1. ITTO INTERNATIONAL CONFERENCE ON PROMOTION OF INTRA-AFRICAN TRADE IN TIMBER AND TIMBER PRODUCTS Accra, 30 June – 2 July 2009 Key Issues for Development of the Intra-African Trade in Tropical Timber and Timber Products Markku Simula

2. Outline of the Presentation Market characteristics Competitiveness Trade barriers Main constraints Recommendations

3. Market Characteristics  Import patterns depend on the structure of local processing industry: overall trend in trade is towards further processed products  Importers are mainly specialized traders, few buyers large enough to justify direct purchasing  High mark-ups of intermediaries (up to 100%, average 30-50%)  Importance of informal trade : no level playing field  Markets are generally highly price sensitive, quality comes after; in primary products inferior grades dominate  Limited knowledge on African timbers and suppliers with few exceptions; no preference; importer perceptions suggest African products are of lower quality than alternatives

4. Competitiveness of African Suppliers  Suppliers’ perception : “we are competitive enough”  Small trade volumes suggest otherwise  Main competition coming from South-East Asia but also competition from US/European temperate hardwoods is important (mainly in Northern Africa)  In further processed products the quality of African products is inferior not meeting international standards  Limited information on species, products, potential uses, suppliers  Logistics and high cost of transportation by sea and road

5. Import Tariffs ProductECOWAS Nigeria SADC South Africa Logs50 Sawnwood200 Plywood2010 – 0 Builders’ woodwork 2015 – 0 Wooden furniture2020 - 13

6. Other Trade Barriers and Challenges  Export regulation  Import regulation  Quality standards and grading rules  Certification and legality

7. Main Constraints for Intra-regional Trade Development Lack of knowledge on regional markets Poor transportation links – high delivery costs Weak trade-supporting infrastructure (communication, other services Bureaucracy in documentation – high transaction costs Limited access to trade finance Competition from illegal/informal sector – uneven playing field Limited secondary processing capacity Low quality and design competitiveness Image and reputation of African suppliers Intense competition from outside the region (Asia, in the future Brazil)

8. Recommendations - ITTO 1. Support detailed market studies 2. Support research and publication of the properties of African timbers 3. Promotion of LUS 4. Promote trade from legal and sustainable sources 5. Support specialized fairs and exhibitions and other trade promotion 6. Support skills development and technology transfer 7.Specific market monitoring and other market intelligence 8.Strengthen statistical data on production, consumption and trade

9. Recommendations - Governments 1. Reduce trade barriers (incl. import duties, check points) 2. Strengthen customs cooperation 3. Support organization of trade promotion 4. Provide incentives for further processing 5. Reconsider forest sector taxes 6. Strengthen forest governance 7. Support private sector skills development 8. Improve communication and physical infrastructure 9. Improve currency systems

10. Recommendations – Forest Industry and Trade Organizations 1. Participate in fairs and exhibitions 2. Promotion of LUS 3. Promote domestic markets as testing ground for trade 4. Invest in retooling and value added production 5. Consider investment in imported raw materials production 6. Engage in production of legal and sustainable TTPs and certification 7. Develop networks and strengthen own national organizations 8. Build capacity in market intelligence 9. Improve quality control (sawing, kiln-drying, finishing, grading) 10. Improve reliability of deliveries and customer communication

11. Recommendations – Regional Organizations 1. Promote removal of trade barriers 2. Promote cooperation of customs authorities 3. Promote timber trade fairs and exhibitions 4. Organize meetings on strategies for intra-African trade development 5. Promote harmonization of national legislations 6. Promote trade in legal timber 7. Consider establishment of West African Forest Commission 8. Engage ECOWAS and WAMU in forest sector cooperation issues

12. Intra-African Trade in TTPs  A largely lost opportunity in the past  Stepping stone for the world markets  Needs a concerted effort by the private sector, the governments, regional organizations, ITTO and other international bodies  ”Accra Action Plan for the Development of Intra- African Trade in Tropical Timbe and Timber African Trade in Tropical Timbe and Timber Products” Products”

13. 13 Thank You markku.simula(a)ardot.fi