1. Presentation for Plenary Session 2: National-level Efforts toward Infrastructure Development and Sustainable Industrialization Edward Lorenz University of Nice and Member of University Côte d’Azur

2. Industrialization and development challenges in Africa • Participation in global value chains largely confined to upstream production (primary inputs) limiting scope for upgrading of indigenous firms • Shallow financial systems lacking the breadth to meet liquidity demand of a large share of enterprises • Weak and uneven development of infrastructure in transport, energy and communications • Need develop national education and training systems, increasing participation rates at the tertiary-level education and improving access of youth to high quality technical vocational education and training (TVET)

3. SMEs as sources of diversity and complementarity in industrialization • SMEs are a source of new ideas and they implement new products and services • They innovate by producing goods and services responding to unmet local needs, especially low income consumers. • SMEs are suppliers and subcontractors providing essential inputs and services for larger exporting firms • Successful SMEs grow and can gain a larger stake in the economy

4. SMEs and inclusive development • SMEs account for the majority of registered enterprises in Sub-Saharan Africa and for large share of new job creation over the last decade. • If the so-called ‘informal economy’ is included then the shares are substantially higher. • SMEs provide needed job opportunities for Africa’s youth in sectors as diverse as agro-industry, ICT, automotive components and chemicals and pharmaceuticals

5. Are SMEs innovative?

6. Problems of skills gaps

7. Constraints on SME development

8. Africalics project on innovation and competence building in micro and small enterprises • The project explores how micro and small firms (< 50 employees) in four African countries organise work and acquire the knowledge & competences needed to improve their innovation capabilities • A unique design with surveys carried out both with employers/owners and with their employees • A focus on how skills are developed both through formal training and though on-going work experience • Types of equipment and technology used • Explore the role of linkages with customers, suppliers and external support institutions

9. Research team

10. Countries and Sectors studied

11. Survey methodology

12. First results: employer responses • A large share of SMEs introduced significant changes to their products and processes over a 3-year period. Depending on the sector, between 45 and 70% • A large share engage in regular annual up-dating of their equipment and machinery. Over 50% introduced new or improved equipment or machinery over the last 3 years. • The most common methods of competency building referred to were in-house training, interactions with clients and informal knowledge sharing with collegues

13. First results: Employee responses

14. Constraints and challenges • Weak links to formal support organizations and institutions • Poor access to technical support and training providers: 68% of firms • Poor access to financial services: 82% of firms • Poor access to business planning services: 74% of firms • Lack of formal partnerships or alliances with other producers for joint technology development or marketing

15. Main policy conclusions • Best practice local system/cluster development policies could be used to good effect for SMEs • Platforms for joint development of common technologies that overcome disadvantages of small size and limited resources • Policies to link SMEs to universities and technical transfer institutes in knowledge-intensive business services (e.g. ICT, pharmaceuticals) • Policies to develop links between SMEs and upstream research institutes in agro-business

16. Main policy conclusions • Development of regional programs to support organization change and improve the provision of vocational and technical training in complex assembly industries (e.g. auto parts) • Incubators, accelerators and seed investment funds to promote start-ups and support young firms