1. Easing Access to Global Markets: Trade Logistics Advisory Program Washington DC,April 6, 2011 Uma Subramanian Global Product Leader, Trade Logistics Investment Climate Advisory Services World Bank Group

2. THE WORLD BANK World Bank Group Multilateral Investment Guarantee Agency 2 What is the rationale for the Trade Logistics Advisory Program? Governments and private sector energized to improve trade logistics services Overarching rationale Globalization and the desire to be part of global networks Attracting private investment is a key objective for developing countries Faster, leaner & responsive supply chains that are essential for Improving export/trade performance Improved export competitiveness

3. THE WORLD BANK World Bank Group Multilateral Investment Guarantee Agency Doing Business 2010 – Trading Across Borders Very high trade transactions Low trade transactions High-medium trade transactions Time to trade: Selected African Countries

4. THE WORLD BANK World Bank Group Multilateral Investment Guarantee Agency 4 The Case of Rwanda: 69 days to import (2008 data) Documentation and Pre-arrival procedures 25 days SEA MOMBASSA PORT MOMBASSA PORT GATE MALABA (KENYAN BORDER) MALABA (UGANDAN BORDER) GATUNA (UGANDAN BORDER) RWANDAN BORDER DRY PORT (KIGALI) DRY PORT GATE 10 days 7 days 15 days 2 days 5 days 1 day 2 - 3 days Over 50% time accounted for by regulatory procedures Source: Trade Logistics project baseline 1 day

5. THE WORLD BANK World Bank Group Multilateral Investment Guarantee Agency Supply Chain Analysis of Pineapples Imported into St. Lucia 10% Producer Price Land Transport Ocean Transport + Port CR Port Miami Wholesale Consolidated Cost Other Costs Ocean Transport + Port SL Duties Land Transport & Handling Land Transport + Storage Retail Profits + Other Costs 90% 0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 1.8 2 Farm Gate (CR) CR FASOcean to Miami Miami PortMiami Warehouse Miami FOB Price Ocean to St. Lucia St. Lucia PortWholesaleDistributionRetail Price Costa Rica (CR) ------------> --------------> St. Lucia (SL) US$/lb 60% of the landed cost is due to transportation and logistics Source: Logistics, Transport and Food Prices in LAC (2009) and OECS Backward Linkages Study (2008) Farm Gate price Landed cost

6. THE WORLD BANK World Bank Group Multilateral Investment Guarantee Agency 6 At least 40%-60% of time to trade is due to ‘software’ HondurasPeruKenya Tanzania Rwanda Days% % % % % Documents processing1470%1253%134514581740 Customs clearance/ tech.control420%521%62141725 Port and terminal handling15%313%621417614 Inland transport15%313%414281740 Total20 23 29 24 42

7. THE WORLD BANK World Bank Group Multilateral Investment Guarantee Agency Source: Centro Logístico de Latinoamerica, Bogota, Colombia. Benchmarking 2007: Estado de la Logística en America Latina Anexo, María Rey LogisticSummit 2008 Domestic logistics costs: Disproportionate burden on small firms

8. THE WORLD BANK World Bank Group Multilateral Investment Guarantee Agency Reducing Transactions Time Has a Direct Impact on Trade A 10% reduction export time Increases Export of … by … Sub Saharan Africa6.1% South Asia5.8% East Europe & Central Asia5.0% Middle East & N. Africa4.1% East Asia and Pacific Islands4.1% Latin America and Caribbean3.5% OECD1.7% For Colombia this is equivalent to US $740 millions Source: Forthcoming research paper (Subramanian, Anderson and Lee (2011) Direct implications for growth, private investment, jobs and poverty reduction 8

9. THE WORLD BANK World Bank Group Multilateral Investment Guarantee Agency 9 What is the focus and business model? Identifies quick wins to jump-start deeper systemic reforms in response to client demands Explicit focus on investment climate with strong synergies with World Bank Group departments and potential IFC investments (cold chains, ports, etc.), trade finance and others Ties results to objective outcome measurements. Examples: time, cost, number of signatures, number of documents, percentage of containers inspected. Ex-ante articulation of feasibility vs. relevance matrix with framework to measure Cost- Benefit ratio Objective to assist countries improve access to markets through efficient, easy and accountable import and export procedures Focused and targeted areas of work: Simplification and harmonization of procedures including documentation Risk-based management systems for inspections Automation/ Single Window Systems for trade

10. THE WORLD BANK World Bank Group Multilateral Investment Guarantee Agency 10 Trade Logistics Advisory Program: Delivery Models Rapid Response Regional Solutions Catalyze reform momentum through quick wins and high level championship (1 year program) Regional framework combined with country level implementation Greater reach and cost-effective solutions S. Asia, Caribbean, S.E.Europe Full Fledged projects and Solutions to systemic issues (3-4 years) Colombia Systemic Reform

11. THE WORLD BANK World Bank Group Multilateral Investment Guarantee Agency Results: over 80 improvements since launch July 2007 11 10 CountriesImprovements Highlights Rwanda, Liberia Has become a core product of advisory services Partnering with over 7 agencies/departments Identified by IFC for global scale up Presence in 9-10 countries + 3 Regional. 12-15 countries in FY11. Corp. Performance Award First 2 pilots in post conflict countries with results Corp.Performance Award 2008 2009 2010 Rwanda, Liberia, Colombia, Burkina Faso, Sudan 32 Over 35 Rwanda, Liberia, Colombia, Burkina Faso, Sudan, Mali, Yemen, Honduras, Peru

12. THE WORLD BANK World Bank Group Multilateral Investment Guarantee Agency 22 improvements till Dec 2009: What do results mean in Liberia? 12 The growth and profitability of her business relies on the speed at which she can clear her imported goods through Monrovia’s Freeport. But in the past, Choko says, this process has not been easy. “Clearing customs used to be hard, it could take almost 3 months to get the goods from the container with lots of people asking for money for various things.” Liberia is a highly import oriented country, relying on the port of Monrovia, ‘Freeport’, to provide key commodities and staples. Yet the customs and excise system in use was rife with constraints and challenges and it could take months before businesses could take delivery of their containers. Cont… Choko Harris – Entrepreneur and Small Business Owner Choko Harris has been involved in a family business since she was a teenager. Encouraged by her mother to start a business in 1982, with $10 in her pocket she began selling palm oil off a table on the street. Today she owns two stores selling plastic goods and regularly visits China and Thailand to procure products while employing 9 members of her family. “Clearing customs used to be hard, it could take almost 3 months to get the goods from the container with lots of people asking for money for various things.” - Choko Harris

13. THE WORLD BANK World Bank Group Multilateral Investment Guarantee Agency 13  Quick response, quick wins helped generate reform momentum – we achieved 5 reforms in the first 8 months of the program  Strong political support at the highest level. The RICP Program had the President’s support in Rwanda.  Committed counterparts that have vision, credibility and mandate to bring multiple agencies together. The Rwanda Revenue Authority led an extremely reform minded Trade Logistics Working Group  Dynamic private sector pushing for change. Importers/Exporters, freight forwarders etc provided critical inputs into what they wanted to see improved.  Regular stakeholder dialogue ensured right priorities for action. Have had 2 workshops with a third scheduled in mid March. What Have We Learned in Rwanda? Partnership driven: Mobilize world class expertise from across WBG, international agencies (IMF, WCO) etc and the private sector to deliver solutions.

14. THE WORLD BANK World Bank Group Multilateral Investment Guarantee Agency 14  Effective public-private dialogue has allowed for greater momentum in the implementation of reforms. All parties feel part of the decision and implementation process.  Strong support from central and local government has made the implementation of changes easier. Clear communication at all levels of government keeps people informed in a transparent manner.  Government has requested broadening the initial scope of the program given the effectiveness of the program in demonstrating results. What have we learned in Colombia? Facilitate internal champions to support reforms: through strong communication among stakeholders at all levels

15. THE WORLD BANK World Bank Group Multilateral Investment Guarantee Agency Advisory Panel Project Delivery Team Core Team Provide Clients with World Class Expertise by… Leveraging partnerships and expertise both within and outside the World Bank group Core Product Development and delivery team -- includes staff from FIAS, IFC Facilities, DBRA team and the World Bank PRODUCT SUPPORT GROUP For Project Delivery a larger group includes:  Donors (Norway, Netherlands, DFID, Spain, SIDA, CIDA, SECO, Italy, Japan)  WBG (Doing Business, WB and IFC Facilities, WB trade, GICT, WB transport, IFC Investment and Advisory groups)  Development agencies (WCO, IMF, US Dep of Commerce)  Private sector experts drawn locally and globally An Advisory Panel of experts -- WBG internal as well as development / International agencies (donors, IMF,WCO) 15

16. THE WORLD BANK World Bank Group Multilateral Investment Guarantee Agency Metrics: Increases in exports/trade Cost savings to firms Increase in private investment Emphasis on Impact Evaluation- 16

17. THE WORLD BANK World Bank Group Multilateral Investment Guarantee Agency 17 Measuring Results in Colombia This includes: reduced inventory holdings (raw, intermediate, finished) in storage and reduced capital carrying charge in transit, and cargo loss/damage. Indirect benefits such as induced growth would add to this benefit well in excess of the estimates above. What does this reduction in time to trade mean for one Colombian firm? Even conservative partial estimates of direct cost savings to a medium sized firm with $150 million revenue is $3.5 million Inferred value for the industry: $28 million Source: Ongoing research (Subramanian (2010)) Estimates of direct cost savings to a fertilizer plant with $260 million revenue is $2.7 million

18. THE WORLD BANK World Bank Group Multilateral Investment Guarantee Agency Rapidly Expanding Reach… 18 Kenya, Colombia Liberia, Mali, Burkina Faso Rwanda Armenia Peru Caribbean (regional) S.E.Europe (regional) Yemen Honduras Zambia South Asia (regional) Malawi Mauritius

19. THE WORLD BANK World Bank Group Multilateral Investment Guarantee Agency Aligning with new corporate priorities: 19 Trade Logistics with Agribusiness/ Food security: Regional and national supply chains bridging gap between food production and food security by creating and linking growth nodes and markets. Streamlining NTBs and thus market access for key agribusiness produce in client countries Regional projects which aim to harmonize and rationalize trade supply chain activities across countries to maximize impact and reduce duplication. Benefits in particular will accrue to small poor economies whether landlocked (Rwanda in the EAC) or island nations (Caribbean region) where food imports are a large part of trade volumes.

20. THE WORLD BANK World Bank Group Multilateral Investment Guarantee Agency Aligning with new corporate priorities: 20 Trade Logistics with Climate Change: McKinsey study on climate change for India showed commercial vehicles were the largest contributor to carbon emissions. Exploring green supply chains- reduction of carbon footprint along the supply chain Conflict affected countries: First 2 pilots, Liberia & Rwanda. Continued engagement with other conflict affected countries.

21. THE WORLD BANK World Bank Group Multilateral Investment Guarantee Agency 21 Thank you!