeria. The established mechanism to coordinate have been notified to the NCC through the CCP for standards-related work of the various notification, a possible FAO or WHO training assistance. Such certification, and regulatory agencies locally include capacity building in risk assessment as an integral the NCC and NFP on multilateral trade. part of risk analysis is envisaged as a component of In terms of the effectiveness of SON, NAFDAC, CAC's training assistance. Federal Ministry of Commerce, and the NFP on Both the SON and NAFDAC are not aware of risk multilateral trade in the dissemination of informa- assessment guidelines by the International Plant tion to local stakeholders, both SON and NAFDAC Protection Convention (IPPC) and the Interna- have adequate email and online facilities for im- tional Office of Epizootics (OIE). Codex standards porters and exporters to obtain information on SPS are the benchmark for food safety issues recognized standards and other compliance issues and also ob- by the WTO while the IPPC and OIE standards are tain forms from their web sites, which are updated recognized by WTO for plant and animal health regularly. Both also engage the print and electronic respectively, which are used in WTO's dispute media to pass information to local stakeholders settlement. NAFDAC hardly deals with unprocessed through jingles and prime time advertisements ed- plant or animal products though all three organiza- ucating the members of the public of the hazardous tions are .relevant to the SPS Agreement of the WTO. implications of substandard drugs and other goods. Relationship Between "Contact Points" and the Functions, Capabilities, Infrastructure Main National Authorities for Trade Policy and Ne- and Overall Effectiveness of National gotiation. Both SON and NAFDAC work closely Standard Agencies with the Federal Ministries of Commerce and For- eign Affairs. Imported products into Nigeria must Functions, Capabilities, and Infrastructure. These have a Manufacturer's Certificate and a Free Sale Cer- issues are concerned with the mandates and en- tificate issued by Nigerian Foreign Missions having forcement capacities of national standards agencies Standards and Global Trade: A Voice for Africa including the possession of tangible and intangible nated and approved by its council for the effective infrastructure. The physical infrastructure available control of quality of food, drugs, cosmetics, medical in and outside government regulatory agencies re- devices, bottled water, and chemicals and their raw flects the level of understanding, development, and materials as well as their production processes in importance attached to the standardization and factories and other establishments; and registration food quality control system in the country. This has of food, drugs, cosmetics, medical devices, bottled an influence on the magnitude of investment to water, and chemicals. In addition, NAFDAC is ex- procure adequate scientific equipment and instru- pected to control the exportation and issue quality ments, and well-trained and technically competent certification of food, drugs, cosmetics, medical de- staff to undertake tests related to standards and vices, bottled water, and chemicals intended for ex- technical regulations in food control agencies, re- port; pronounce on the quality and safety of food, search institutions, and universities. Because of the drugs, cosmetics, medical devices, bottled water, inadequate concern of the government and the pri- and chemicals after appropriate analysis; and advise vate sector, their involvement in standardization Federal, State and Local Governments, the private thus seems of lowest priority. However, NAFDAC, sector, and other interested bodies regarding the the food control agency is sufficiently equipped to quality, safety, and regulatory provisions on food, meet the challenges of setting safety and quality drugs, cosmetics, medical devices, bottled water, standards for food and can request for support from and chemicals. other the scientific community like the Institute for The SON has a Standards Directorate compris- Public Analysts of Nigeria (IPAN). ing six main departments namely, Chemical Tech- The functions of SON as entrenched in the en- nology; Civil Engineering; Electrical Engineering; abling decree No. 56 of 1971 and its subsequent Mechanical Engineering; Food Technology; and amendments include, among others, the organiza- Textile and Leather Technology departments. Tech- tion of test and other necessary activities to ensure nical committees are set up to coordinate the compliance with standards designed and approved activities of each of these departments and set, by the council; investigation into the quality of fa- approve, and review standards concerning the cilities, materials, and products in Nigeria; and the departments. SON's Directorate of Quality Assur- establishment of a quality assurance system in- ance is fashioned into six subject areas covering cluding certification of factories, products, and Chemical Technology, Food or Codex, Mechanical laboratories. SON's others functions include fos- Engineering, Electrical or Electronics Engineering, tering interest in the recommendation and main- Civil or Building Engineering, and Textiles and tenance of acceptable standards by industries and Leather to ensure quality control. The Directorate the general public; registration and regulation of embarks on routine factory inspection and surveil- standards marks; specifications, development, and lance to enforce compliance with set standards and distribution of standards samples; the coordina- established quality control practices. Regular mar- tion of all activities relative to its functions ket surveys are also undertaken whereby samples of throughout Nigeria; and cooperation with corre- locally produced and imported goods are taken and sponding national or mternational organizations are subjected to laboratory tests. in such fields of activity as it considers necessary SON has three laboratories across the country, with a view to securing uniformity in standards namely the Food and Chemical Laboratory, Ikoyi, specifications. Lagos; Engineering Laboratory, Emene, Enugu; and The broad function of NAFDAC is the control Textile and Leather Laboratory, Kawo, Kaduna. The and regulation of food, drugs, cosmetics, chemicals, laboratories conduct third-party conformity as- and packed water. The specific functions of the sessment tests of products using statutory approved agency, according to its enabling Decree No. 15 of quality control standards. SON also embarks on 1993, include the regulation and control of the port and border operations to ensure that imported importation, exportation, manufacture, advertise- and exported goods meet the required local and in- ment, distribution, sale, and use of food, drugs, ternational standards. Imported and export prod- cosmetics, medical devices, bottled water, and ucts are made to carry labels showing producer chemicals; conducting appropriate tests and ensur- name, country of origin, ingredients, and manu- ing compliance with standard specifications desig- facture and expiry dates. Samples of these goods are 190 Standards, Technical Regulations, and Product Quality: Institutional Evidence from Nigeria also taken and subject to laboratory tests and sub- priate certificates required for importation, in ad- standard products are seized and destroyed. A cer- dition to compliance with labeling requirements tificate of standardization-the Nigerian Industrial such as batch numbering, manufacturing date, ex- Standard (NIS) certificates-are issued to locally piry date, location address, manufacturer and so on. produced goods to indicate that such products have When the products comply, they are inspected and met approved and recognized standards by SON. released if the product is registered. A new product SON is active in the work of the African Regional must undergo the process of registration before im- Organization for Standardization (ARSO), Codex portation is allowed into the country. This is where Almentarius Commission, International Organiza- the work of the Registration and Regulations (R&R) tion of Standards (ISO), and other international Directorate begins. agencies. This R&R Directorate gives approval for impor- NAFDAC, on its part, is well equipped to perform tation of registration samples on receipt of an its regulatory functions as it has both competent application requesting approval. The imported reg- and specialized manpower to carry out inspections istration samples undergo laboratory analysis in at the port of entry, and in local and foreign man- NAFDAC laboratories while the results in addition ufacturing outfits. It has the physical infrastructure, to meeting the labeling requirements, and so on, equipment, facilities, and competent technical determine the registrabiity of the product. The manpower to conduct tests related to standards and R&R Directorate anchors all the activities required technical regulations. There are four functional for product registration. It organizes consultative NAFDAC laboratories in Oshodi and Yaba in La- meetings with manufacturers including clinical gos, Kuduan and Maiduguri adequately staffed and trials committee meetings and formulates all the equipped with modern laboratory equipment such regulations enforced by NAFDAC. as HPLCs, GC-MS and so on. The vaccine labora- The Food, Drug, and Related Products Approval tory in Yaba is well equipped and adequately staffed. Committee (FDRPAC) considers the results of NAFDAC also has an ongoing arrangement for analysis and other requirements and scrutinizes the international certification of its laboratories. products after the R&R Directorate and the Sub- NAFDAC's inspection function is carried out by committee of the FDRPAC must have considered the Inspectorate Directorate, with the Ports In- and recommended them for approval. Membership spection Division (PID) and the Establishment In- of this committee is drawn from the R&R Direc- spection Division (EID) having responsibility for torate including the Advertisement Unit, EID, PID, ports inspection and establishment inspection, re- Laboratory Directorate, Planning Research and Sta- spectively. The EID guides manufacturers toward tistics (PRS) Directorate, the Director General's adherence to SPS standards. office, Legal Unit, Food and Drug Information The Division advises on the location of factories Center (FDIC), and the Codex Office. that must not be near a refuse dump, cement fac- The laboratory services directorate analyzes all tories, sewage treatment and oxidation ponds, abat- products for registration, compliance routine, and toirs, smoky and dusty areas and so on. It ensures research purposes, among others. The laboratories, that the HACCP system, a food safety management located in Oshodi and Yaba in Lagos, Kaduna and system that identifies critical points where control Maiduguri have appropriate infrastructure, equip- is essential to prevent food safety problems that may ment, facilities, and staff to carry out its functions otherwise arise, has been established. This system is adequately. The Food and Drug Information Cen- applied from the beginning to the end of the pro- ter (FDIC) is a computerized (with email and in- duction process. In addition to the HACCP con- ternet facilities) and adequately staffed technical cept, the general principles of the code of practice unit responsible for the monitoring of adverse drug of food hygiene are applied to ensure the mainte- reactions and for circulating related information to nance of the appropriate degree of personal clean- health care providers, staff, and clients. liness, behavior, and operation in an appropriate The Codex Office is also the technical arm of the manner during the food handling and manufac- NAFDAC, which serves as the link between the turing processes. Codex Alimentarius Commission (CAC) in Rome, The PID monitors regulated products at the ports Codex Contact Point (CCP) in Nigeria, and NAF- of entry into the country. It checks for the appro- DAC. There is a National Codex Committee (NCC), 191 Standards and Global Trade: A Voice for Africa which has NAFDAC as the chairman and SON as influence on critical socioeconomic indicators of the secretary of the NCC. development. The Food or Codex Department of The four technical committees of the National the SON has established over 100 standards on food Codex Committee that deal with Codex issues in- and related products as well as a good number of clude the General Purpose Committee; Animal and Codex of hygienic practices for food and food prod- Animal Product committee; Plant and Plant Prod- ucts (SON 1997). These standards and codes specify uct committee; and the Miscellaneous committee. the essential quality requirements for nutritional, The scope of work of the Animal and Animal health, and safety, and for labeling. Product committee covers carrying out effective Standardization is made complete with the en- deliberations, providing technical inputs, and re- forcement of set standards. Consequently, the SON viewing issues arising from Codex standards, code amendment Act of 1990 empowers it to punish of practice, guidelines, and other advisory texts manufacturers or importers whose products do not with respect to meat hygiene, fish and fishery conform to established standards. Apart from var- products, milk and milk products; and meat and ious fines, SON, on satisfactory establishment of poultry products. It examines these issues in rela- product defectiveness considered hazardous to life tion to the global concern for growing health prob- and safety, will apply its powers of seizure or de- lems. The scope of work of the plant and plant struction or prohibition of any person offering such products committee covers deliberations and products for sale. It is empowered to seal premises provision of technical inputs as well as reviewing where such products are manufactured, or direct issues arising from codex statements, codes of the manufacturer or importer to rectify the defi- practice, guidelines, and other advisory tests con- ciency where possible. cerning cereals, pulse and legumes; vegetable pro- There are basically four types of inspections teins; fats and oils; cocoa products and chocolate; undertaken by SON. These include routine, certifi- sugars and honey; fresh fruits and vegetables; cation, consumer complaints, and port inspections processed fruits and vegetables; and soups, broths, with the objective of ensuring that locally produced and bouillon cubes. Specifically, it is mandated to or imported food is safe, unadulterated, and prop- examine critical issues involved in fats and oils of erly labeled to meet the essential quality character- animal, vegetable, and marine origin including istics stipulated in the standards. margarine and olive oil; the high lead content in NAFDAC as a regulatory agency functions effec- cocoa as well as the inclusion of bitter varieties of tively and has the capability and infrastructure as a cassava in the draft Codex standard for cassava un- national standard agency though it has sufficient der fresh fruits and vegetable committee of Codex room for improvement. The agency has offices in Alimentarius. the 36 state capitals of the Federation in addition The Miscellaneous committee is charged with the to "special" offices located in Onitsha, Kano, and responsibility of ensuring standards, guidelines, or Aba that have peculiar problems related to substan- other principles, as appropriate for foods derived dard goods and other violations. There are ongoing from biotechnology or traits introduced into food concerted efforts to augment staff strength in all by biotechnology; examine, amend if necessary, and departments to strengthen NAFDAC's regulatory endorse provisions on nutritional aspects proposed and enforcement functions. The agency currently for inclusion in Codex standards, guidelines, and has an enforcement arm specifically geared toward related texts; elaborate comments on regional stan- enforcing laws on fake and counterfeit drugs; and dards for national mineral waters; and examine violations of food, drug, and related products guidelines as appropriate on good animal feeding registration. practices to ensure safety and quality of foods of Both SON and NAFDAC have a number of local animal origin. and international research cooperation projects. NAFDAC have such projects in collaboration with Overall Effectiveness of National Standard Agen- the International Atomic Energy Agency (IAEA) cies. The broad concept of food control, which aimed at certification of NAFDAC laboratories and covers the elements of compliance with mandatory standards-related work. Also, laboratory and in- requirements, quality control procedures, monitor- spectorate staff and others are provided with train- ing, and surveillance activities, has considerable ing programs abroad. 192 Standards, Technical Regulations, and Product Quality: Institutional Evidence from Nigeria NAFDAC's new guidelines released in the first information on SPS standards to its members, week of April 2002 require mandatory preship- which would have been slower and more difficult ment inspection for every pharmaceutical products if communicated on a one-on-one basis. The prod- whether registered with NAFDAC or not, by its ap- uct associations also ensure compliance to self-reg- proved agencies in the country of origin, which will ulation, which usually conforms to international issue a certificate. In addition, foreign producers of standards. This structure has proven to be an ef- drugs and beverages should affix NAFDAC regis- fective self-regulating tool to NAFDAC in its regu- tration numbers on the packaging while importers latory functions. ensure that production plants of their foreign There are a couple of preshipment inspection partners are WHO-certified for good manufactur- agencies, namely Swede Control Intertek, Bureau ing practice. Fallure to comply will result in im- Veritas, Cotecna International Ltd, and Societe pounding and destruction of goods at the port General de Surveillance (SGS) that the Nigerian of entry. government engages to verify the quality, quantity, From July 2002, NAFDAC inspectors have com- the price and financial terms, and the customs clas- menced inspection of foreign producers' plants, sification of goods imported into Nigeria under fruit orchards, and the production process to en- the Comprehensive Import Supervision Scheme sure that they satisfy NAFDAC's standards to safe- (CISS). Apart from this mandate and agreements, guard public health. There were more than 15 the SGS complements the SON and Produce In- brands of unregistered MSG food seasoning prod- spectorate division of the Ministry of Commerce ucts in Nigeria in 2001. Despite NAFDAC's invita- as recognized agencies to carry out test, preship- tion, producers never came forward for registra- ment inspection, and certification of goods for tion. As part of its enforcement strategies, NAFDAC export. published the list of registered and unregistered The relationship between the private organiza- brands of MSG in Nigeria. tions and regulatory agencies goes beyond paying attention to factors which impinge on food safety or quality and fraudulent trade practices and ex- Certification Services, Standardization and tends to joint sponsorship of training and work- CodertificractionSices,n StaNdardization andshop activities as a means of solving common food quality problems within a given industry. This is the NAFDAC has some government-designated food avenue through which industry partakes in the and drug analysts who are recognized private an- overall implementation of the food standard con- alysts and whose certification services for the trol strategy. analysis of regulated products are accepted by Participation of consumer organizations in the NAFDAC. The private analysts are active in the formation of standards and codes of practices cre- packaged water, food, drugs, and cosmetics sec- ates a strong consumer lobby system that can be an tors. Most of the analysts are members of the In- effective means of withstanding undue pressure stitute of Public Analysts of Nigeria (IPAN). The from the industry and vice versa. Education of con- role of private organizations and companies in sumers about the hygiene and sanitation, food haz- formulating standards and codes of practice is ards, and improved food labeling practices should usually through their contributions at meetings of be an equally important element of the strategy the NCC and other standards-setting bodies such to build up demand for improved food quality as SON. In addition, NAFDAC holds consultative control by the industry. This area has not been meetings where private sector inputs are included thoroughly developed. during the making or review of regulations as the need arises. NAFDA alsoencouagesthe frmatin of Relationship Betwveen Legislation and NAFDC alo enouraes te fomatin of Implementation Capacity and Key Principles product associations to contribute to self-regula- Implmnin SPS A nd tion to conform to international standards. Such associations also make NAFDAC's functions of reg- Though the SPS agreement allows members to ulatory control easier as the group can easily be adopt or enforce measures necessary to protect reached and depended on to disseminate relevant human, animal or plant life, or health, it strives to 193 Standards and Global Trade: A Voice for Africa ensure transparency in the formulation and appli- barriers to Nigeria's trade flows. Second, many stan- cation of standards and regulation and thus dards are harmonized with Codex standards, which encourages reduction of compliance costs related to are internationally accepted as required by the SPS inspection, testing, and certification from multiple Agreement. This is indeed ensured through the link standards that may arise in the absence of the agree- of Nigeria's regulatory agencies with, and partici- ment. In addition, the agreement endeavors to pation in, the Codex Alimentarius Commission's guarantee socially optimal standards by ensuring work. The SPS Agreement suggests that national that they are not excessive and costly to consumers regulations that are consistent with those of Codex and producers through their restrictive influence on meet its requirements in this regard. Finally, though trade flows. It thus aims to achieve a measure of capacity remains weak, standards development standard that is least restrictive to trade. Thus, the agencies in Nigeria endeavor to set standards that SPS Agreement supports member countries' activ- are based on scientific principles and evidence con- ities in the area of generating improvements to their firmed by laboratory analysis. human health, animal health, and phytosanitary conditions by the establishment, adoption, and application of SPS measures but such measures Capacity Building for Standards and should' not be used to restrict trade. The likely neg- Regulations Development ative effects on trade of SPS measures are thus attenuated through the harmonization of SPS Introduction measures via standards, guidelines, and recom- Both the SPS and TBT Agreements obligate indus- mendations developed by the relevant international trial WTO member countries to aid developing organizations, such as the Codex Alimentarius countries through the provision of technical assis- Commission, the International Office of Epizootics, tance. The TBT Agreement specifically requires and the International Plant Protection Convention. members to advise developing country members in The key underpinning principles of the SPS terms of the preparation of technical regulations, Agreement are as follows. First, there is need to base the establishment of national standardizing bodies measures on scientific principles and apply them and participation in international standardizing only to the extent necessary to protect human, an- bodies; and in the establishment of conformity imal or plant life, or health. Second, SPS measures assessment bodies, institutions, and legal frame- will not arbitrarily or unjustifiably discriminate be- work that would enable them to fulfil the obliga- tween members when identical or similar condi- tions of membership or participation. In the SPS tions prevail, and will not be applied to constitute Agreement, members agree to facilitate the provi- a disguised restriction on international trade. sion of technical assistance to developing country Third, members will base their SPS measures on in- members, through bilateral or relevant interna- ternational standards, guidelines, or recommenda- tional arrangements, in the area of processing tech- tions, where they exist and base such measures on nologies, research and infrastructure; advice, cred- risk assessment techniques developed by the rele- its, donations and grants for the purpose of seeking vant international organizations. In this regard, technical expertise, training and equipment; and members are obliged to fully participate in the work the establishment of national regulatory bodies so of CAC, IOE, and IPPC within the limits of their that countries are able to adjust to, and comply resources. with, SPS measures in their export markets. In ad- From the analysis and assessment of the regula- dition, in cases in which substantial investments are tory and implementation frameworks of Nigeria's required for an exporting developing country standardization process and procedures through member to fulfil the SPS requirements of an im- SON and NAFDAC, legislation and supporting im- porting member, the latter is expected to consider plementation capacity are based on the key princi- providing such technical assistance to the extent of ples of the SPS Agreement enumerated above. First, permitting the developing country member to apart from the fact that Nigeria's regulatory stan- maintain and expand its market access opportuni- dards are not discriminatory as they apply equally ties for the product involved. It is in the context of to both imported and domestically produced these that donor-supported programs are evaluated goods, to that extent they avoid any unnecessary below. 194 Standards, Technical Regulations, and Product Quality: Institutional Evidence from Nigeria Table 3.1 3 Donor-Supported Program for Standards Capacity in SON Donor implementing Committed Main Agency Period Focal Area Agency Resources Accom UNIDO 1994 Implementation I SON Cost of staff Exposed officers to of ISO 9000 training abroad the implementation standards of ISO 9000 standards Swedish 1994 Standardization SON -ditto- Exposed officers to Govt /SON management standardization and techniques management and techniques Turkish 1994 Field of textiles SON -ditto- Exposed officers to Govt./SON processing and J textiles processing finishing of and finishing of cotton textiles cotton textiles National 1994 Laboratory methods SON -ditto- Exposed officers to Resources for the analysis of analysis of nongrain Institute, UK nongrain starch starch staple food staple food crops crops SON/PTB 1997 Seminar on volume SON -ditto- Exposed officers to flow chart course volume/flow chart UNIDO 1972-1998 Establishment of SON n.a. Establishment of laboratories and laboratories, supply supply of laboratory of laboratory equipment equipment ISO/Swiss 1998 Awareness lecture SON n.a. ISO 14000 training Government for stakeholders and certification, from Nigeria, exposed officers Senegal, C6te to the use of d'lvoire, Guinea, facilities on Cameroon, and ground Liberia UNDP/BSI 1998 Training of staff SON n.a Exposed officers to the use of facilities on ground UNICEF Ongoing Vitamin A NAFDAC, SON, Equipment Exposed officers to fortification Manufacturers used, clean up, the use of facilities sampling, HPLC on ground Source Standards Organisation of Nigeria, 2002. Donor-Supported Programs for Standards and finishing of cotton textiles, analysis of nongrain Capacity in SON starch staple food crops, and the implementation of Table 3.13 shows donor-supported programs for ISO 9000 standards. In 1998, selected members of capacity building in regulatory standards in Nige- staff were further exposed to the use of facilities on ria. In SON, capacity building programs were com- ground as well as ISO 14000 training and certifica- menced in 1972 by UNIDO, which provided tion. The assistance in the areas of implementation assistance that comprised laboratory establishment of ISO 9000 and ISO 14000 has enhanced Nigeria's and supply of laboratory equipment. This lasted up capacity, as more firms in the country have been to 1998. Most of the othercomponents of assistance ISO certified since 1994. Available data, however, are related to staff training. Thus, in 1994, selected did not indicate that these firms are export firms, members of staff were exposed to standardization implying that more efforts need to be directed to- management and techniques, textiles processing ward encouraging export-oriented small firms in Standards and Global Trade: A Voice for Africa food processing, textiles and garment industries, are provided by multilateral institutions while lit- chemicals, plastics, bottles or glasses, among others tle or no assistance is given by trading partner to apply for ISO certification. There is also an on- countries as required by the SPS and TBT Agree- going program with the UNICEF in conjunction ments (see Table 3.14). with NAFDAC under which equipment is being supplied for vitamin A fortification. Donor-Supported Programs for Standards Capacity in PQS Donor-Supported Progiams for Standards The Food and Agricultural Organization, United Capacity in NAFDAC Nations Development Program (UNDP), and the Donor-supported programs for resource and ca- World Bank have been involved in the provision of pacity building in NAFDAC are mainly from the post-entry facilities; establishment of PQS Training International Atomic Energy Agency (IAEA) and School for personnel development; procurement of UNICEF, both of which are sponsoring activities laboratory equipment, vehicles, and office and res- in the area of equipment supply (e.g., High Pres- idential buildings. An on-going program in the sure Liquid Chromatography, HPLC), teaching PQS, though sponsored through its annual alloca- analytical methods for the formulation of pesti- tion, and which will certainly fortify private capac- cides and determining pesticide residues as well as ities in implementing agricultural products stan- conducting mycotoxin research. UNICEF is cur- dards, includes compilation of a checklist of plant rently facilitating a program of vitamin A fortifi- pest in Nigeria, revision of current legislation, and cation with SON, NAFDAC, and manufacturers as evaluation and administration of phytosanitary ca- implementing units. NAFDAC is also discussing pacity. The FOA or TCP program that is currently the possibility of collaborating with the United on ground is geared toward strengthening of PQS States Food and Drug Administration, Tuskegee through the provision of modern technical equip- University, USA, and the USAID to strengthen its ment, computers, and accessories for Internet, activities. An important issue of note is that insectary, and phytosanitary standards training through the assistance from IAEA and UNICEF or (see Table 3.15). Roche, NAFDAC is empowered to determine pes- The World Bank assistance that lasted between ticide residues for exports. This is significant for 1991 and 1997 is instructive. The assistance appears miany processed foods such as cocoa butter, cocoa to have been packaged long before the SPS Agree- paste, and yam powder, among others. It is also ment, though it extended beyond 1995. This sug- noteworthy that many of these assistance efforts gests that the SPS Agreement was not part of World Table 3.14 Donor-Supported Program for Standards Capacity in NAFDAC Donor Implementing Committed Main Agency Period Focal Area Agency Resources Accomplishments IAEA Ongoing Capacity building, NAFDAC HPLC, GC, Exposed officers to equipment Glass ware the use of facilities on ground UNICEF Ongoing Vitamin A NAFDAC, SON, Equipment -ditto- fortification Manufacturers used, clean up, sampling, HPLC IAEA 1997 Pesticide residues, NAFDAC Equipment Research presentations onward exports (seafoods), and cash aimed at validation pesticide of analytical formulation methods UNICEF/ n.a. Mycotoxin research NAFDAC -ditto- n.a. Roche Source: NAFDAC (2002). Standards, Technical Regulations, and Product Quality: Institutional Evidence from Nigeria Table 3.15 Donor-Supported Program for Standards Capacity in Plant Quarantine Service (PQS). Implementing Resource Main Donor Period Focal Area Agency Commitment Accomplishment FAO/ 1970-80 PQS Post-entry FMA/FDA n.a. Glass House, UNDP facilities set Phytotron, laboratories, up; personnel office building, regional development; training school, establishment training PQS personnel, of PQS training for OAU Training member countries School IBRD/ 1991-97 Personnel FDA/PQS US$5.2 million Staff development, World development; supervised by provision of staff Bank procurement World quarters and of lab./G.H. Bank/FFMA laboratories; purchase equipment; of vehicles; various vehicles and equipment and buildings institutional reform (office/lab., and residence) FAO/TCP 2002 Strengthening FAO/FMA US$220,000 Expected to provide onward of PQS; modern technical computer and equipment, staff accessories for training on internet, phytosanitary standards insectary, and measures and insectary phytosanitary standards training Source Plant Quarantine Service (2002). Bank assistance. There was no new assistance firms and farmers. In the case of PQS, publicity re- package until 2002, seven years after the signing of garding its activities is at a very low level because of the agreement. inadequate funding of its activities while there is also a very weak linkage between the agency and the Agricultural Development Programs (ADPs) in the Standards and Technical Regulations country, which have direct contact with local farm- in Action in Nigeria under the ers. In addition, there have been import rejections WTO Obligations or refusals in destination countries without ade- Level of Awareness with International Standards quate explanation. The lack of full understanding of the relevance of standardization in business en- In Nigeria, the level of awareness of local firms and hancement and market creation and sustainability farmers with mternational standards can be de- as well as ignorance of national standards even in scribed as inadequate though some elements of some cases account for the low level of awareness of mixed results of awareness can be discerned. First, local firms and farmers. interactions with officers of SON, NAFDAC, and All the three organizations are gearing up toward PQS provided the impression that there is little or imprinting indelibly on the consciousness of busi- no awareness of international standards among local nesses about standards generally in Nigeria with 197 Standards and Global Trade: A Voice for Africa many information- and communication-related ac- activities is disseminated, and participation of PQS tivities to improve the status quo. The measures that officials in seminars and workshops organized by have been taken and are currently adopted to im- other agencies. To buttress the negative impact of prove the dissemination of information on these madequate funding on its publicity drive, the last standards have emphasized creating awareness on national workshop or seminar that the agency or- national standards and good manufacturing prac- ganized was as far back as 1994 during its PQS week, tice. NAFDAC organized a series of workshops on while an ambitious national workshop on IPPC food safety and quality focusing on hygienic prac- and ISPM planned for 1999 to involve farmers, tices, HACCP, and GMP. The agency collaborated importers, exporters, and other stakeholders was with reputable drug companies to organize GMP not held. seminars on drugs and with the WTO, whose staff were used as resource persons, to organize Adoption of HACCP and ISO 9000 workshops and seminars on SPS and TBT. NAFDAC enhances its information dissemina- The status of the adoption of the Hazard Analysis tion through technical or news publication, the and Critical Control Points (HACCP) and ISO 9000 print and electronic media using press releases, ad- in Nigeria is moderately impressive. For example, vertisements, interviews, talk shows, and consulta- NAFDAC is quite comfortable with the application tive meetings with stakeholders, among others. of HACCP and has assisted firms that are aware of SON, on its part, has generally improved its infor- its advantages to draw up their HACCP plans and mation dissemmation also through technical or continues to offer assistance when problems arise news publication including corporate briefs, paid in the process of its implementation. SON on its advertisements, and interviews. In particular, many part has continued to certify firms based on the ISO large firms that won SON's NIS Quality award gen- 9000 standards quality system. The first trainmng erally advertise such an occasion but with a view to program on ISO 9000 was held in November 1994 appealing to their clientele. This avenue generates with 23 participants from large and reputable in- some awareness about SON's activities but the dustries. By the end of 1994, only one company was reach of its impact is limited to the literate urban able to obtain ISO 9000 Standards Certificate while population. A related issue is the communique re- the applications of three other companies were un- leased at the end of the Stakeholder's Forum on der processing and three firms were at the enquiries "Product Competitiveness-the Way Forward" on stage. According to SON (1997, p. 17), "the imple- 9 October 2001 during SON's Quality Week. The mentation of NIS ISO 9000 series of standards went communique states, among others that (a) stan- smoothly within the year as many companies ap- dards can be used to drive markets; (b) improving proached SON for assistance to certify the con- quality and the management of technological formity of their quality management systems to the changes are the major vehicles of industrial growth relevant requirements...." with standardization as the driving force; and (c) Table 3.16 indicates that at the end of 1997 seven standards being consensus based are subject to re- companies were ISO 9000 certified. The status of views based on stakeholders'inputs. In other words, adoption of the ISO 9000 series across firms in SON has generally increased awareness about the Nigeria is also shown. Because the adoption is still need to consider standardization as a paramount very recent and had been slow, no adequate data requirement for industrialization. What is missing can be used to compare the status and adoption pat- still is the need to accept standardization among the terns in different industries by size, market orien- general population who purchase products and tation, and ownership structure. While it has been bear the health risks of substandard products. more possible for large firms such as those shown According to the PQS, though inadequate fund- in Table 3.16 to adopt the ISO 9000 standards qual- ing has tended to critically hamper its drive to cre- ity system, small and medium companies face par- ate public awareness of its activities, it is taking the ticular problems related to funding as well as the cheapest route to advertise its activities. This route voluntary nature of the certification process. These includes distribution of PQS information service problems are related to the degree of the awareness and handbills, attendance of World Food Day of the benefits that the adoption can generate in and Agricultural Shows where information on its terms of efficient utilization of scarce resources, 198 Standards, Technical Regulations, and Product Quality: Institutional Evidence from Nigeria Table 3.16 Status of Adoption of the ISO 9000 Series in Nigeria C I~~C~ertificatiori ~ S66cO 3 N- i k- fr Yqifi -,OfI.r-@ogpto _-e -Nan (+ o' CWiatiny. Sc-petaf ard -Typ~e I Yetar -.of4Award I. - lnterniationl'al " - . Companywide U NIS ISO 9001 1994 -CQrnpte (r'1ig,t -+i->NCR (+Nig.z) P.lc v= Customer support NIS ISO 9002 l 1995 services Mobil Manufacture and NIS ISO 9002 1996 distribution of PJ and insecticides N A ipL 9tl Blending plants, NIS ISO 9002 1997 Kaduna -Oi . Manufacture and_' T 1vlMobilOil NiFgiPlc Manufacture and NIS ISO 9002 1997 distribution of lubrication Lucky-FibresA1ig.Lftd. - Manufacture and NIS ISO 9001 1997 L_ + r sale, Nobel carpet and rug -Dunlop Nig. Plc. Companywide NIS ISO 9002 1997 Source SON, Annual Report (1 997) reduction in materials waste arising from better Quality and Safety-Related Restricted Exports production design, ensured international market ' ~~~~~~~There have been documented cases of bans and access, and the enhancement of the company's restrictions of export products from Nigeria In image and credibility, traditional markets, particularly the United Kingdom and United States. Investigations revealed, however, Adoption of ISO 9000 Standards and that the refusal at the destination points is because the exports do not carry evidence of certification In principle, if the adoption of particular standards from NAFDAC, SON, or PQS. This suggests that the raises the cost of production and price then the refused consignments may not have met national and economic opportunities of the poor may be ham- international standards in the first place before the pered. Empirically, the scope of certification of exporters embarked on exporting them. Apart from companies in Table 3.16 shows that consumer prod- goods that are in)urious to human health, which re- ucts are not directly affected and by extension the quire mandatory conformity assessment, presenta- poor as consumers are not affected. However, out- tion of other types of goods for conformity assess- puts of the oil firms and the tyre-manufacturing ment is voluntary. Analysis of the types of goods firm may affect consumers if the prices of those mvolved in importing country refusals shows that a goods rose substantially post-ISO certification. substantial proportion is in the food category but Since prices of these commodities have been on the which do not have evidence of preshipment testing, rise generally, a part of the increase can be attrib- which is supposed to be mandatory. Table 3.17 shows uted to certification and thus could have resulted a list of plant interception notices sent from the in loss of consumer surplus. These products are also United Kingdom in 2001/2002 on Nigeria's export. used as production inputs and the price rise noted According to the table, there is no evidence of m- would also contribute to a rise in the price of the spection at the point of departure, which was Lagos. final product for which they are purchased. Thus, Thus, the interceptions were because of the presence for small firms whose main problem is working and of pests in the consignments, which could have been investment capital, such input price increases can detected during preshipment inspection, rather than only lead to a decline in sales as demand drops as the presence of a disease in the exporting country or a result of the increased price of the final product. changes in the overseas market rules or regulations. 199 .) I> Z° Z° OZ O O o Z° Z° O O ZO - y~ y C V) w a) ._ _ aV) a) a)Q) a ) 0 0 - 0 V a) a) a I 3 6 z z z z z z z z z z z z $ .0 o VI vo - D' a - i -o -o 'a -0 o 0 'U _4- :' 0 - - o - - - - - - - 0 e ° 0 0 0 ° O nC0 >a) 0 X -c u z z LL z 5 z z z cLz z z $ z $$ 0.)~~~~~~~~~~ ~~~~~0 ~ ~ ~ 2 s 'o0 -o. o ICCrSo@ < a) ~ i ° ~ - 4- °J 2C E- .J , t 8 > 0~~~~~~~~~" c X .~ Um - SwX .2 a vxo ~ Q) O CI cn t ' - *n 2 _ - - - - C C . aa C@ s> sa ^U 0) b '_ZDs - -U o 0 =. -0 = u --= C=- = )--- Q~~~~~~~~- d -~~~ 0 ~ ~ LI.I 0 a) 0~~~~~~~~~~~~~0- 0VN a) 0 _ c zu 8 Z E88 v o ~ N S 0 2 C: -0 5: c '0 D-0~ o 0 oC oC o o _ o o o o o o a - o' rs oC t~ .0 0- -2 C *V2 , - o C -~ ~ ~ o ~ o .e ~ ~ ~ o'. I CC = - ° ,~ o C 0 IV a 0 0 0 o 0) o~ 0 - >2 > Ul MOU o' - 2 -~~~~ -0 -0 -0 -0 '- Z . . .. . 0 . . 0I oUC _ , o; O - 4 ' 0 000 Q-~~~~~~~~~~~~~~~~- 0.) ~ ~ 0 .0 q) qu r3 z~0 ~ - C)~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ C3 0 00~ ~ ~~~~~ 0_ . -~~~~~~ ~ ~ ~~~z Z~ C0 2 0 .2 0 - 0 -a r C03~~ 9- C~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~0C C ' --wC "C 0 a,0 r0 (4~~~~~~~~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~ 0 (, CC~~~~~~~~I nQ C', C a)C. ~ ~ -w ~ - 0F - -- a) o -~~~~~~. Z- N -0 (N (N:5 0 0 0 00 N 0 0 (N 0 c 0 0 00 0 0 0 0 0~~~~~~~~~~~~~~~~~~~~~~~~~~~ 0 0 a, (N ~~~~~~~~~~ -4. -~~~~~2 , o (N3 -. C2 o J S-a o - 3 C -T N U U~ ~ 0 (. CO 0 (C 0 N 04~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~- 2~~~~~~~~z N100% Additional. plant or equipment 1 0 0 0 0 0 One-time product redesign 1 0 0 0 0 0 Product redesign for each export market 0 0 0 0 0 0 Additional labor for production 0 0 0 0 0 0 Additional labor for certification and testing 0 0 0 0 0 0 Decreased labor 0 0 0 0 1 0 1 0 Source: World Bank Export Survey for Nigeria (2002). 20U8 Standards, Technical Regulations, and Product Quality: Institutional Evidence from Nigeria which domestic consumers cannot afford because is suggested to be modest for the food and beverages of low income. Producing to meeting international industry to comply with international standards. standards for export markets and satisfying do- mestic consumers pose a serious challenge to oper- Cocoa and Cocoa Products. The figures of the Fed- ators in this sector. A related problem is the need eral Office of Statistics on Nigerian exports show that to harmonize international standards with the cul- cocoa and cocoa products are the leading export ture of the people. For instance, most domestic con- commodities and the largest foreign exchange earner sumers prefer a salty margarine, which does not for the country after crude oil (see Table 3.25). meet international standards. It is evident from the table that crude petroleum It was estimated that to meet the packaging re- has consistently maintained the lead, contributing quired by international standards would cost about between 95 and 98 percent to the country's exports N150 million. The level of awareness of technical between 1993 and 1997. This is followed by cocoa assistance to bridge the standards gap is low among and cocoa products, though they are far behind pe- the small and medium enterprises in the sector. troleum and have a fluctuating performance. The However, this level is high for multinationals, such dwindling fortune of cocoa and cocoa products is as Unilever, and they rely more on the technical as- the result of the "Dutch disease syndrome" being sistance from their parent companies located witnessed in the oil sector. This notwithstanding, mostly in Europe and the United States. Other op- the cocoa and cocoa products sector still has a high erators in the sector reported that international potential as a major commodity export. technical assistance to close the standards gap In the cocoa and cocoa products sector, the key comes mostly from UNIDO, UNICEF, and the constraints were induced by the economic policy re- World Bank, among others. The Standards Organi- forms of 1986, generally know as the Structural Ad- zation of Nigeria provides local technical assistance. justment Program (SAP). The liberalization compo- At the workshop, it was suggested that to bridge the nent of the program had serious adverse effects on standards gap in the sector there is the need for the quality and standard compliance by cocoa pro- awareness workshops for stakeholders, most espe- ducers and exporters. The general consensus during cially, the quality control officers in the various or- the workshop was that before the liberalization of ganizations; retraining of quality control officers; 1986, there was the Cocoa Commodity Board that and financial assistance from the government for ensured that all the cocoa produced conformed to procuring necessary equipment and machines. On the specified international standards. There were var- the cost of implementing compliance process, it was ious standard control measures to ensure better agreed that putting a value for the implementation quality for export. Such controls include inspection of compliance, process by process, is very difficult by a produce warden, supervised store keeping, thor- without a detailed process evaluation because of its ough examination of various levels from the farm multifaceted nature. An estimate of t750 million to the ports, and certification was made in such a Table 3.25 Peecentage Contribution of Major Nigerian Commodity Export Commodity 1993 1994 1995 1996 1997 Cocoa and cocoa products 2.08 6.59 1.40 9.83 0.08 Coffee 0.01 0.20 0.002 0.01 n.a. Palrm and palm products 0.01 0.23 0.03 0.16 0.02 Rubber and rubber products 0.93 1.24 0.61 1.32 0.03 Crustaceans and Molluses l fresh and frozen 0.31 2.82 0.31 0.16 0.02 Crude petroleum oil 96.65 88.34 97.65 96.29 98.29 Automative gas oil n.a. n.a. n.a. 0.91 1.52 Tin ore and Cumlatraty 0.04 n.a. n.a. 0.00 0.01 Hide and skin 0.01 0.45 0.0 0.07 0.03 Source: Computed from FOS Annual Abstract of Statistics (1998). 209 Standards and Global Trade: A Voice for Africa manner that references could be made to whoever known as "Port Organization," which was established approved the product at different stages. Shortly af- before 1986, the officials of the Federal Produce In- ter the liberalization policy was introduced in 1986, spection Service (FPIS) took over such other quality the Cocoa Commodity Board that guaranteed qual- control and certification functions, arrival check- ity and standard compliance by farmers and mar- test, supervision of private warehouse operators at keters was scrapped. This was done without a re- the ports, and preshipment tests. placement with any effective mechanism to assume In recent times, the Federal Ministry of Commerce, the role of the commodity board to ensure quality with which the Federal Produce Inspection Service is and standard of cocoa products for the international associated, has been making renewed efforts at en- market. The export of cocoa was taken over by un- suring that items of produce entering the export mar- scrupulous private exporters who cared little for ket and those meant for domestic industrial process- quality. Thus, for the first time, Nigerian cocoa, ing comply with acceptable quality standards. The which always competed with Brazilian cocoa for the Federal authorities have continued to enlist the par- first position in the international market, was rou- ticipation and cooperation of the State Produce In- tmely re)ected because of low quality. The factors that spection Services in this crusade of presenting the best were responsible for low quality were the preliberal- quality produce to the export market. ization standard and quality control system were no The workshop could not provide an estimate for longer strictly adhered to by the private exporters what it would cost to comply, but listed the areas re- that invaded the market, the rising cost of chemicals quiring inputs to meet international quality stan- as a result of exchange rate depreciation and dereg- dards. The main item of expenditure is fumigation. ulation of the exchange rate as part of SAP; the re- The fumigation exercise required for standard or moval of subsidy on chemical inputs; nonavailabil- quality is very expensive and mostly unaffordable for ity of high-quality seedlings, and where they were small holders and processors, who provide the bulk available, they were very expensive unlike the prelib- of the output in the cocoa and cocoa product com- eralization period when there was easy access to im- modity sector. Under the defunct Marketing Board proved seedlings; and team grading, the pre-port and there was a kind of assistance to reduce farmers' cost postinspection process is no longer well supervised of fumigation. Other assistance includes grading, and is regularly by-passed. The current poor quality clearing, storage tools, and store maintenance; ap- and standard compliance in the cocoa commodity propriate modem farm implements such as sprayers, sector can be largely blamed on the liberalization harvesters, dryers, weighmg and storage equipment; policy component of the International Monetary high-quality seedling: and training of inspection Fund imposed Structural Adjustment Program. The officers at the different stages of cocoa processing. policy largely disrupted the chance for cocoa pro- It was strongly suggested that to ensure better duction from which it has not recovered till now. compliance with international standards in the cocoa Some cocoa-producing states of the Federation re- commodity sector, there is need for the reintroduc- acted to the unpleasant development by enacting tion of the pre-1986 practice m which the com- produce laws or edicts to streamline the operations modity board maintained control over the cocoa ex- of the private entrepreneurs in the produce trade and ports. Indeed, the Nigerian government has initiated to prescribe legal sanctions for noncompliance with steps in this direction. The state, in conjunction with the quality standards. For instance, Oyo State, which the federal government plan to raise N 1.5 billion to is one of the leading producer of cocoa, took the fol- establish a three-commodity board in each state, lowing initiatives: introduced the Inspection Edict which will be managed by the farmers themselves. (1987); established three commodity companies in 1999; organized a conference of commissioners of 13 Textile and Clothing. The textile and clothing in- cocoa-producing states to fashion out control sys- dustry in Nigeria has been a vibrant sector in the tems; adopted a standard and universal grading manufacturing industry. There were 46 firms in the system; formed a universal marketing system, and sector that engage in spinning, weaving, and finishing, registered produce stores and merchants. Officials of eight engaged in made-up textiles except apparel, and the State Produce Inspection Service continue to per- nine knitting mills in 1989. In 1994, the sector ac- form the functions of primary grading and evacua- counted for about 15.4 percent of manufacturing tion check-testing. With the removal of what was value added, 42 percent of the total employment in 210 Standards, Technical Regulations, and Product Quality: Institutional Evidence from Nigeria manufacturing industry, and N 14.3 billion in output. the abundance of local cotton production in that The sector did well in the 1960s with a cumulative part of the country in the 1960s and 1970s. average growth rate of 12.5 percent in the 1970s. The The small producers are scattered all over the sector began to witness a decline in growth rate in the country and produce mainly traditional clothes and 1980s largely because of the general neglect of the tie and dye. The tie and dye clothes have been mod- agricultural sector with the ascendancy of crude pe- ernized and generally have great appeal for a large troleum exploration as the leading export commod- segment of the population both as a simple and for- ity. This affected cotton production, which is an im- mal wear. While the technology for production by portant input in textile production. When the small holders remains rudimentary and simple, the economic recession of the early 1980s, induced by the demand for their products has grown. Tie and dye collapse of the international crude oil price, occurred, products are even finding their way to the export the attendant foreign exchange scarcity leading to im- markets in Europe and the United States. The un- port licensing greatly affected the textile sector as it recorded nature of the business makes it difficult to could not obtain foreign exchange to import cotton have a figure of volume or value of exports. yarn and this resulted in capacity under utilization in The Nigerian market has a strong demand for the industry. The cumulative textile production in- African prints, as well as for satin and brocade. In dex, which was 100 in 1972, declined from 427.1 in the early 1990s, most of the local needs were met by 1982 to 171.1 in 1984, using the 1985 production in- local industry, the balance being made up by high- dex as base year. The index declined further to 118.0 quality fabrics entering through unofficial sources percent in 1990, 92.1 percent in 1994, rose margm- from the Netherlands, Austria, China, and Japan. In ally to 94.5 percent in 1998, and declined again to 92.3 spite of all the difficulties faced by the textile and percent in 2000. The dwindling fortune of the textile clothing subsector, it has grown over the years and and clothing industry since the early 1980s was ag- diversified into fiber production, spinning, weaving, gravated by the trade liberalization policy of the knitting, lace and embroidery making, dyeing, print- Structural Adjustment Program (SAP). The sector is ing, and finishing. The official statistics published by generally acknowledged as the most affected by the the Central Bank of Nigeria in 1995 show that of the liberalization policy and inconsistent government 13 subsectors in the manufacturing sector, the tex- policies toward processed exports. In addition to the tile sector continued to account for a significant pro- general problems that the manufacturing industry portion of the overall growth of manufacturing pro- faces, such as dumping, devaluation of the Naira, high duction. The subsector also contributes 25 to 30 cost of production (wages, transportation, energy), percent of the manufactured export. Its contribu- irregular electricity supply, poor communication, tion to total exports is, however, negligible. For in- high interest rates, and multiple taxation, there is an stance, CBN statistics show 0 percent level for 1970 acute supply problem of quality cotton yarn and fiber through 1985 and 0.2 percent during 1990 and 1995, supply from the upstream cotton production to the and which declined again to 0 percent in 1998. This downstream garment manufacture subsector of the is, however, not to say that it is not potentially a industry. viable export commodity. The sector is dominated by two players: the large To demonstrate the challenges that textile firms face producers and small producers with different spe- in Nigeria, the experience of the Nigerian Textile Mills cialties. The large producers make use of modern (NTM) and ENPEE Industries is very illustrative. production equipment with large factories and spe- NTM is a joint venture domestic enterprise, which cialize in printed fabrics. Many of them produce for produces wax prints, hollandis, super prints, drills, the domestic market with few finding their way to and bleached cloth. The company has been in busi- the ECOWAS market through informal traders. ness for more than four years, but only started pro- There is little or no record of official export of textile ducing bleached cloth in 2002. As many other tex- to the ECOWAS market. The sector is dominated by tile mills, NTM has just resumed exports after a long Asian producers who take advantage of the large break since the import-substitution era of the 1970s. domestic market and relatively cheap labor to pro- It now derives about 0.6 percent of its total revenue duce in the country. The production plants are (i.e., US$60,000) from export of Africa Print to the mostly established around Lagos in the South, and Republic of Benin and Togo and the company looks Kano and Kaduna in the North took advantage of set to expand exports significantly to other African 211 Standards and Global Trade: A Voice for Africa countries through the ECOWAS trade liberalization seen as irrelevant to its abihty to export. Certifica- scheme. Gross revenue from sales in 2000 was about tion schemes like ISO 9000 and 14000 are seen as US$9.35 million, of which, 46 percent (US$.32 mil- generating little or no business value. Ensuring for- lion) represents the cost of raw materials. About 50 mal distribution networks to other countries is not percent of its raw materials are sourced locally of paramount interest to the company. This is be- (mostly cotton), while the rest (mostly intermediate cause Enpee is so focused on the local market for products like dyes and other chemicals, worth African Prints (and its informal channels to other US$2.17 million in 2000) is imported. NTM em- West African countries) which have completely dif- ploys 1546 full-time monthly workers and its ex- ferent standards from international standards for penditure on payroll is about 20 percent of revenue clothing, textiles, and apparel. Enpee however iden- (i.e., US$1.96 mlllion in 2000). tifies with the need for better quality cotton mput. ENPEE Industries is also a domestic enterprise, The firm currently uses low quality cotton between which sources 90 percent of its input locally. ENPEE 12 single count (used for printed furnishings) and has no export division though its products are sold 20 count cotton (used for short staple designs). En- in other West African countries like Republic of pee also finds the lack of business development Benin, Togo, and Ghana. While it produces other services to be very crucial to its ability to export. products, Afncan Prmt is believed to be the product For both Enpee and NTM, product standards are in which it has comparative advantage for exports. derived from customer/importer specifications, The African Print market is consumer regulated, and trade fairs, and some government agencies like the there are no specific international standards to which Nigeria Export Promotion Councl. NTM managers compliance is required (though some voluntary stan- acknowledge that they have difficulty obtaining in- dards on usage of dyes and chemicals may apply). formation about applicable regulations in EU, US, NTM's management highlighted both policy and Canada and other countries. However, this is prob- market-related issues that affect their product qual- ably due to their mild engagement in exports since ity and capacity to access larger markets. Supply of exports only account for 0.6 percent of its revenues. skilled labor, taxes on capital, access to credit, im- Other constraints highlighted are the availability port tariffs and charges, port charges and delays, of good quality cotton that feeds directly into NTM's product quality, and freight charges were found to final products. This is one of the key constraints to be the critical success factors that influence the product quality as identified by the company. capacity of NTM to expand exports. The first four Current cotton production m Nigeria is described were found to be most important. as unorganized, with little or no monitoring, and no Furthermore, technical regulations governing tex- grading system that conforms to international stan- tiles (particularly garments) were found to be more dards. Hence, cotton production in Nigeria is said important for NTM to sell in export markets than to be inefficient, small in production scale, and the in the local market. In fact, the company is in the quality is poor compared to that of Benin or Cote process of applying for ISO 9000 and ISO 14000 cer- d'Ivoire. The few good quality cotton produced in tification. Testing equipment, accounts for about 2.5 this environment are often exported at the expense percent of NTM's investment costs, and the cost of of the needs of the local industry. Thus, many com- testing done within the firm are about 0.15 percent panies like NTM and Enpee have adopted products of the total production cost. The firm's test results (e.g., Africa Prints) that require lower grade cotton are generally accepted by customs authorities in Re- inputs (about 20-25 counts compared to 35-100 public of Benin and Togo (its major export mar- count quality used in the garment industry in de- kets), hence there seems to be no duplication, How- veloped markets). This focus on the production of ever, compliance with performance standards, African Print is self-limiting because the market for product quality, and testing certification at the in- African Prints is limited to Africa, and its Diaspora, ternational level is said to be more expensive than and African Print does not compete effectively with compliance at the local level-particularly the stan- other imported garments and textile products in dard for health and environment. This is largely as Africa and internationally. a result of weak enforcement of local standards. Therefore, for NTM, designing a cotton produc- For Enpee Industries, apart from basic voluntary tion and development program to improve the standards, most technical standards on textiles are quality and availabdity of Nigerian cotton from the 212 Standards, Technical Regulations, and Product Quality: Institutional Evidence from Nigeria upstream sector, both for local consumption as well only be justified if a better organized garment in- as exports is a necessary first step for improving dustry is available to leverage such investment. quality of textile products in Nigeria. Such a pro- One can conclude from NTM's experience that gram must also reintroduce appropriate cotton market opportunities created by schemes like grading systems consistent with international rank- AGOA became available to textile companies like ing to facilitate better cotton pricing and selection, NTM when cotton production and quality were in and to avoid unfair discounting of Nigerian cotton the gloomiest condition, capacity was under uti- at the international markets. lized and in less competitive product ranges, and As an alternative, NTM could import its cotton. the local garment industry was too premature and However, this is not a desirable option since the unorganized to compete internationally. Further- international price of better quality cotton is higher more, textile firms like NTM have never been able than the price of the low count cotton required to to achieve optimum capacity utilization, and ex- manufacture African Print. So as long as NTM con- ploit opportunities for economies of scale inherent straints itself to the export of African Print, the firm in Nigeria's large domestic market for clothing and will not need higher quality international cotton textiles, which will precipitate exports. By contrast, inputs. However, if NTM were to access other mar- increasing capacity utilization by exporting abroad kets like the United States or Europe, it will need to has been unattainable because of all the factors dis- diversify its export base toward higher quality tex- cussed above-mainly lack of high-quality and tile products like yarn, synthetic products, and gar- large quantity of cotton inputs, diversification of ments, the current availability and quality of cot- product design, long-term investment capital, and ton production in Nigeria will increasingly become high production costs that undermine price com- bigger constraints, and importation of cotton will petitiveness of Nigerian textile products. become more attractive. In diversifying their export base to take advan- Fish and Fishery Products. Fish and fishery prod- tage of market opportunities like AGOA, textile ucts are not yet an important export commodity in companies like NTM face other constraints. Many Nigeria, but it is a highly promising sector because of the textile mills in Nigeria would need to develop of the richness and vastness of Nigeria's marine, complete new production lines and capacities to in- coastal, and inland waters. Most catches are con- tegrate into the global garment industry. NTM, for sumed locally, which are mainly sourced from nat- example, estimates that it would need up to N I bil- ural waters, both inland and offshore, from 7 mar- lion for refurbishment of its machines and pro- itime states and 14 inland states. Nigeria's total fish duction processes to position itself for the U.S. and production comes from artisanal and industrial EU market for garments and other textile products. production with fish farming accounting for the Moreover, this level of corporate investment will lowest production (see Table 3.26). Table 3.26 Nigeria's Fish Production by. Sectors (thousands of tons) Sector || 1986 1988 1990 1993 1995 1997 Artisanal l Coastal and brackish water 160,169 185,181 170,459 106,276 142,279 152,213 lnland river and lakes 106,967 112,443 115,044 94,876 26,642 185,327 Fish farm: agriculture I 14,881 15,764 7,297 18,703 20,753 18,537 Industrial: Commercial trawlers Fish 22,419 32,740 21,120 22,464 1 ,473 14,742 Shrimps 2,623 2,868 3,666 8,956 9,024 10,664 Eel - 941 743 4,224 823 1,570 Distant (imports) 65,242 11 3,603 118,219 363,688 265,882 449,410 Total 372,301 463,540L 436,548 619,187 466,876 | 832,463 Source: Department of Fisheries, Federal Ministry of Agriculture, Nigeria. 213 Standards and Global Trade: A Voice for Africa The commercial production is effectively con- 2000, that is, US$50 million. Nigeria, m effect, holds trolled by large trawler fleets, which are mostly about 2 percent of the European market. Important owned by foreign companies. However, as there are markets are Spain (25 percent of sales), France, Bel- numerous small fishermen and women, particu- gium, and the United Kingdom. larly in coastal areas, catches from coastal brackish Fish products, being perishable, raise important water and inland rivers and lakes presently domi- health concerns, especially from consumers in Eu- nate the total fish catches in Nigeria. While most rope and the United States. Thus, the National small fishermen produce for domestic consump- Agency for Food and Drug Administration and tion, large trawlers use the deep sea to catch for the Control, (NAFDAC) enforces stringent rules to en- export market, mainly in Europe. Generally, there sure that fish products exported from Nigeria com- has been slow growth in all sectors, but easily the ply with international standards. NAFDAC does most important of the markets is frozen shrimps. this for the purpose of ensuring that products ex- According available statistics, the most important ported from Nigeria are wholesome, safe, and of sector is frozen, cooked "penaens" prawns (see Table good quality so that the image of the country is not 3.27). Most tropical prawns are sold either headed tarnished in the international market. In the case of or de-headed, green, and after blest-freezing. fish and fishery products, the evidence required for From Table 3.27 export of Nigeria's frozen fish fil- participation in fish exports is registration as an ex- lets, frozen shrimps, frozen crabs and cuttle fish porter of seafood with a registration certificate shows an increasing trend between 1995 and 1999. granted by the Nigerian Export Promotion Coun- For frozen cooked "penaeus" prawn, its export in- cil (NEPC). The product to be exported must have creased at a rate of more than 10 percent per year, the following particulars: name and full address of while that of sepiola cuttle fish remained unchanged. the manufacturer; batch numbers; date of manu- The total EU market is 280,000 tons of prawns and facture; expiry date or best before date; destination is valued at 2 billion euros, that is, US$1.75 billion. of intended export; and certificate of analysis of the Nigeria's exports were valued at 57 million euros in product batch by batch. Before the agency issues an Table 3.27 Trend of Nigeria's Export of Marine Products to the EU (1 995 = 100) Code FProduct 1995 1996 1997 1998 1999 030420 Frozen fish fillets i100 49 121 169 343 030613 Frozen shrimps 100 113 121 118 112 030614 Frozen Crabs 100 134 140 177 224 030749 Cuttle fish 100 137 165 193 1; 195 Frozen b I j Shrimps and i Prawn I 03061350 Frozen cooked "Penaeus" ji - - 100 129 i 123 Prawn (1997 = 1) Ii 0306138 Frozen other cooked prawns -- 100 62 57 (1997 = 100) i II 03061390 Frozen cooked prawns 100 113 3 - - Frozen Crabs I ai 03061490 Frozen cooked crabs 100 132 140 li 168 221 Frozen Cuttle Fish 03074911 Frozen "Sepiola" cuttle fish - l100 209 496 321 (1996=10) = 1 03074918 Sepolia Offinalis + Rossia 100 123 11 136 126 136 Macrocosma _ L- Source Computed from Chemonic/USAID Report (2002) 214 Standards, Technical Regulations, and Product Quality: Institutional Evidence from Nigeria export certificate, the product most conform to the There is a large demand for prawns. Europe is standard requirements of good manufacturing predicted to have particularly strong expanding practice (GMP) and the regulated product must demand. Aquaculture provides the only realistic pass NAFDAC laboratory tests. opportunity for satisfying the increasing world It is important to note that for fish and fishery demand. Some experts are projecting that farmed products, the report on the status of good manu- prawn output could double to 1.4 million tons over facturing practice in the establishment and results the next decade, which would generate about US$7 of NAFDAC laboratory test on the products, is for- billion income for developing countries. The warded to the Federal Department of Fisheries and shrimp farming industry is currently looking for Federal Ministry of Agriculture and Natural Re- new locations to expand production. New produc- sources for their action and issuance of an export tion industries are being considered on the east certificate. Before the Department of Fisheries issues coast of Africa and in Brazil. Correctly planned and an export certificate, the following standard practice designed shrimp farms could provide additional in- must be observed at the production, processing, and come for the artisanal fishermen of the Niger Delta. marketing level. The fishermen and fish handlers at Developing an environmentally sound, sustainable the landing beaches must be trained in basic hy- and socially responsible prawn industry in Nigeria gienic and sanitary procedures. Fish at the landing would be challenging, but this industry would pro- beaches must be placed in sanitary containers with vide an opportunity for Nigeria to participate in ice; vehicles used for transporting fish to the mar- this projected, very significant increase in trade kets or processing plants must be ice-cold and dust from the tropics to the industrial markets. proof; and fish must be maintained in an unbroken So far only one prawn commercial farming is cold chain from production to the market. At the known to have operated in Lagos and has folded processing level the following must be observed: a up. There could be very important lessons for a fu- competent authority should inspect all establish- ture industry to be learned here. It is also believed ments intending to export fish. The EU also requires that some of the oil companies, that is, Shell and that its inspectors approve the processors and issue AGIP have been considering investments in this EU export numbers; the establishments should im- area. There is then an opportunity for a project in plement HACCP and GMP principles, both in their Nigeria to pull together the disparate elements of construction and in routine operating procedures; this future industry, so that they share information there should be regular and documented inspections and work together, and that responsibilities are sen- of the establishments by the country competent au- sibly divided. Much has been learned about best thorities; and all personnel should to have a certifi- practices on both the environmental and social cate of health and training in hygiene and sanita- sides, in recent time which any new industry needs tion. At the marketing level, a health export to embrace. We have assumed that the farmed certificate should accompany every consignment for prawn industry would grow at 40 percent per year. export, and there should be complete traceability of Nigeria could take as much as 14 percent of this products right to the source. This is made more im- projected growth. This could lead to an industry portant especially when tracing the source of con- worth US$200 million over the next decade and re- tamination in a particular batch. quire some 5000-6000 hectares of prawn ponds. To improve on the standard practice in the com- There may also be opportunities to link tilapia modity sector, there is need for increased awareness farming with the prawn industry. on hygienic practices in the area of processing and packaging at the beach; construction of modern beach landings; and improving the skills of inspec- tion officers in the area of testing and quality as- The private sector operators in the manufacturing surance. According to the Chemonic/USAID report and agricultural export in Nigeria are standard tak- on marine products, it was noted that Nigerian ers. They have been largely unable to influence the prawn farming offers the potential for a new in- content and direction of international standards dustry with a strong demand. It must be noted that and technical regulations. However, most exporting prawn farming does have difficulties, such as unfa- firms and industries in the country are sufficiently vorable environmental condition. aware of basic standard rules and regulations but 215 Standards and Global Trade: A Voice for Africa are usually not abreast of new developments and House, that the country's membership of the mul- changes in standards practice. Therefore, the aware- tilateral rules-making body is disadvantageous to ness that noncompliance with required quality Nigeria's interest, contrary to the position of the standards may and often lead to sanctions ranging Executive arm of government. from fines, seizures, rejection and confiscation of Nonetheless, both the private and public sectors noncompliant consignments at the port of export individually and jointly are initiating bold steps in or import has often led to self-imposed privately the form of policies, programs, and even intentions determined standards and conformity assessment to ensure the deeper integration of Nigeria's econ- requirements, which are more stringent than offi- omy into the world trading arrangement. Indeed, the cial standards. These self-imposed standards are thrust of Nigeria's draft trade policy released in 2000 sometimes beyond the requirement for interna- was to use domestic policies to encourage produc- tional negotiations and regulations. This practice is tion and distribution of goods and services to foster, very common among large and multinational among other things, international competitiveness. firms. Compliance with required standards is not a Furthermore, sustained rise in trade will be encour- problem for large and multinational firms. aged through the establishment of an open, rules- Thus, for small firms and farms, they are highly based market-oriented economy, while the role of the disadvantaged in the process of accessing informa- government would be constrained to that of a facd- tion and adopting measures to conform to inter- itator of a favorable business environment to gener- national standards. Many of them lack the techni- ate higher exports and strengthen the country's cal expertise and financial resources to comply with structural competitiveness through the improve- such requirements. Thus, it can be concluded, given ment of physical infrastructure, promotion of ex- the experience of the private sector in Nigeria, that porter-supplier relations, maintenance of continu- the sector's response to international standards is ous dialogue with the private sector, and the closely associated with the following factors, generation of pro-export growth policies. The draft namely, the firm's size, the size of foreign owner- document further asserts "the aim of Nigeria's trade ship or long-standing strategic business ties, and policy is to ensure that Nigeria derives maximum historical exposure to the export market. Thus con- benefits from participating in international trade ne- formity assessment, and its certification and trace- gotiations through the creation of favorable market ability are an important challenge for Nigeria's pri- access conditions for its export products at the bi- vate sector's continued access to the international lateral, regional and multilateral levels. Government market and can be very prohibitively expensive for would take advantage of opportunities provided by a new or small export industry in the country. programs such as the African Growth and Opportu- nity Act (AGOA) ... and the new ACP-EU Agree- Ongoing Public and Privament" (Trade Policy of Nigeria, 2000, p. 2). OngoingPublior SandaPridate Initativs ReatedThe Federal Ministry of Commerce continues to be the organ responsible for commercial relations The agreements that emanated from the Uruguay between Nigeria and other countries in areas in- Round were signed by the Nigerian military gov- volving trade negotiations, implementation of trade ernment in 1995, though there were no concerted agreements, collection and dissemination of trade efforts to integrate the provisions of the Round into related information, and the formulation and ad- Nigerian laws throughout the period of military ministration of import and export policies and rule. The democratic government has quickened measures. In effect, certain new institutions were the pace of fulfiling Nigeria's obligations to multi- slated for establishment, such as the National trade lateral rules by initiating landmark measures in- Policy Advisory Councl, Sectoral Subcommittees of cluding restructuring the National Focal Point on the Council, Nigerian International Trade Commis- WTO issues, reviewing its trade policy stance in sion, Foreign Commercial Service, Foreign Trade In- 2000, and generally mtroducing sector-specific re- stitute, Intellectual Property Commission, Bank- forms in line with the WTO rules. However, the ruptcy Commission, Export Trading Companies/ Nigerian legislature has also been interested in re- Houses, and Commodity Exchange and Futures viewing Nigeria's membership of the WTO. It is the market. Of the 16 trade institutions already estab- view of the legislature, particularly the Lower lished, SON, NAFDAC, and the Federal Produce 216 Standards, Technical Regulations, and Product Quality: Institutional Evidence from Nigeria Inspection Unit (FPIS) are related to the regulatory Industry, Nigeria Police Force, and NEPC remain- standards while there is also the Consumer Protec- ing the implementation agencies for the various tion Council that functions to a lesser extent to im- strategic solutions to the international standardiza- plement some standards-related issues. In contrast tion problem for Nigerian goods. The SON has re- to the regulatory conditions of the past, the draft solved to work in accordance with the ISO General trade policy envisages a regulatory environment Assembly directive on quality system certification characterized by inter-sectoral linkages, effective- and conversion. In effect, the agency directed all ness, and coordination of the implementation of certified organizations to convert from the Nigeria trade-related laws as well as a situation in which reg- Industrial Standard NIS 9600 1994 series to NIS ulations would be in line with Nigeria's obligations ISO 9001 2000 standards by December 15, 2002. under the international agreements. In terms of the The private sector, on its part, has generally be- strategy to implement regulatory standards, the gov- coming more proactive to WTO issues especially ernment plans to strengthen and enforce the intel- those that relate to increasing import liberalization lectual property rights regimes, including copy- of the Nigerian economy. For example, in the week rights, patents, trademarks and designs; evolve prior to the Seattle meeting of 30 November-3 De- guidelines and standards for exports and import cember 1999, Nigerian Textile Manufacturers,2 in a procedures that facilitate smooth trading systems; as paid newspaper advertisement captioned "a punch- well as initiate inspection and monitoring arrange- ing bag for the whole world," explained that the in- ments to ensure that goods meet the requirements dustry had suffered job loss to the tune of 196,000 of national and international standards. in two years with projected job losses of an addi- Prior to the new policy, there were no sectoral tional 60,000 and a capacity utilization of only 30 standards implementation agencies but apex insti- percent. The manufacturers implored the Nigerian tutions that are charged with the responsibility of government, in view of the WTO Agreement on regulating standards in general. This condition was safeguards, infrastructure deficiencies, high interest maintained in the new policy, but which recognizes rates, low capacity utilization, and the closure of 24 the need to strengthen and equip SON, NAFDAC, textile mills with an additional 11 in dtstress, to ban FPIS, and PQS to effectively perform their func- textile imports so as to develop the country's tex- tions. Accordingly, it is also a crime to export any tile industry. In addition, NACCIMA, the Nigerian scheduled agricultural commodity without grad- Marketing Association (NIMARK), MAN, and the ing, a crime that is punishable by a fine, imprison- Nigerian Employers' Consultative Association ment, or both. The envisaged quality certification (NECA) have variously advocated for the review of and control mechanism requires all processed and the WTO agreements as they are perceived as being manufactured export products to have quality cer- inimical to Nigeria's industrialization process. Ac- tification as well as to exhibit evidence of agreed cording to NECA, products adversely affected by a product specification between importer and ex- rise in import include textiles, shoes, tyres, dry cell porter. Importers of Nigerian products will also batteries, matches, vegetable oil, biscuits and con- have access to the inspection facilities available for fectioneries, cement and aluminum extrusions quality control in the country. products. The association sought that the Nigerian According to the policy's implementation government should request through the WTO ne- strategy and Action Plan for the regulatory gotiating mechanism for a 5-10-year grace period environment, policy process, export promotion, to prepare industries producing these goods to face industrialization, trade support infrastructure, and the challenges of global competition.3 agricultural production, all problems related to reg- The various influences of the Organized Private ulatory standards are planned to be resolved in the Sector (OPS) can be said to be yielding results as short to medium term, with the Federal Ministry the Federal government has announced a ban on of Finance, Central bank of Nigeria, SON, FPIS, the import of some items including textiles, second- Federal Ministry of Commerce, Federal Ministry of hand clothing, outdated refrigerators, vehicles older Agriculture, PQS, NAFDAC, Federal Ministry of than five years, frozen chicken, and so on. Import 2The Guardian, November 26, 1999, p. 24 'The Guardian, November 29, 1999 217 Standards and Global Trade: A Voice for Africa prohibitions related to the age of products in ques- ity crisis that is being generated, there is an explicit tion such as refrigerators, second-hand clothing, need for a new body of laws recognizing the private and vehicles older than five years border on regu- certification systems in Nigeria. As a temporary latory standards. In the case of textiles, a commit- measure, the SON advertised the process of regis- tee comprising SON, NIAN, and Nigeria Customs tration with it for private training and certification Service (NCS) is expected to establish the specifi- companies as a sequel to serious disagreement cations of the different categories of textiles that about their accreditation and legality. could be imported after which the temporary ban A complete private sector initiative is the intro- will be lifted.4 The Federal government has also duction of product labeling and coding system adopted new measures to revive the textiles indus- against faking and counterfeiting Nigerian manu- try, including introduction of incentives for the factured goods by a Nigerian private marketing NCS officials for any seizure of contraband textiles; company, Flurex Limited, for Willet Coding and reduction of import duties on textile raw materials, Labeling Company. The initiative is said to be ca- machinery and spare parts; compulsory patronage pable of creating better market access opportuni- of locally manufactured textiles by the armed ties for Nigerian products, through enhanced prod- forces, paramilitary forces, government agencies uct standardization, labeling and coding, in the and schools; and the stipulation of internationally international market. accepted quality guidelines. A landmark initiative is the establishment of two ministerial committees each mandated to make Nigeria self-reliant in rice Action Plan and textiles production by 2006. Introduction In deference to the demands of commodity pro- ducers and exporters, the federal and state govern- Compliance with international standards is an im- ments are planning to pool N 1.5 billion to establish portant challenge for Nigerian firms (producers three commodity boards in each state of the feder- and exporters) if they are to take advantage of the ation to strengthen the quality and standards of market access opportunities of the WTO and Nigerian cash crops. In addition, the federal gov- AGOA. The current administration's efforts to ernment has approved N420 mlllion for NAFDAC make the private sector lead the economy can be to acquire a new head office after the destruction seriously jeopardized if quality standards are not of its Lagos laboratory whose resuscitation is val- strictly adhered to. Thus, the issue of conformity ued at N 250 million. To curtail the importation and with international standards in the production and sale of substandard drugs, NAFDAC has initiated a export of non-oil commodities poses a serious con- bill in the National Assembly for the establishment cern to both the public and private sectors. If the of one drug mart in each of the six geopolitical private sector were to jump-start the economy to zones of the federation. move on the path of sustainable growth, the sector The law that established the SON made it the only must be equipped and empowered to face the chal- body responsible for all standardization issues in lenges of international competitiveness. Nigeria, including the implementation and appli- The private sector in Nigeria generally faces some cation of international standards. However, private crippling constraints such as high cost of produc- organizations, which SON considered unaccred- tion arismg from devaluation of the local currency, ited and illegal, have been engaged in training, sys- high interest rate, increasing energy cost, inade- tem certification, and the award of ISO 9000 qual- quate infrastructure such as telecommunication, ity management and ISO 14000 Environmental and transportation, and domestic policy inade- Management Standards certificates. These private quacy. These factors have a negative impact on the organizations include Federation International Des cost of production leading to under utilization of Demanageurs Internationaux (FIDI), KPMG, BU- capacity in the sector and sometimes, total closure REAU VERITAS Quality International, SGS, and of some private enterprises. Even if these factors Trithel International Consulting. With the credibil- are removed, producing to meet the required 4 Press briefing by the Minister of Information at the end of the weekly Federal Executive Council Meeting of October 2, 2002 218 Standards, Technical Regulations, and Product Quality: Institutional Evidence from Nigeria international standards still remains a challenge to their parent companies in Europe and the operators. Undoubtedly, if non-standard-related United States. This is also true of the big trawler constraints are removed, it would translate to lower fish sector, which is largely dominated by for- cost of compliance. Yet meeting quality standards eign owners. In the cocoa and cocoa products still remain a problem to be solved if Nigerian firms sector, both the large and small farmers are are to derive full benefits from the market oppor- quite aware of the applicable standards and tunities created through WTO, AGOA, bilateral strictly adhere to them. However, because of agreements, and regional market initiatives. the adoption of the trade liberalization policy As has been noted in the previous section, Niger- in the country at the wake of the Structural Ad- ian producers and exporting firms are to some ex- justment Program in 1986, the Cocoa Com- tent standard takers. This is because they have been modity Board responsible for final quality con- largely unable to influence the content and direc- trol before exports was scrapped. The private tion of international standards and regulations. entrepreneurs that forayed into the cocoa ex- Efforts must be made at the local level to become port market demonstrated less concern about active participants in standards and technical reg- standards, leading to subsequent rejection or ulations setting in collaboration with the mamn discounting of Nigerian cocoa, which had com- players in the world market so as to ensure adequate peted favorably with Brazilian cocoa in the in- compliance by the Nigerian exporting firms. There- ternational market. Small producers who fore, this action plan is being put together to sum- hardly export any produce largely dominate the marize the constraints that the Nigerian firms and horticulture sector though the country has an exporters face in the five commodities studied. It is abundance of flora and medicinal plants. In ef- a probable solution together with the identification fect, generating sufficient awareness among the of projects that can assist in bridging the standards small producers about export markets and divide between Nigerian producers and exporting their requirements for standards will certainly firms, and the importers in the rest of the world. leverage the opportunity of the high potential for foreign exchange earning from the sector. In Nigeria, SON and NAFDAC are the two main public institutions that are responsible for From the study, there are industry-wide constraints standards development and implementation. In that have been established. This section will focus on recent times, NAFDAC has been organizing a standards-related constraints in the five-commodity series of workshops to inform the producers case studies. The standards-related constraints are and exporters. This was largely influenced by inadequate awareness, insufficient and ineffective the SPS Agreement of the WTO. SON is engaged administration and enforcement, high compliance in similar activities with the manufacturing sec- cost, and evasion of conformity tests. tor. The general assessment is that they have to do more by strengthening their activities and (a) Awareness. From the main study, it can be seen also collaborate with other government agen- that there is a low level of awareness about cies that are responsible for standards enforce- quality standards among small producers ment. These include the federal and state pro- across the five commodities. They all lack mod- duce inspection facilities located in the Ministry ern equipment in production as they rely on of Commerce and Trade, and the various de- traditional method of production. The tradi- partments and agencies in the Ministry of Agri- tional method of production often fails to pro- culture such as the Fisheries and Livestock De- duce quality goods. However, this is not the partments that issue final certification to case among the large producers and exporting exporters of fish and fishery products, and the firms. Some of these firms sometimes even im- Plant Quarantine Service, which issues certifi- pose self-determined standard requirements cates for varied plant exports and imports. that are generally more stringent than official (b) Administration and Enforcement. Though the standards. This is very true of multinational two main agencies responsible for standards de- corporations in the food and beverages sector velopment, implementation and enforcement because the adopted standards are those of are the SON and NAFDAC, some private sector 219 Standards and Global Trade: A Voice for Africa organizations, such as the Societe Generale du tional accreditation. For the private producing Surveillance (now SGS Inspection Services), are and exporting firms, cost constraints prevent engaged in standards certification and quality them from carrying out risk analysis and sur- control. Most Nigerian standards are based on veillance programs for pests, diseases, chemical international standards set by Codex Alimenta- residues, food safety, and control. This is the rius Commission (CAC), Office of Interna- general experience of operators in the five com- tional des Epizootes (OIE), International Orga- modity sectors studied. The cost of compliance nization of Standards (ISO), and International at the private level is indeed very prohibitive. Plant Protection Convention (IPPC). Both SON and NAFDAC are members of these interna- tional standard bodies and participate in some of their meetings. While most Nigerian stan- One critical success factor arising from the study dards conform to the international standards for bridging the standards gap being experienced in using guidelines and procedures provided by Nigeria is information dissemination. All the actors these international standards-setting organiza- and stakeholders in standard development, imple- tions, Implementation and enforcement are mentation, enforcement, and users must be ready weak partly because of the huge costs involved to make available the latest discovery, in terms of in effective participation, monitoring, and en- the practice and production of standards. Informa- forcement. Most technical officers of SON and tion sharing and networking through formal train- NAFDAC are not adequately exposed to inter- ing and workshops would help upgrade the relevant national practices because of poor attendance skills and knowledge of standards and about recent in international standards meetings, a result of developments in the field of standards. For instance, severe financial constraints. Thus, there is need NAFDAC has organized workshops and seminars to upgrade the skills of the officers in the two for stakeholders in the past on Sanitary and Phy- agencies to adequately administer standards tosanitary (SPS) measures and Technical Barriers to rules and technical regulations in the country. Trade (TBT) in collaboration with WTO, which Given the fact that many agencies in the public sent experts from Geneva. Besides, NAFDAC rou- and private sectors are involved in the admin- tinely organizes workshops on food safety and qual- istration of standards, there is the need to har- ity, that is, hygienic practices, HACCP, and GMP monize operations to give room for proper locally. GMP seminars on drugs have also been coordination for better and effective admin- organized in collaboration with reputable drug istration of standards in the country. companies. There is also continuous public en- (c) Compliance Costs. One issue that became clear lightenment through technical or news publica- from the study is that the cost of compliance tions, press releases, advertisements, interviews, and with international standards is prohibitive. This talk shows. The NAFDAC efforts can be emulated is the case for both the agencies responsible for by other agencies involved in the promotion of standards development, administration, and en- standards development. forcement, and the private firms and farmers There is also the need to strengthen the public and producing and exporting. The heavy costs in- private agencies that are mvolved in standards devel- volved in complying with international stan- opment. The two most prominent are the SON and dards mainly constrain the standards agencies NAFDAC. For instance, NAFDAC requires capacity and private producers and exporters from min- building in the area of analytical procedures, food imally implementing and sustaining quality safety issues, risk assessment, HACCP, GMP and so control in production. For instance, because of on, for food, drugs, and cosmetics. It also requires cost constraints, the standards agencies found it training in the area of the maintenance of analytical difficult to ensure that some domestic standards instruments. For NAFDAC to carry out its functions and regulations are developed, revised, and im- effectively, it would require well-equipped laborato- plemented in compliance with international ries and adequate information management systems. standards; overcome the weaknesses in export The following is a list of what NAFDAC would re- and import certification systems; and provide quire to have well-equipped laboratories, given what adequate testing capabilities including interna- is currently on ground in their laboratories. 220 Standards, Technical Regulations, and Product Quality: Institutional Evidence from Nigeria List of Equipment Needed by NAFDAC | S. No. || Equipment Use 1. UV/Visible spectrophotometer (Unicam/Phillips) Analysis of organic compounds Thermo Helios Gama with 7 positions and printer 1' 2. Thermo Matteson IR 300 spectrophotometer Determination of different functional groups I 3. Thermo (Unicam/Phillips) MS Solar M Series Trace metals analysis 4. Capillary GC/FID Pesticide formulation analysis 5. Upgrading of Perkin Elmer GC/ECD Upgrading of the integrator 6. Moisture analyzers Rapid analysis of moisture in food 7. pH meters Hydrogen ion concentration 8. Electronic Toploading balance 60 kg (min.) Weighing of samples 50 kg and above 9. Analytical balances Weight determination 10. Coring Cherwood flame photometers Sodium/potassium analysis in fruit juice 11. Handled refractometers Determination of sugar 12. Ultrasonic bath HPLC analysis 13. Casometer Determination of carbon dioxide in drinks 14. Multisoxhlet extractors Extraction 15. Polarimeter Optical rotation 16. Binocular microscope Cell examination 1 7. Electronic digital colony counter Plate count 18. Rapid milk analyzers ! Analysis of milk 19. Heating mantles Heating 20. Multisocket heating mantles Heating 21. 6 Hole water baths Heating 22. Heating block Heating 23. Vortex mixers Mixing 24. Automatic pipettes 1! Accurate pipetting 25. Membrane filters and pumps Microbiological analysis 26 Bucket autoclave Microbiological analysis 27. Incubators f: Microbiological analysis 28. Hot plates Microbiological analysis 29. Anaerobic jars Microbiological analysis 30. Binocular microscopes Microbiological analysis 31. Khedial apparatus Microbiological analysis 32. Ovens Microbiological analysis 33. Electronic colony counters Microbiological analysis 34. Cold rooms Storage of perishable meat/sea foods etc 35. Capillary gas chromatograph/FID For pesticide formulation 36. Autosampler GC Varian Workstar 3800 To compliment existing GC 37. Atomic absorbance spectrophotometer with graphic To include lamps furnace and mercury hydride generating accessories 38. Rotary evaporators 39. GC column HP 1 (30 m x 0 53 mm x 1 ,um) 40. GC column HP 17 (30 m x 0 25 mm x 1 pm) 41. GC column HP 5 (30 m x 0 25 mm x 1 Im) (30 m x 0.25 mm x 1 jim) 42. GC column HP 5 (30 m x 0.53 mm x 4.6 mm) 43. HPLC column C18 ODS (150 mm x 4.6 mm) ODS (150 mm x 4.6 mm) 44. Ion exchange column (150 mm x 4.6 mm) (150 mm x 4.6 mm) 45. Ultrasonic bath 46. Workstation for GC Upgradation of the existing Perkin Elmer XL Source NAFDAC Office, Lagos. Standards and Global Trade: A Voice for Africa In Nigeria, there are several commodity sector 2. Upgrading of Facilities in Public Standards Agen- business groups. They all came together under the cies: SON and NAFDAC need to strengthen their umbrella of the Manufacturing Association of Nige- standards-oriented activities. To perform their ria (MLAN) and the National Association of Cham- regulatory functions effectively, their facilities re- ber of Commerce, Industry, Manufacturing, and quire upgrading to meet modern standardization Agriculture (NACCIMA). MAN and NACCIMA do requirements including conformity assessment, not currently have capacities to resolve issues of and testing and certification procedures, so that standards at the level of their secretariats. However, they can even serve the West African markets. As the two business associations are well placed to in- a matter of priority, NAFDAC in particular has struct their members with the need to comply with identified the provision of modern laboratories. standards. Thus, strengthening these associations The project would cost about N50 million to can assist in providing the necessary impetus in supply the laboratory equipment for the seafood bridging the standards gap in Nigeria. laboratory, food compliance laboratories, radia- The prohibitive cost of compliance at the level of tion laboratory, and drug laboratory. private and public agencies calls for donor support The breakdown is as follows. intervention. This is more important for agencies that are responsible for standards development and N the provision of support for business association in a. Seafood laboratory 4,296,790 carrying out information programs and activities. b. Food compliance laboratory 24,212,984 NAFDAC and SON already enjoy such support c. Radiation laboratory 2,630,000 from UNIDO, UNICEF, CODEX, and so on. d. Drug laboratory 8,350,000 e. Miscellaneous 200,000 Projects Total 50,000,000 The following are specific projects requiring in- Other expenditures include the cost of giving ap- vestments, which when undertaken can assist in propriate training to staff on laboratory analysis, bridging the standards gap in Nigeria. The benefits food quality, and safety and training on drugs, of these projects cut across all the five commodity cosmetics, and other regulated products. This ex- sectors studied. penditure, however, cannot be fixed now but it was estimated by NAFDAC to be N25 million for 1. Information Exchange Center: The Information a period of two years. Exchange Center serves the source of accessing and disseminating standards and technical regu- 3. Skill Development for Small Holders: The skills lations that may be relevant to the different com- development program for small holders to pro- modity sectors. This project can be located in the duce to meet the required international standards MAN and NACCIMA secretariats in the six will involve training of small producers through geopolitical zones, each secretariat specializing m extension and field officers by SON, NAFDAC, the product in which that zone has comparative and other standards-related agencies in the fed- advantage in production. A list of equipment that eral and state Ministry of Agriculture and Health. would be required in one zone include: It is, however, difficult to put a fixed cost on this program but it is estimated to be N250 million a. 10 sets of desktop a five-year period for the five commodity sectors computers N 900,000 studied. b. Internet connectivity N 1,000,000 c. Personnel cost (for 2 years) N 500,000 Summary of Major Findings and d.Contingency (10 %) of Recommendations total cost N 240,000 Summary of Major Findings Total cost N 2,640,000 The Uruguay Round Agreement (URA) of 1994 and To make the project sustainable, after a year in the establishment of the World Trade Organization operation, user fees should be charged. (WTO) in January 1995 reinforced the philosophy 222 Standards, Technical Regulations, and Product Quality: Institutional Evidence from Nigeria that "free trade is better than restricted trade," cul- further complicates the economic situation through minating, since then, in a general decline in tar- its effect on the country's indebtedness. Both iffs and quotas. However, the application of SPS domestic and foreign debts accumulated to un- and TBT as a disguise to restrict trade flows is precedented levels and their servicing became threatening this free-trade philosophy. Though cumbersome and almost unbearable. enforcement of standards and regulations is neces- In terms of the direction of trade, the United sary for responsible governments, these standards States and the European Union )ointly account for especially in relation to agricultural, food, and three-quarters of Nigerian exports, the bulk of health products can negatively impinge firm- and which is crude petroleum. Even though Nigeria's country-level competitiveness through cost raising trade with developing countries (Africa in partic- incidences that also result in export market share ular) has improved relatively in the recent period, loss. In Nigeria's case, the agricultural sector em- it nevertheless remained highly insignificant. A re- ploys 70 percent of its total labor force indicating view of the tariffs applicable to Nigerian exports the vulnerability of the Nigerian economy through in its main external markets indicates that its ma- its agricultural sector, and whose performance is jor export, crude oil, is excluded among the U.S. second only to the oil sector, to externally imposed market tariff-bound products and that it enjoys a measures with a grave potential impact. Thus, the low tariff in the EU implying that its effective tar- SPS and TBT issues are viewed seriously as they iff protection in the EU is low. Basic agricultural border on restricting market access of Nigeria's products are highly protected, both in the United agricultural products into importing countries. States and the EU as high tariffs, mostly in addi- This study examines the awareness and impact of tion to the overall simple rate, are applied coupled international standards and technical regulations with a spectrum of other restrictions and specific on Nigeria's trade, and assesses the current status of duties, which are applicable to the agricultural laws, regulations, capacities, and programs relating products as well as the textile and clothing prod- to standards and technical regulations in Nigeria. It ucts. Overall, Nigeria's increased involvement in also identifies the level of participation in the in- regional and multilateral trade agreements should ternational standards setting process and the areas bring about an improved trade position with the needing priority attention at the national level. It rest of the world. also provides recommendations on key steps to be For Nigeria, giving priority to regulatory stan- taken by government and private organizations and dards is a key to its effective participation in the relevant international development agencies to al- rapidly integrating world, especially because its eco- leviate the negative impact and strengthen the pos- nomic growth not only fully depends on the exter- itive influences to face the challenges in trade facil- nal sector but also because Codex, IOE, and IPPC itation posed by SPS measures and technical standards have been accorded greater prominence barriers to trade. and recognition in the Uruguay Round of Multi- In effect, a critical examination of the trade and lateral Trade Negotiations and this will likely be the economic profile of Nigeria shows that the real case in future rounds. Nigeria seems to have the rel- GDP per capita stagnated at a low level between evant manpower but lacks the resources and nec- 1970 and 2000 while the growth rate of real GDP essary infrastructure to conduct scientific research improved relatively in the few years following the and properly harness inputs into standards devel- introduction of the Structural Adjustment Program opment. Thus, though it is desirable to be an im- (SAP) in 1986 only to fluctuate between 2.1 percent portant player in the global trading arrangement, and 3.8 percent in the post-UR period. The in- the lack of adequate resources and necessary infra- flation rate reached 72.8 percent in 1995 only to structure to conduct scientific research to integrate decrease continuously thereafter with the period properly into the global standardization process, as 1997-2000 recording low levels of price level found in this study, even where there is the requi- increases. The study also observes that in spite of site manpower, is a binding constraint for Nigeria. the increasing openness of the Nigerian economy, For example, apart from the fact that the standard- its total exports as a proportion of the GDP were ization equipment is obsolete, communication unimpressive until around 1995. The federal fiscal equipment is generally nonexistent and coupled balance that was found to be perpetually in deficit with madequate computerization, all of them 223 Standards and Global Trade: A Voice for Africa aggravate the problem of ineffective participation since 1994 in the case of ISO 9000. It has also been in the international standards-setting process. more possible for large firms to adopt the ISO 9000 In Nigeria, though local legislation relating to standards quality system than for small and medium standards and technical regulations predate the SPS companies that face particular problems of funding. Agreement, enforcement is weak. This has led to the The study finds that though the adoption of ISO rejection of Nigerian products in importing coun- 9000 standards has not directly affected the eco- tries. Evidence shows that many of these rejections nomic opportunities of the poor, they nevertheless were not certified, having evaded preshipment in- affect them indirectly as many ISO certified firms spection, but the fact remains that the products produce commodities that serve as inputs into the were shipped from Nigerian ports. production of goods that the poor purchase. Through its standards regulatory agencies, SON, In addition, there are documented cases of restric- NAFDAC, and PQS, Nigeria has been modestly tions of export products in Nigeria's traditional mar- involved in standardization but its effective partic- kets. These include raw agricultural goods, plants, ipation is limited in the world standards arrange- processed agricultural goods, and cosmetics. By con- ment because of such constraints as inadequate trast, statutory agencies such as SON and NAFDAC equipment, chemicals, highly skilled technicians have tended to enforce regulatory standards on im- and limited funds, lack of private capacities, acute ports such as electric cables, used tires, canned fish, capacity problem in risk assessment, and a limited and pharmaceutical drugs and beverages. laboratories accreditation program. These con- Finally, the sort of product differentiation to straints suggest a vital role for technical assistance achieve competitive advantage experienced in Nige- through bilateral and multilateral arrangements. ria is widespread in the importation business where However, an important finding is that trading substandard products, labeled to deceive the con- partner countries have been minimally involved in sumers are imported for sale at lower but not nec- technical assistance in negation of their obligation essarily cheap prices. under the SPS and TBT Agreements as many of the programs since 1995 have been supported by mul- tilateral institutions such as the UNDP, UNICEF, UNIDO, IAEA, FAO, among others. The summary contains issues related to opportu- In Nigeria, the level of awareness among local nities and challenges for bridging the standards gap firms and farmers of mternational standards is in Nigeria. In effect, it is recommended that: mixed. One reason for this is inadequate funding that limits the publicity work of the standards agen- * there should be a "Standards Campaign" in the cies. However, the agencies have developed coping six geopolitical zones of Nigeria to create and sus- strategies to improve the dissemination of informa- tain awareness among consumers and producers, tion including organizing series of workshops on especially small producers of exportable com- food safety and quality focusing on hygienic prac- modities; tices, HACCP, and GMP; use of technical or news * there is an urgent need to strengthen the National publications, the press and electronic media for Codex Committee including its Secretariat to be press releases, advertisements, interviews, talk able to modernize and integrate properly into the shows; consultative meetings with stakeholders, cor- international standardization process; porate briefs, and paid advertisements, and * equipment should be upgraded through pro- interviews. Others include issuing of communiques, curement of new technology in conformity with distribution of information through handbills, and assessment and risk analysis; attendance at relevant commodity shows. Nonethe- * staff knowledge requires upgrading, especially less, public awareness is still very low. Another with regard to demonstrating equivalence of reason is the poverty level in the country that allows standards through regular scientific training of consumers to be satisfied with low-priced but not laboratory staff; necessarily cheap substandard products. * cooperation among regional (ECOWAS) mem- The status of the adoption of the Hazard Analy- bers for attending international standards-setting sis and Critical Control Points (HACCP) and ISO meetings should be encouraged. This is a result 9000 in Nigeria is moderately impressive, especially of the high costs involved in attending all Codex 224 Standards, Technical Regulations, and Product Quality: Institutional Evidence from Nigeria and other international standards institutions' FAO-WHO. 2001a Agenda Item No. 5 (b), XC/FL meetings; 01 /07-CRD.45 * regional harmonization of standards through the - 2001 b Document CL 2001 /39-FFV, regional ~~~~~~~~November ISO, ARSO, and so on, should continue and be National Codex Committee, 2001 Report of the intensified by ensuring regular attendance of National Codex Committee Meeting of 29th meetings; August. * budgetary provisions from the Nigerian govern- Ogunkola, E. 0. and Y F Agah. 1998. "Nigeria and the ment to the standards institutions should be im- World Trading System." Draft final research report submitted to the African Economic Research Consor- proved; tium (AERC) Collaborative Prolect on Africa and the * bilateral technical assistance needs to be intro- World Trading System. duced and sustained in line with the require- Oyejide, T A 2001. "Nigerian Trade Policy in the Con- ments of the relevant articles of the SPS and TBT text of Regional and Multilateral Trade Agreements." Agreements; DPC Research Report, No. 27. * the formation of well-equipped private laborato- Oye'ide T. A., E. 0. Ogunkola, and A S. Bankole. ries need to befacitatedbyprovidingthe2000. "Quantifying the Trade Impact of Sanitary ries need to be facilitated by providing the en- and Phytosanitary Standards: What is Known and abling environment through relevant laws; and Issues of Importance for Sub-Saharan Africa." Pa- * information and telecommunications facilities per presented at the workshop on "Quantifying should be modernized to enhance good manage- the Trade Effect of Standards and Regulatory Barri- ment of the standardization process. ers: Is It Possible7" World Bank, Washington, D.C, 27 April 2000. Standards Organisation of Nigeria. 1992. "Nigeria In- References dustrial Standards-Standards for Milk Powder." First edition. Bankole, A. S. 2001 "Sanitary and Phytosanitary Stan- Standards Organisation of Nigeria. 1997. Annual dards and Processed Agricultural and Food Products Report. Exports: Evidence from Nigerian Firms." Presented at World Bank. 2000. "Africa's Integration into the World the African Economic Research Consortium (AERC) Trading System Challenges in Trade Facilitation, Reg- biannual research workshop, December, Nairobi, ulatory Reform, and Standards Tariff Prolect Action Kenya. Plans." Central Bank of Nigeria. CBN Annual Reports and State- WTO (World Trade Organization). 1998. Trade Policy ment of Accounts (Various Issues) Review: Nigena Geneva: W`TO. - 1998. Statistical Bullefin, December . 1999. Trade Policy Review. United States. Geneva: FAO. 1999. Importance of Food Quality and Safety for VIITO Developing Countries, Committee on World Food . 2000 Trade Policy Review European Union. Security, 25th Session, FAO, Rome Geneva \A/TO. 225 w '1 - 4 - n 0 ~ -0 0 P n % N ''C 1C n N r E C ; ;0c c - 0J - ~~~~~~~~~~~~~~~~~~~~~~~~~~~~N e.J I/) '0 V ( ON 00 N - 0 r-4 N I C' ) 00 00 0 N ' 0 N 0 N 0 C' N 0 W) In N a -, - - m N 'C In) C' In U) 0 m 'q- 00 0 '? 0 C N M C, - ) In (N N- N, V t- N ~~~~~~~~~~~~~~~~~~~~~ ~~~~~~~~~~~~~~~~~~~0) (t) O0 Mt V N 00 'A) )C ' ft) 0 \C C' *V \C 0 't) 00 0 \0 00 N N N- 00 In NI C' - 0 L v to ~ t' N N N 0 0 ' . C' ' O N ~ ) N I ~ ) t 7) CU 0J C~~~~~~~~~~~~~~~~~~~r Nr n K C, , 6~ ~ 6 r E 0 N ' C00 CC' NN 'O O 0 i O)O C' 00 0 O.~~~~~~~~~~~~~~~~~~~~~~~~~~ 0~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~0 0\ C' l e r) t N ItLei C N\ mIt) 00 U)0 (IN0N I)0 m\ - __ p C - - N -0 0 -~ -t N '- -C 'C- ) )0 ' - N - -' - -t - 0 00 - -t -0 - CO.~~~~~~~~~~~~~~~~~~~~~~~~~~~ o U '-' ~ ~ ~ i\ i o ~ ;~ ~ m6 o 64 - ~ r e e - ic CC0 A C C ' 1), - N 'C It) rt) ~ ~ f- N r N C'0 ' 0 It ,- It - m C' w NS N C 'C\ I) t\ -\ t\ ON 00 o C - ~ ~ ~ . C0 ) ' 0.C 2261pN tn g. m~~~~~~~~~~~ ~o m V) K- o~ ' N N o 0o- N M q r4N e - N- - - N- '0 4)r ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 0 J *N E.- P - Nm',N N C'.4 0 N '0 N N - N ~ 0' .d r-4 4 W) '0 CN (ON O\ ~ - 0 0 0 r 0 ~ 00 00I 0 n 4 C' (M '0 00 10'4,~ c N~ '0 0' '0 0 '0 %O *i 0 N - 0D U J ~0' W '0 CY, Nl '0 - 'In N - 0 0 00 M '0 0' N, mn 0' N 00 V e" V - N VI ON0 o6 ~ o~ ~d : O 4 '0 '0 'ON O~ 0000000w ri N~ ON in 0' N:~ N: i' r~ c'N o6 ,i v N M M N M M(NM m o \ o mco q . o r m , o y,N T t ., q N w)r, - Knr4r~v o a w o0 m 0' c 0 ~N c ~ 00I,O :0'1'N-0 Niq vi o N6 o6~ N ; -t ; N o ' E coI I I - lI I - I 7 7~~ 7I c~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~c -o-- - --~~~~~~~~~~~~~~~~~~~~~~-~~~~~--~~~~~~~~< ~ 7 .2 w) 43k o rN 140 V) N r-4 r' :1% 00 al N ~ ~ ~ ~ ~ ~ ~ o m ~~~~~~.0 o~~~~~~~~~~~~~~~~~~~~ Ow~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Z .2 --- - r, cN ~~o m N \o v n - -N n VI 1w\ ~ m m 0 ~W)C\m ,r 0 M I C N In I n In 0 m1m 000 0 2 : I I 0' LU m c~~~~~~~~~~~~~~~~~~ '- 0-N m~'~,'0N0 0'0~- Nm'W ~'0 000'0.- ~ 000 < (LI 'a NNN N N N N N N 00000 000000 00000 00' 0''0'0'' 0'0' '0'0 ~ 0' '0'0 0'0 0'0' '0' '0'0 0' 0 0'0'0''0''0' '0'00' '0' '0 u I- _ _ _ ~ ~ ~ ~ ~ ~ ~ ~ ~ W W W WO 7 3~C\(,~NO 7 Standards and Global Trade: A Voice for Africa Table 3.30 Trade Performance Indicators Current Export/ Import/ Degree of Export Import A/c Balance GDP GDP Openness Year (Nt billion) (N billion) (N million) (percent) (percent) (percent) 1970 0.885 0.756 -50 16.99 14.51 31.5 1971 1.29 1.079 -229.4 19.63 1 16.42 36.0 1972 1.43 0.99 -322.7 19.83 1 3.73 33.5 1973 2.28 1.22 52.7 20.75 11.10 31.9 1974 5.79 1.74 4,671.5 31.64 9.51 41.2 1975 4.93 3.72 42.6 23.52 17.75 41.3 1976 6.75 5.15 -258.4 25.32 19.32 44.6 1977 7.63 7.09 -647.5 24.21 22.49 46.7 1978 6.06 8.21 -1,157.4 17.54 23.77 41.3 1979 I 10.84 7.47 9,427.3 25 84 1 7.81 43.7 1980 14.19 9.1 13,057.9 30.43 19.52 49.9 1981 11.02 12.84 10,070.3 21.84 25.45 47.3 1982 8.21 10.77 7,980.9 15.92 20.88 36.8 1983 7.5 8.9 6,752.3 13.23 15.69 29.0 1984 9.09 7.18 8,234.3 14.43 11.40 25.8 1985 11.72 !1 7.06 10,738.9 16.42 9.89 26.3 1986 8.92 5.98 8,006.6 12 37 8.29 20.6 1987 1 30.36 17.86 17,138.2 28.41 16.71 45.1 1988 31.19 21.45 31,586.1 21.86 15.03 36.9 1989 57.97 30.86 59,112.0 26.06 i 1 3.87 39.9 1990 109.89 45.72 79,810.1 42.61 1 7.73 60.3 1991 121.54 87.02 51,969.8 37.95 27.17 65.1 1992 207.27 k: 145.91 93,680.5 38.08 26.81 64.9 1993 218.77 166.1 -34,414.7 31.63 24.02 55.6 1994 206.06 162.79 -52,304.3 22.62 1 7.87 40.5 1995 950.66 755.13 -186,084.6 48.49 38.51 87.0 1996 1309.54 562.63 376.02 47.79 20.53 68.3 1997 1241.66 845.72 !1 268,899.3 1i 43.80 29.83 73.6 1998 751.86 837.42 -331,429.5 27.63 1 30.77 58.4 1999 1,189.01 862.53 j' 41,074.1 50.85 36.89 87.7 2000 1,945.76 962.97 _ 706,977.0 L 73.79 36.52 110.3 Note The degree of openness is measured using the ratio of total trade (exports + imports) to GDP Sources CBN Annual Reports and Statements of Accounts, (various issues), CBN Statistical Bulletin, December, 1998 cn 0% I IWkm -mN 40ef (, '0 O C5] I 0' ud _6 , 6 m es o6 r' o J6 v o c- X N N _ 0NrP x 0 05 v V o _ t _ e 0 O%- 0 O '0N 10 O 0 _ X \0 0 _ O _ 0 0 \0 \0 v 0% ~ ~ ~ ~ ~ ~ ~ OCr' \0 e 0 l ' OR tO N O~ rN O: _ N O O rn \0 0 0' N 0 P ~~~~~~~~~ ~~~~~~~~~~~~~~v k rs eS 08 VN _ N0 0 ' 0 N I. 6o~~~~o~0 CN Z £t^Z , > o n N N -n ,n 0 ' I N °.,N ° 00 \ f N o on O' v0 t N In s 0 ur rS MN un( \0 - . . - - N . . . . o . ° - 0 ° o OR U~~~~~~~~~~~~~~~~~~~~ \0 tv N o *N In 0 N vo m o o oi ao re .'rf 0 I (h z co 0~~~~~~~~~~~~~~~~~ GJ _ .. X:~~ ~ ~~~~~~~~~~~~~ . ~ ' ; ' 0 Unr U~~~~~v CF 06 _ ~ O 00 4 6i Xl X; Oi C5 ci o6 \0X rs 0 w v~ 0% N _ - ' v qo' _Z sr _ V: 7 V:ri, N Cz In l In o oq X rS li _ o r X o N o0 o 0 Vi o N o 4 o X C 0 - M 0' *j 0 o N PS o N -c o _ 0 0 0l 'r-4-0 22 -c~~~~~~~~~~~~~~ - '~~~~ .'a - . M *5 zuc al Uoa M )V U o~~~r o i i6K 60E 6 r Ij 4 (0 C\ 229 00 N 0 - 0- -o s.. ..... No n 'n ~ ' ~ N rf% 00 0 %O 00 \O \0 N 00 _. '0 O\ - N 0 0 o Ji t N v) t oo o N m X N~~~~~~~Ii 0 -~ ( N~~~~~~~~~~~~~~~r 00 0% r \00 On az N o^(N NO -( ( (N r N0% 0sX- r 0° 0 O* PN ° r OR %. .. C( 0% r# . 0 oo .l X m m u) as ON , r t 51 0 1s 1s x r~ 0 It m In In V) O 00 C- t IN (N V- C0 - _t 4 - - 4 N m 0 0 t t PN ^ N N ' N 4( CK S t Vi VI In V) v 04 % O -z -; M \0 m N\ %O C0 C.C. - (N (N~Lr (N C ~ - 0 0 _' on CY 00 v) c' O .. c (u E w m u~ ~~~*. ( cO q j om E- 0 - C.3 cu '4'- E OE -U. c 230~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~0 \.0 0 0 0 Is . - . - M 0\ _ r0 00 00I r ( 0 N 5 - - -= M N0 In In 6\ £ sN - 0; _ o o o "I 7 Xo o 0000(Nm'.'° °O '0', I _ _ _0% r _ 0% 0% 0 0 0, I ~N 0 0 ON 1N, s r - , 0%~~~~~~~~C cn ° .o \°C oo oE 4 o q o 00oo X C\ cls O C, o oc o I i s N _ _ CD:_ r04 0001 0 10C ao ~~~ ~~~00 00,,, V0 m O' - - ' I ES \0 _I =~~0 - ,0_000 oOI 00 0\ n t t W t . O( '. - 0 a) e~~~~~~s 0 o 0 ~ ~ ~ ~ ~ ' 0%N_ O t° _ R o N °. o~ N, E 5 ~ r . - - - (NX E~~~~~~ o oJ _ N jSZXtopt@eS O rl uCD 2mmm cu C7u, u E o U 0 Z. ( .u- rn~~ ~ ~~~~~~~~~~~~~~ C X 0 N~~~~\ 0" U, ,0 In N t L 0 _ 4- -~~ "-'*0 ~\' P, C o~~~~~~~ 0~~~~~~~~ u 0 0 0OJC C r o- 0. 00) '~~~~~~~~0W 0 x 2 F 'a'0 ' E z -C '0~~~~~~~~~~~ LU~~~~~~~~ C 43 a)- U _ _ _ _ _co_ _ I - s..- - _ _ _ _ _ _ _ _ _ _ _ _ _ _ 4- Standards and Global Trade: A Voice for Africa Table 3.34 Direction of Nigeria's Trade (S' million and percent) Exports (Destinations) 1971 1975 1980 1985 1990 1995 1998 Total 1810 (100) 7995 (100) 26,958 (100) 14,289 (100) 10,273 (100) 11,664 (100) 11,791 (100) Industrial countries 85.6 82 1 804 79 1 92 0 79 4 64 5 Developing countries 7.8 15.8 I 19.1 20 8 7.9 20.6 35.5 Africa 2.2 2 0 2.0 2.4 65 9.2 10.7 Asia 0.4 - - 0.5 0.3 6.3 14 0 Others 17.1 179 1.0 5.1 EU 1125 (62) 3704 (46) 10246(38) 7974 (56) 3662 (35.6) 3951 (33.9) n a. US 320 (17 7) 2316 (29 0) 10471 (39) , 2826 (19.8) 5569 (54.2) 4595 (39.4) 4135 (35.1) Canada 31 (1 7) 51 (0.6) 36 (0.1) 171 (1.2) 122 (1 2) I 426 (3.7) 209 (1.8) Japan 25 (1 4) 280 (3.5) 110 (0.4) 5 (0.0) 3 (0 0) 122 (1.0) 78 (0.7) France 267 (14.8) ' 872 (10 9) 2728 (10.1) 1533 (10.7) 294 (2.9) 734 (6.3) 673 (5.7) Germany 99 (5 5) 543 (6 8) P 2756 (10.2) 1950 (13 6) 593 (5.8) 567 (4.9) 289 (2.5) Italy 79 (44) 96 (1 2) 859 (3 2) 1461 (102) 299 (2.9) 242 (2.1) 340 (2.9) Netherlands 247 (13.6) 899 (11.2) 2639 (9.8) 594 (4.2) 936 (9.1) 367 (3.1) 116 (1.0) Spain 49 (2.7) 8 (0.1) 235 (09) , 707 (4.9) 942 (9.2) 1036 (89) 876 (7.4) UK 392 (21.7) 1130 (14 1) 320 (1 2) 745 (5.2) 300 (2.9) 259 (2.2) 211 (1.8) Africa 40 (2.2) , 163 (2.0) 548 (2 0) 349 (2.4) 670 (6.5) 1072 (9 2) 1267 (10.7) Cameroon - - 4 (0.0) 2 (0.0) 74 (0 7) 95 (0 8) 88 (0 7) Cote d'lvoire 7 (0 4) 48 (0 6) 53 (0.2) 174 (1 2) 225 (2.2) 417 (3.6) 290 (2.5) Ghana 16 (0 9) 54 (0 7) 208 (0.8) 42 (0.3) 255 (2.5) 352 (3.0) 424 (3 6) Senegal 2(0.1) 23(0.3) 70(0.3) 86(06) 43(04) 21 (02) 84(0.7) S/Leone 5 (0.3) ! 19 (O 2) 45 (0.2) 24 (0 2) 16 (0 2) 8 (0.1) 10 (0.1) China - - 5 (0.0) 3 (0.0) 9 (0.1) 54 (0.5) 25 (0.2) Hong Kong 6 (0 3) - - - 2(0.0) 4 (0.0) 4 (0.0) India - , 2(0.0) i! 1 (00) - 4(0.0) 572 (4.9) 1014(86) Korea - - - 62 (0 4) - - 240 (2 0) Other Europe 59 (2.7) 20 (0 3) 934 (3 5) 263 (1.8) 23 (0.2) 41 (04) 61 (0.5) Romania - - 313 (1.2) - - 17(01) 1(0.0) USSR 49(2.7) 122 (1.5) 4 (0.0) 10 (0.1) 14 (0 1) - 7 (0.1) M/East 1 (0.1) 1 (0.0) 4 (0.0) 2 (0.0) 3 (0.0) 4 (0.0) 6 (0.1) Western I Hemisphere 95(5.2) 1100 (13.8) 3662 (13.6) 2290 (16.0) 80(0.8) 549 (4.7) 1202 (10.2) Argentina 2 (0.1) - 34 (0.1) , - 45 (0.4) 5 (0.0) Brazil 28 (1.5) - 82 (0.3) 1293 (9.0) 9 (0 1) 258 (2 2) 630 (5.3) Source Direction of Trade Statistics Yearbook (various issues). Standards, Technical Regulations, and Product Quality: Institutional Evidence from Nigeria Imports (Sources) 1971 1975 1980 1985 1990 1995 1998 1510 (100) 6032 (100) 16,478 (100) 7577 (100) 4317 (100) 5588 (100) 7446 (100) 84.5 865 819 69.5 78 1 686 522 7.4 6 7 15 2 25.3 21.6 31.2 36 0 0.5 09 1.4 10 07 28 3.7 5.4 3.3 8.7 7.5 11.7 17.4 22 3 5.5 20.4 9.2 10 9 878 (58) 3617 (60.0) 9553 (58.0) 3746 (49.4) 2497 (58) 2841 (51) n.a. 212 (14.0) 663 (11.0) 1265 (7.7) 743 (9.8) 274 (6.3) 662 (11.8) 902 (12) 8 (0.5) , 39 (0 6) 96 (0.6) 57 (0.8) 18 (0.4) 21 (0.4) 18 (0 2) 128 (85) 595 (99) 1651 (10.0) 379 (5.0) 257 (6.0) 193 (3.5) 252 (3.4) 61 (4.0) 501 (8.3) 1483 (9.0) 627 (8.3) 394 (9 1) 461 (8.2) 624 (8 4) 184 (12.2) 882 (14.6) 2010 (12 2) 714 (9 4) 647 (15.0) 597 (10 7) 714 (9.6) 57 (3.8) 369 (6 1) 752 (4 6) 379 (5 0) 194 (4 5) 240 (4 3) 360 (4.8) 52 (34) 257 (4 3) 1027 (6.2) 240 (3.2) 207 (48) 316 (5.77) 371 (5.0) 11 (0 7) 86 (1.4) 299 (1.8) 113 (1.5) 59 (1.4) 88 (1 6) 136 (1.8) 482 (31.9) 1389 (23.0) 3079 (18.7) 1338 (17.7) 739 (17 1) 749 (13 4) 854 (11 5) 8 (0.5) 55 (09) 227 (1 4) 73 (1.0) 31 (0.7) 156 (2.8) 276 (3 7) - , 3 (0.0) 5 (0.0) 18 (0.2) 1 (0 0) 10 (0 2) 8 (0.1) 1 (0.1) 7 (0 1) 39 (0.2) 19 (0 3) 5 (0.1) 7 (0.1) 69 (0.9) - , 3 (0 0) 1 (0.0) - 1(0 0) 52 (0.9) 71 (1 0) 1 (0.1) 2(0.0) 8(0.0) 12(0.2) 1 (00) 9(0.2) 1 6(0.1) - ., - 57 (0.3) 5 (0 1) 128 (3.0) 168 (3 0) 393 (5.3) 24 (1.6) 95 (1.6) 411 (2.5) 58 (0 8) 96 (2.2) 262 (4.7) 180 (2.4) 19 (1.3) 39 (0 6) 75 (0.5) 71 (0.9) 67 (1.6) 152 (2 7) 217 (2 9) - - 137 (0.8) 43 (0.6) 54(1.3) - 169 (2.3) 38 (2 5) 216 (3.6) 374 (2.3) 254 (3 4) 163 (3.8) 174 (3 1) 297 (4 0) 5 (0.3) 10 (0.2) 47 (0.3) 93 (1 2) 10 (0,2) 30 (0 5) 32 (0.4) 16 (1.1) 24 (0.4) 13 (0.1) 195 (2.6) 13 (0.3) - 36 (0.5) 19 (1.3) 37 (0.6) 62 (0.4) 23 (0 3) 44 (1 0) 125 (2 2) 47 (0.6) 3 (O 2) 110 (1 8) 409 (2.5) 997 (13.2) 189 (4.4) 313 (5 6) 404 (5 4) - ' 6 (0 1) 19 (0.1) 37 (0.5) 7 6 (0.1) 4 (0.1) 36 (0.5) 1 (0.1) 58 (1.0) 299 (1.8) 926 (12.2) 176 (4 1) 268 (4 8) 361 (4 8) 233 4 TA DARDThe latter is becoming more and STLAN DARDS ~more important with respect to N T ArX consumer buying patterns and AND1 TRADE I Jr N trade in general, thus the impor- SOUTH AF RICA tance of standards (voluntary SOUTH AFRICA and mandatory) and technical regulations. In many instances, standards and regulations are considered vital to the mainte- Paving Pathways for Increased nance or improvement of inter- Market Access and Competitiveness national market access, but there is also an increasing concern that these measures are being used unjustly to restrict access to important markets. In South Africa, the feeling is no different. The purpose of this chapter is, therefore, to provide insight into the South African ONSUMERS WORLDWIDE ARE BECOMING standards and regulations landscape, South Africa's MORE DEMANDING WITH REGARD TO WHAT international participation in setting standards and they want. This is clearly evident from the shift from regulations; and how such standards and regulations "quantity" to "quality" issues (Howells 2000). The are applied and policed, to identify the role and im- ability of price movements and people's per capita in- portance of different stakeholders, and to find out come alone to explain problems associated with food to what extent stakeholders comply, as well as iden- demand and trade is increasingly questioned. In this tify the problems associated with such compliance. regard, two broad classifications for factors that in- The outline of the chapter is as follows. We pro- fluence the demand for goods are Important, namely vide an overview of the macroeconomic conditions and trade in South Africa in the first section. In the * Economic: These factors include income and section entitled "Domestic Regulatory Structures price. For example, consumers will generally in- and Policies," different regulatory bodies and struc- crease their consumption of goods when real in- tures are investigated. Another section investigates come increases, while consumption falls when domestic regulations and standards, cost of com- price relative to other goods rises. pliance, and problems associated with compliance * Noneconomic: These factors include issues per- with regard to regulations and standards in specific taining to health and safety, convenience, quality, industries. South Africa's international involvement animal welfare, and the environment. in standards development is discussed in the section 235 Standards and Global Trade: A Voice for Africa after that. In the next section, private sector per- compliance with standards by customers is an im- spectives and development assistance to Small, plicit challenge to producers in the course of trade Medium, and Micro Enterprises (SMMEs) are dis- liberalization. This challenge is more acute to ex- cussed. The chapter concludes with action plans. porters. Sales on the local market also require im- proved standards and quality, as tariff and other Macroeconomic Conditions and forms of protection are reduced. Trade in South Africa This section begins with a review of South The advent of complete democracy in South Aftica African economic conditions and performance, the in 1994 created the opportunity to undertake urgent sector structure of the economy, and the structure changes in the management of the economy. Three of imports and exports. Bilateral and multilateral areas were singled out in this respect: trade agreements, as well as the institutional frame- work for trade negotiations are reviewed. The chap- . . . ~~~~~~~~~ter concludes by discussing the relevance of qualit * Stabilization of the macroeconomy to serve as a y g quty sound platform for future growth; and standards in sustaining export growth and U . . ~~~~some public policy responses in this respect. * Normalization of the international financial re- lations that included the phasing-out of controls This serves as the broad framework against which on foreign exchange transactions; and the analysis of standards is undertaken for the pres- • Liberalization of the international trade of the elected sectors. A short description of the perform- country and the globalization of the economic ance of these sectors in international trade is given. activities. Emphasis is placed on progress over the period 1994-2001, as this is the period that followed the lift- The primary objective of these changes was to rec- ing of trade sanctions and hberalization of trade. tify the many structural deficiencies apparent in the Economic Conditions and Performance economy at that stage. Progress with the objective of liberalizing the Although success had been achieved with many of trade is of particular importance within the context the above-mentioned objectives, it happened at a of this study. Growth and diversification of exports cost, mainly in terms of low growth in output and are the main objectives of trade liberalization and the shedding of employment as the result of the globalization of the economy. Growing demand for economy responding to international competition Table 4.1 South African Macroeconomic Indicators Subject || Unit 1991 1994 2001 GDP at current prices Rand billion 332 482.1 975.2 Percentage growth in real GDP 1995 prices -1 ij 3.2 2.2 GDP per capita at current prices Rand 9,168 12,504 21,889 GDP per capita in real terms 1995 prices 14,352 13,786 14,321 Fiscal deficit before borrowing Percent 4.7 5.7 1.4 GDFI: General government 1995 Rand billion 15.7 12.4 14.4 Savings: General government Rand billion -6.8 i, -28.6 -5.1 Prime overdraft rate Percent 23.5 17.81 13 Yield: Government loan stock 10 years + Percent 16.66 16.8 11.63 Consumer prices 2000 = 100 Percent 16.2 10.1 4.5 Balance current account/GDP Percent -1-9 -0.1 -0.2 Real effective exchange rate 1995 = 100 102 101.52 74.6 Household savings/disposable income Ratio 2.7 2.8 0.3 GFI/GDP Ratio 17.2 15.2 14.8 Nonagricultural employment 1995 = 100 105.4 101.3 88.3 Nonagricultural labor productivity 1995 = 100 88.4 96.4 131.7 Source Quarterly Bulletin June 2002, South African Reserve Bank 236 Standards and Trade in South Africa: Paving Pathways for Increased Market Access and Competitiveness after a long period of economic isolation. Growth more emphasis on micro policies to activate various improved to some extent, growth in real gross do- sectors, primarily in the development of agro- mestic product averaged 2.6 percent per year in the industries, tourism, labor-intensive and resource- period 1995-2001 as opposed to 0.6 percent per based manufacturing, and the technology economy. year between 1991 and 1995. To summarize, success had been achieved in sta- The most noticeable success in rectifying struc- bilizing the macroeconomy and consolidation of tural deficiencies was achieved in public sector sound public finances. The challenge now is to di- finances (Table 4.1). The budget deficit before bor- rect the economy to a higher growth path and a rowing had been reduced from a high of 9.5 percent greater degree of labor absorption. The remaining in 1993 to 1.4 percent in 2001. In addition, the neg- structural deficiencies of great importance are the ative savings ratio of government had been nearly low savings and investment rate. eradicated by 2001. These improvements were ac- companied by reductions in the corporate tax rate as well as the personal income tax rates. Disciplined public sector expenditure and vastly improved tax Main Sectors. The tertiary sectors achieved higher collection supported these improvements. growth than the primary sectors (agriculture and Inflation, as measured by the consumer price index, mining) as well as the secondary sectors (manufac- was brought down significantly and the Reserve Bank turing electricity, gas, water, and construction) in adopted a policy of inflation targets. According to the period 1990-2001 (Table 4.2). Among the lat- that, core inflation is to remain within a band of 3-6 ter, the electricity, gas, and water sectors achieved a percent per year. Because of the sharp depreciation in growth equal to the national average. the value of the rand, inflationary pressure started to As a consequence, the share of the services' sector build up by the end of 2001. As a result, the Reserve increased from 58.8 percent in 1990 to 63.4 percent Bank raised interest rates in the first half of 2002 to in 2001. Robust growth occurred in the supply of ensure the achievement of its inflation targets. transport, storage, and communication services. This, The real effective exchange rate of the rand de- among others, is the result of strong expansion in the clined over the past decade making imported goods market for mobile communication. Like elsewhere in more expensive and exports cheaper. This develop- the world, the sector for financial services expanded ment supports trade liberalization to compensate significantly along with the supply of other services. for the reduction in import tariffs and the scrap- The investment in fixed assets (Table 4.3) showed ping of export subsidies. Thus, significant growth a corresponding trend to that in production, i.e., in in exports contributed to the current account of the favor of the services' sectors. However, fixed inves- balance of payments, showing only small deficits in tment in mining and manufacturing recovered in the relation to the gross domestic product. period 1994-2001 after significant declines between Given the favorable developments with regard to a 1990 and 1994. In the case of manufacturing, the number of fundamental macroeconomic aggregates, increase in investment relates to technology upgrades the low levels of real economic activity remain a ma- that were prompted by the need for improved com- jor cause of concern. Although the investment ratio petitiveness because of trade liberalization. increased somewhat after 1994, it has fallen back in Growth in aggregate demand (Table 4.4) saw cori- the past three years. Furthermore, the low savings sistent growth in real household expenditure be- rate remains a persistent structural deficiency. tween 1990 and 2001. Real growth in government Labor productivity improved and has been con- consumption expenditure became marginal after sistently spurred by the forces of progressive glob- 1994 but growth in real gross capital formation alization of the South African economy. However, picked up. Real growth in exports was double the rate the labor absorption capacity of the economy suf- in expenditure on gross domestic product over the fered substantially less than before with nonagri- period 1995 to 2001 signalng a rise in the export in- cultural employment. tensiveness with the advent of trade liberalization. Having achieved a great measure of success in the Real imports of goods and services rose equally and macroeconomic and financial environments, the the economy thus tended to be more open. performance of the real economy remains below ex- Sector changes can be summarized in that the pectations. Government is thus starting to place production structure transformed in favor of the 237 Standards and Global Trade: A Voice for Africa Table 4.2 Percentage Change in Sectoral GDP Sector 1990-1994 1995-2001 1990-2001 Agriculture, forestry, and fishing 0.39 1.05 0.78 Mining and quarrying 0.29 -0.84 j, -0.37 Manufacturing -1.52 2.34 0.73 Electricity, gas, and water 2.80 2.44 2.59 Construction -2.78 2.27 0.17 Trade, catering, and accommodation -0.06 2.43 1.39 Transport, storage, and communication 1.34 6.70 4.47 Financial services 1.27 5.38 3.67 General government 1.25 0.18 , 0.62 Other services 3.02 3.18 3.11 Other producers 0.55 1.95 1.36 Gross domestic product 0.21 2.65 1.64 Source. Annex D as calculated from data in Annex A Table 4.3 Average Annual Real Gross Fixed Capital Formation Growth (percent) Sector 1990-1994 1995-2001 1990-2001 Agriculture, forestry, and fishing -1.02 -0.73 -0.85 Mining and quarrying -7.66 5.03 2 -0.26 Manufacturing 1.87 4.76 3.56 Electricity, gas, and water -4.07 -5.84 -5.10 Construction -2.69 3.15 0.71 Trade, catering, and accommodation 3.15 5.30 4.40 Transport, storage, and communication 6.64 10.70 9.01 Financial services -2.05 3.34 1.09 Community, social, and personal services -2.56 2.80 11 0.57 Total fixed capital formation -1.39 3.75 , 1.61 Source Annex D calculated from data in Annex B. Table 4.4 Expenditure on GDP: Real Annual Growth (percent) Description 1990-1994 1995-2001 1990-2001 Final consumption expenditure by households 1.37 3.22 2.44 Final consumption expenditure by general government 1.67 -0.12 0.63 Gross fixed capital formation -1.46 3.75 2 1.58 Change in inventories -96.45 -86.67 j -90.75 Residual items -29.31 -5.58 -15.47 Exports of goods and services 2.64 5.65 4.40 Imports of goods and services 5.11 4.66 4.85 Expenditure on gross domestic product 0.20 2.65 1.63 Source. Annex D as calculated from data in Annex E. 238 Standards and Trade in South Africa: Paving Pathways for Increased Market Access and Competitiveness services sectors over the period 1990-2001. This reference to 4 primary sectors and 27 subsectors of trend is replicated in the sector pattern of gross fixed the manufacturing industry. capital formation. However, gross fixed capital Table 4.5 provides information on the growth formation in manufacturing expanded significantly in the physical volume of production for the over the period 1995-2001, among others, as the re- period 1990-2000. Among the primary sectors, sult of modernization of technology due to the com- the output by gold mines decreased on average by petitive forces of globalization and trade liberaliza- 3.3 percent per year. However, the decline in gold tion. For the same reason the economy tended to be output has more to do with the profitability of more open to the outside world with both exports mining ore reserves at specific price levels that and imports of goods and nonfactor services out- became less lucrative over the past decade, than stripping the growth in aggregate expenditure. with trade liberalization. Quite a number of sectors that fall within the am- bit of light manufacturing experienced shrinking PrMaryuSctorsiand Subscctorsoofrthe production levels (the sectors relevant to this study Manufacturing Sector are shown in bold). Among these are the manufac- Output. Trade liberalization that started in 1994 turing of footwear, beverages, clothing, furniture, was bound to have a differential impact on growth and radio and television. especially with regard to the subsectors of the At the same time, the volume of production by a manufacturing sector. Outcomes in this respect number of light industries was increased between are discussed in the following paragraphs with 1990 and 2000. Among these industries are the Table 4.5 Percentage Annual Growth in Physical Volume of Production: Primary and Manufacturing Sectors (1990-2001) _____________ Negative Growth Positive Growth Growth Growth Sector Rates Sector Rates Footwear -5.32 Glass and glass products 0.32 Gold mining -3.98 Textiles 0.57 Professional equipment etc. -1.87 Nonelectrical machinery 0.67 | Printing and publishing -0.95 Processed food 0.72 Nonmetallic mineral products nec -0.70 Petroleum and petroleum products 0.81 Other transport equipment -0.31 Agriculture 1.01 Beverages -0.31 Furniture 1.45 Rubber products -0.15 Other mining 1.66 Other manufacturing -0.11 Metal products, excluding machinery 1.77 Radio, television, and communication apparatus -0.05 Other chemical products 1.96 Clothing, excluding ootwear -0.04 Paper and paper products 2.01 Electrical machinery 2.54 Coal mining 2.62 Basic iron and steel products 2.64 Plastic products 2.78 Motor vehicles, parts and I accessories 4.38 Industrial chemicals 4.56 Wood and wood products 5.15 Leather and leather products 5.58 Total manufacturing 1.88 Nonferrous metal products 9.07 Source Annex E Standards and Global Trade: A Voice for Africa manufacturing of processed food, plastic products, are shown in Table 4.6 for 1990, 1995, and 2000. firniture, and leather and leather products. The out- The last column shows the change in export inten- put of agriculture increased as well as that of coal sity between 1995 and 2000 that helped in ranking mining and other mining among the primary sectors. the sectors and subsectors according to the change m their respective export intensities. The year 1995 Export Intensity. The change in the export inten- signaled the advent of trade liberalization. sity of a sector to some extent reflects the impact The trend toward a more open economy is clear of the liberalized trading environment on the per- from the contents of Table 4.6 in which all sectors formance in international trade. Available data al- experienced an increase in their export intensity be- lows the export intensity of sectors to be calculated tween 1995 and 2000. (The results for the sector by expressing the value of exports as a percentage "Other mining" must be interpreted within the con- of sales of domestically produced goods of that sec- text of the activities of the Central Selling Organi- tor. Export intensities caluculated in this manner zation for diamonds that results in a high export Table 4.6 Exports/Sales (percent) Change Sector 1990 1995 2000 (1994-2000) Other mining 87 106 106 0 Basic iron and steel products 43 49 58 18 Other transport equipment 17 77 91 18 Agriculture 11 12 14 18 Industrial chemicals 19 36 43 19 Coal mining 49 47 56 20 Nonferrous metal products 60 45 60 35 Paper and paper products 15 21 28 35 Leather and leather products 17 34 46 37 Footwear 1 4 5 38 Printing and publishing 1 2 3 39 Textiles 11 12 18 46 Processed food 9 9 13 49 Wood and wood products 7 15 24 62 Nonmetallic mineral products neca 2 6 10 70 Other chemical products 5 10 20 89 Professional equipment etc. 8 35 70 99 Other manufacturing 16 15 31 101 Metal products, excluding machinery 6 6 12 113 Plastic products 2 4 9 117 Glass and glass products 8 9 19 122 Beverages 2 6 13 122 Electrical machinery 4 8 19 139 Furniture 4 18 44 146 Motor vehicles, parts and accessories 5 9 24 168 Clothing, excluding footwear 4 6 18 182 Nonelectrical machinery 5 19 62 221 Rubber products 3 8 24 222 Radio, television, and communication apparatus 2 10 39 294 Petroleum and petroleum products 1 3 j 28 865 Source Calculated from information published by Statistics South Africa a nec not elsewhere classified '240f Standards and Trade in South Africa: Paving Pathways for Increased Market Access and Competitiveness ratio for the sector and for exports to be higher than vision manufacturing, and furniture was insuffi- production in any given year as diamond sales are cient to prevent a decline in the physical volume managed according to demand conditions.) of production. Growth in the volume of produc- The sectors relevant to this study are shown in tion benefited from higher export intensities with bold in Table 4.6. A common feature among them respect to agricultural production, the processing is that with the exception of the subsector "leather of food, and manufacture of textiles, plastic prod- and leather products," their export intensities were ucts, wood and products, and leather and leather relatively low in 1995. This is most clear for those products. subsectors that achieved high rates of increases be- tween 1995 and 2000. Import Intensity. The import intensities are the Furthermore, a comparison of the results of imports as a percentage of domestically produced Tables 4.5 and 4.6 indicates that the increase in goods (see Table 4.7). Except for the first four sec- export intensity for footwear manufacturing, bev- tors, the trend toward a more open economy is clear erages, rubber products, clothing, radio and tele- among all sectors. Table 4.7 Imports/Sales (percent) Change Sector 1990 1995 2000 (1994-2000) Paper and paper products 11 13 11 -12.2 Other mining 4 12 11 -6.7 Leather and leather products 29 32 31 -1.4 Industrial chemicals 39 46 46 -1.1 Basic iron and steel products 6 7 7 0.6 Electrical machinery 30 44 44 0.6 Other manufacturing 12 21 22 5.0 Wood and wood products 9 12 13 7.4 Printing and publishing 10 1 7 20 1 7.9 Beverages 4 3 4 19.5 Motor vehicles, parts and accessories 34 39 47 20.3 Processed food 5 8 10 20.5 Nonelectrical machinery 83 127 156 23.0 Textiles 22 26 32 25.9 Metal products, excluding machinery 9 10 13 37.0 Other chemical products 25 32 46 44.6 Agriculture 4 4 7 52.8 Plastic products 12 13 20 57.0 Glass and glass products 14 18 29 58.7 Coal mining 1 1 2 60.2 Professional equipment etc. 279 273 455 66.8 Nonferrous metal products 11 15 27 73.7 Rubber products 16 23 40 74.9 Nonmetallic mineral products nec 9 11 23 105.0 Clothing, excluding footwear 6 8 18 112.1 Other Transport Equipment 54 99 215 116.5 Radio, Television, and communication apparatus 52 137 332 141.8 Furniture 2 4 12 163.3 Footwear 10 20 63 219.1 Petroleum and petroleum products 2 1 7 415.9 Source Calculated from information published by Statistics South Africa 24! X Standards and Global Trade: A Voice for Africa Table 4.8 Aggregate Earnings on the Current Account Balance (percent) Heading | 1990 1992 2001 Merchandise exports 60.9 6 63.3 72.61 Gold earnings 24.8 21.5 9.2 Services and investment income 14.3 15.2 18.2 Total 100.0 100.0 100.0 Source: Quarterly Bulletin June 2002, South African Reserve Bank. In the sectors relevant to the study, the import economic isolation. As a consequence, a number of intensities of those sectors that historically exhib- sectors-some of which are relevant to this study- ited high import intensities did not rise signifi- experienced negative growth and others exhibited cantly (see Table 4.7, sectors relevant to the study positive growth over the past decade. are in bold). This is clear in the leather and leather Analysis of changes in import and export inten- products and electrical machinery sectors and to a sities showed that, with few exceptions, all sectors lesser extent in the textiles sector. However, the im- opened up internationally with rising import and port intensity in the radio, television, and com- export intensities. Many of the sectors relevant to munication equipment sector rose steeply from an this study opened to world markets from low ex- already high base. This can be related to the intro- port and import intensiveness, an indication of a duction of new technology, i.e., the introduction historically inward orientation. of mobile phones. Footwear manufacturing is ex- As the markets of sophisticated, developed coun- periencing a consistent increase in the import in- tries remain the main destination of exports and tensity, of as high as 63 percent of domestically pro- source of imports, the rising export and import in- duced sales in 2000. Imports are mainly sourced tensities of sectors imply that South African produc- from low-cost producers located in the Far East. ers had to improve the quality and standards of their The import intensity increased from a low base products for export penetration purposes and as a to ratios ranging between 4 and 13 percent in defense against imports at lower protection levels. 2000 for the wood and wood products, beverages, processed food, agriculture, and furniture sectors. These developments are the logical outcomes of Structure of Imports and Exports trade liberalization especially for an ecoiiomy that Foreign Exchange Earnings. South Africa has operated in isolation for a protracted period. three aggregate headings under which foreign ex- change earnings on the current account of the bal- Summary. Trade liberalization and globalization ance of payments are recorded. Table 4.8 shows were adopted as one of the important policy di- changes over the past decade. rections of the Past decade. Their impact on the The decline in the importance of the export growth of individual sectors can be expected to be of gold in total foreign exchange earnings is the different as the pattern of competitive advantages striking feature of the past decade. This is the re- and disadvantages evolve compared with a pre- sult of a low gold price and a decline in physical ceding period characterized by protection and production. Real growth in total exports was Table 4.9 Relative Shares of Expenditure (percent) Heading 1990 1994 2001 Merchandise imports 65.8 70.6 68.3 Services and investment payments 34.2 29.4 31.7 Total 100.0 100.0 100.0 Source: Quarterly Bulletin lune 2002, South African Reserve Bank. 242 Standards and Trade in South Africa: Paving Pathways for Increased Market Access and Competitiveness Table 4.10 Changing Composition of Merchandise Exports (percent) Heading 1990 1994 2000 Primary exports 58.5 59.1 20.0 Processed primary products 32.3 32.7 53.3 Manufactured products 9.2 1 7.2 26.7 Total 100.0 100.0 Source: Department of Finance 2002. 4.4 percent per year between 1990 and 2001. This exports. The exports of a number of sectors rele- is due to the expansion and diversification of vant to this study also showed significant gains in merchandise exports and services receipts. export, namely radio, television, communication and electrical machinery and apparatus, plastic and Disbursement of Foreign Exchange. The figures articles, wood and articles, and furniture. in Table 4.9 show that relative shares of expendi- The share of motor vehicles and parts sector is ture on merchandise imports and services receipts prominent among those that gained in exports. In this fluctuated with about two-thirds expended on sector, producers are required to comply with strict merchandise imports and one-third on services standards as laid down by the international original including investment-related payments. Invest- equipment manufacturers. South African producers ment-related payments became more prominent are successful in this.' The South African Bureau of after 1994. Standards (SABS), according to its ISO 9000 Regis- tration Scheme, facilitates standards and quality com- pliance. These standards are recognized intemation- ally by more than 70 countries and include The Overall Pattern of Change in the Export Structure. The overall trend in merchandise ex- * ISO 9001 Quality Systems: Model for quality as- ports is the move away from the export of primary surance in design, development, production, in- products to processed primary products and man- stallation, and servicing; ufactured exports (see Table 4.10). * ISO 9002 Quality Systems: Model for quality as- A major reason for the decline in the share of pri- surance in production, installation, and servicing; mary exports is the decline in gold production, re- * ISO 14001 Environmental Management; ferred to earlier, as well as the more rapid growth rate * QS 9000 Quality Management applicable to the in the export of processed primary products and mer- motor industry; and chandise exports. Except for gold, the trend in the * VDA 6.1 Quality Management applicable to the physical level of exports tended to remain positive for motor industry. the more important primary export products. Merchandise exports are shown in Annex F ex- Significant among the sectors that lost in export pressed as values and a percentage share of total share are the precious stones and metals sectors. exports, classified according to chapters of the Har- The decline in gold output contributed to the monized Code. Certain deductions on structural smaller share of the metals sector. changes in the export basket can be made with the Furthermore, a significant development over the help of this irnformation. past decade is that the sectors that gained in their export shares became more important in the export Important Shifts in Exports by Sector. Table 4.11 basket than those that lost their export share. summarizes changes in export shares by sector. Among the sectors that gained in export share, Primary and Processed Foods. Calculations from some benefited from interventionist policies Annex F show that the export of primary and especially motor vehicles and parts and aluminum processed foods rose consistently from 7 percent of See the "Automotive Sector" http://www.tisaglobal.com/auto/currentLdevelopment.asp 243 Standards and Global Trade: A Voice for Africa Table 4.11 Changes in Export Shares by Sector (percentage of total exports) Sector 1990 1995 20 [ Sectors That Gained Edible fruits and nuts 1.69 2.03 2.06 Wine and beverages 0.32 1.35 1.49 Mineral fuels substances and waxes 6.14 8.71 11.41 Inorganic chemicals etc 1.32 2.90 2.21 Organic chemicals 0.54 0.83 1.37 Plastics and articles 0.53 0.93 1.20 Wood and articles 0.52 0.86 1.15 Paper and paperboard 1.17 1.56 1.72 Aluminum and articles 0.91 0.83 3.19 Machinery 1.59 3.43 7.63 Radio, Television, and electrical machinery 0.64 1.43 2.36 Motor vehicles parts and machinery 1.09 2.66 7.66 Furniture and bedding 0.23 1.46 1.48 Subtotal 16.69 28.98 44.93 Sectors That Lost Pulp of wood, cellulose, or waste 1.37 2.18 1.18 Precious stones and metals 39.15 31.48 23.84 Iron and steel 8.66 9.57 7.86 Articles of iron and steel 1.44 1.34 1.20 Subtotal 50.62 I 44.57 34.08 Source. Calculated from information published by Statistics South Africa total exports in 1990 to 8.3 percent in 1995 and to of leather cover seats for motorcars. Exports of the 9 percent in 2001. Increased exports of wine, fish, latter are classified as part of the furniture sector. tobacco, and tobacco products and edible fruits and Exports of footwear increased from 0.03 percent nuts were mainly responsible for the rise in the share of total exports to 0.08 percent in 1995 before re- of primary and processed foods in total exports. ceding to 0.05 percent in 2001. Exports of textiles However, quite a number of products with a small lost ground in total exports, textiles' share declined share in total exports also improved their shares. A from 2 percent in 1990 to 1.7 percent in 1995 and loss in export shares was observed in the case of veg- to 1.4 percent in 2001. However, exports of cloth- etables, cereals, animal and vegetable fats and oils, ing and made-up textiles improved their share in waste from the food industries, and animal feeds. total exports from 0.24 percent in 1990 to 0.53 per- The share of total exports for a number of products cent in 1995 and to 0.85 percent in 2001. remained relatively stable over the past decade. Summary. The South African economy became Other Light Industries. Exports of leather re- more open over the past decade. Most of the sectors mained at 0.64 percent of total exports in 1990 and relevant to this study increased their share of total 2001 after having reached a high of 0.83 percent in exports but for many this happened from a very low 1995. Exports of leather goods increased from 0.01 base. The important exporters among these sectors percent of total exports in 1990 to 0.07 percent in are agriculture and processed food, wood and wood 1995 before fallingbackto 0.05 percent in 2001. This products, plastics and plastic products, and radio, sector is constrained by shortages in the supply of television, and communication equipment with the leather since South Africa became a leading supplier clothing exports among the textiles sector growing 2"I Standards and Trade in South Africa: Paving Pathways for Increased Market Access and Competitiveness Table 4.12 Selected Sectors' Share of Imports (percent) Sector ll 1990 1995 2001 Machinery 21.61 20.29 16.22 Mineral Fuels 0.52 8.63 14.80 Electrical machinery 8.28 I 10.68 11.66 Motor vehicles 11.74 11.71 6.38 Instrumentation including optical i 3.80 3.65 3.72 Aircraft 1 1.02 1.84 3.08 Total 58.12 56.80 55.86 Source: Annex F. in prominence. As a consequence, standards as an the decade (see high percentage of unclassified im- underlying facilitator of exports increased in ports in 1990 in Annex F), while high oil prices could prominence. have blown up the import share for 2001. Imports of electrical machinery and equipment rose due to the installation of information technol- The Structure of Merchandise Imports ogy services. The development program for the mo- Important Shifts in Imports. South African im- tor industry is affecting imports of motor vehicles. ports historically tended to be concentrated on a small number of sectors or products (see Table 4.12). Imports of Sectors Relevant to the Study. The Imports of products in six sectors constitute more share in total imports of these sectors changed as than 55 percent of total merchandise imports. The shown in Table 4.13 during the past decade. machinery sector lost in prominence of imports over A general pattern of gains in import share the past decade. This trend could be attributed to a emerged among sectors in the period up to 1995, low level of fixed investment in the economy that but receded again thereafter. Sectors whose share in should be reversed in the future. The share of im- imports rose consistently include footwear, furni- ports of mineral fuels rose significantly since 1990. ture, radio television communication. Sectors To some extent this can be ascribed to imports of oil whose share in imports declined include electrical becoming overt rather than covert in the course of machinery and textiles. Table 4.1 3 Percentage of Total Merchandise Imports (percent) Sector | 1990 1995 2001 Agriculture and processed food 5.38 7.32 4.61 Fish 0.17 0.13 0.13 Edible fruits and nuts 0.08 0.10 0.08 Beverages 0.54 0.41 0.37 Wood and products 0.69 0.70 0.51 Leather and leather products 0.61 0.61 0.55 Footwear 0.40 0.67 0.77 Textiles 4.54 3.67 3.08 Plastic products 2.95 3.13 2.67 Furniture 0.29 0.40 0.59 Radio, television, and electrical machinery 8.28 10.68 11.66 Total 23.14 27.18 24.44 Soure: Annex F. 245 Standards and Global Trade: A Voice for Africa Table 4.14 Destination of South African Exports (percentage share) Region Country 1990 1995 2001- Africa (excluding SADC) total 0.80 2.27 3.85 Eastern Europe total 0.28 0.44 0.45 Germany 4.35 4.55 7.49 United Kingdom 4.14 8.17 9.65 EU total 23.92 29.92 34.10 China 0.21 1.02 1.67 Japan 5.94 5.29 5.83 Far East total 13.58 14.66 13.80 Middle East total 3.83 4.86 6.45 United States 3.06 5.41 9.82 Northern America total 3.56 6.31 10.92 Oceania total 0.49 1.18 1.78 Other total 46.78 27.10 15.79 SADC total 5.72 11.26 11.09 South America total 0.95 1.90 1.76 Western Europe (excluding EU) total 0.09 J 0.11 0.02 Total 100.00 100.00 100.00 Source Annexes G and H Destination of Exports age of exports share per sector. The comments be- Total Exports. A summary of the destination of low are derived from the information in Annex G. South African imports is shown in Table 4.14. The Processed Food. The EU is the most important des- item "Others" constituted almost 50 percent of to- tination of processed food export but is declining tal exports in 1990 ("Others" includes unclassified in importance due to diversification of food exports items that were exported in the sanctions era). The to other markets. This also applies to SADC, which proportion of exports under this item decreased to became the second most important destination in 15.8 percent in 2001 (Classification of a high pro- 1995 but then lost ground by 2001, and to the Far portion of exports in this item in 1990 is a remnant East, previously the third most important destina- of the era of trade sanctions. "Other" also includes tion. Destinations that gained in their share of gold). However, some meaningful deductions can processed food exports are Africa (excluding be made for the period 1995-2001. SADC), the Middle East, North America (especially It is clear from the information that the share of the United States), and Oceania: however, these des- exports going to the traditional trading partners, the tinations had a relatively low "starting point" (that EU and United States, increased as well as exports is, they had previously received very few processed to Africa excluding Southern African Development food imports), so it is not surprising that, once Community (SADC), the Middle East and Oceania. sanctions were removed, they gained in their shares. Due to the growth in exports to the Far East, SADC, and South America having been less rapid than that Beverages. The share of beverages (wine) exports to other destmations, their share in total exports di- to the EU, North America, and Africa (excluding minished between 1995 and 2001. It is not clear if SADC) increased significantly. The export shares to standards issues played a role in this. China as a des- SADC, Far East, and Oceania decreased greatly. tination of exports increased in importance. Textiles. The proportion of exports destined for Destination of Exports of Sectors Relevant to SADC, North America, and Africa (excluding This Study. Data for 1990, 1995, and 2001 are SADC) increased significantly, while that destined shown in Annex G according to value and percent- for the Far East was reduced significantly and Standards and Trade in South Africa: Paving Pathways for Increased Market Access and Competitiveness marginally the proportion (37.6 percent of the to- The share of exports destined for SADC and South tal in 2001), that went to the EU. America diminished significantly. Leather and Leather Products. The proportion des- Radio, Television, and Communication. Gains in ex- tined for the EU is declining but still amounted to port share were made to Africa excluding SADC, 43 percent of the total in 2001. This also applies to the Far East, Middle East and Oceania. The export the Far East, the second largest market. A growing share of the EU remains significant at a reduced proportion of exports is going to the Americas. level as well as the export that of SADC. Footwear. The largest proportion of footwear ex- Furniture. The EU remains the single most important ports (53.8 percent in 2001) was to SADC. Gains destination at a stable level (about 83 percent of fur- were made to Africa excluding SADC, the Far East, niture exports). Export of leather covers for automo- Middle East, and Oceania. The share of exports to tive seats used in luxury German cars are important the EU diminished. for this sector. Gains in export share happened in the case of the Far East and North America. Loss in ex- Wood and Wood Products. Exports to the Far East port share to Africa, as well as SADC occurred. (mainly Japan) and North America increased, while that to the EU declined. Agriculture. The EU remains the most important destination for agricultural exports (52.2 percent in Plastic Products. SADC was the main destination 2001). Gains in export share are made to Africa ex- of exports while the export share going to the EU cluding SADC, North and South America, and shrunk. Gains to Africa (excluding SADC and Oceania. The percentage of exports going to the North America) occurred. Middle East is shrinking. Electrical Machinery. The EU became an important Origin of Imports destination for exports (43.3 percent in 2001) and there were gains in export share to Africa exclud- Total Imports. A summary of the origin of total ing SADC, the Middle East, and North America. imports is shown in Table 4.15. The EU remains the Table 4.15 Origin of South African Imports (percentage share) Region Country 1990 1995 2001 Africa (excluding SADC) total 0.23 1.10 1.33 Eastern Europe total 0.25 0.50 0.77 Germany 19.68 16.50 14.97 United Kingdom 11.78 11.07 8.43 EU total 48.71 47.82 43.00 China 0.77 1.90 4.22 Japan 9.83 10.17 6.82 Far East total 18.09 20.74 18.97 Middle East total 2.24 9.58 15.11 t- United States 11.43 11.89 11.98 Northern America total 12.65 13.14 1 3.04 Oceania total 0.98 1.84 3.01 Other total 1 3.53 1.04 0.89 SADC total 1.42 1.88 1.27 South America total 1.87 2.32 2.60 Western Europe (excluding EU) total 0.04 0.04 0.02 Total 100.00 100.00 100.00 Source Annexes G and H 247 Standards and Global Trade: A Voice for Africa most important source of imports but its share is Plastic Products. The EU continues to supply about marginally declining. The same can be said of the 50 percent of South African imports of plastic prod- Far East but to a lesser extent. However, China's ucts but its share is on the decline. The same ap- share of South African imports is growing. Many plies to imports from North America (15.6 percent are increasing their share from a low level, namely in 2001). The share of the Far East increased to 26.7 Africa excluding SADC, Eastern Europe, the Mid- percent in 2001 due to rising imports from China. dle East (possibly as the result of overt oil imports and higher priced oil in 2001), North America, Electrical Machinery. The share of the EU of South Oceania and South America. After an increase in its African imports of electrical machinery is on the share between 1990 and 1995, SADC lost ground in decline but still amounted to 54 percent in 2001. the period 1995-2001. The share of the Far East (that of China) is on the increase as is the share of North America in the Imports of Merchandise Relevant to This Study. period 1995-2001. Processed Food. South America and the EU are the main sources of processed food imported into Radio, Television, and Communication. The share South Africa, each with a share of about 25 percent. of the EU of South African imports (57 percent) in Oceania improved its share of South African im- 2001 is growing, while that from the Far East (27 ports, as have Eastern Europe and the Middle East, percent in 2001) is on decline (except for China). SADC and Africa excluding SADC. The Far East (an Imports from North America remain about 10 per- important supplier) lost its share of South African cent of the total. imports. Furniture. About 57 percent of furniture imports Beverages. Imports are predominantly from the are sourced from the EU and 23 percent from the EU (76.2 percent in 2001). North America is gain- Far East. North America lost import share as well ing in share as are a number of regions that have a as SADC between 1995 and 2001. small proportion in total imports. Agriculture. Imports of agricultural products tend Textiles. The Far East and the EU are the most im- to fluctuate severely upsetting the establishment of portant suppliers of textiles to South Africa but set patterns. From the information in Annex H, it their respective shares in total imports are on the is clear that the EU is losing its share of South decline. However, China is increasing its share rap- African imports. This seems to be true for imports idly and so is the Middle East. The share from SADC from the Far East and North America too. Import is also on the rise as well as imports from Africa gains are clear with respect to South America, Ocea- excluding SADC. nia, SADC and Africa excluding SADC. Leather and Leather Products. The EU, Far East, Multilateral and Bilateral Trade Agreements Middle East and South America are the most im- portant suppliers. Among them, the Far East (China) The multi- and bilateral trade agreements that are and South America are gaining in share. important to South Africa and those that came into existence over the past decade are dealt with below. Footwear. The Far East accounted for 88.6 percent of imports in 2001. Imports from China alone ac- World Trade Organisation. South Africa is a counted for 64.5 percent up from 14 percent in member of the World Trade Organisation (WTO) 1990. The share of footwear imports declined with and was a founding member of its predecessor, the respect to all other regions. General Agreement on Tariffs and Trade. As such, all relevant trade promotion activities and all ne- Wood and Wood Products. The EU and the Far East gotiations that South Africa undertakes fall within increased their significant shares of total South WTO rules. African imports of wood and wood products. The The tariffs that South Africa's trading partners ap- share of South Africa's imports held by the Middle ply to its exports are according to their Most East and North America declined. Favoured Nations' schedules. However, South Africa 248 "**==>This document did not complete OCR process. <==**"