UNIDO Director General LI Yong at the Second ISID Forum, Nov. 4-5, 2014. Credit: Courtesy of UNIDO

By Ramesh Jaura
VIENNA, Nov 6 2014 (IPS)

The United Nations Industrial Development Organisation (UNIDO) has come a long way since 1997, when it faced the risk of closure in the aftermath of the end of the Cold War.

At that time, it was threatened with the withdrawal of Canada, the United States – its largest donor – as well as Australia on the grounds that the private sector was better suited to foster industrial development than an inter-governmental organisation.

Nearly one-and-a-half year after UNIDO’s 53-member Industrial Development Board appointed LI Jong – who had served as China’s Vice-Minister of Finance since 2003 – as Director General, the organisation is set to respond to post-2015 global development priorities by treading the path to inclusive and sustainable industrial development (ISID).

“We have a vision of a just world where resources are optimised for the good of people. Inclusive and sustainable industrial development can drive success" – U.N. Secretary-General Ban Ki-moon
It was not surprising therefore that some 450 participants from 92 countries, including Heads of State and government, ministers, representatives of bilateral and multilateral development partners, agencies of the United Nations system, the private sector, non-governmental organisations and academia, joined hands to interact at UNIDO’s Second ISID Forum on Nov. 4 and 5 at the United Nations headquarters in Vienna.

The first Forum was convened in June 2014, at which government officials and key policy-makers exchanged views on policies and ISID instruments and examined what had worked in one country and could inspire another.

“The promotion of inclusive and sustainable industrial development is a very clear mandate given by our Member States at the General Conference of UNIDO in Lima, Peru, last December,” LI told the Forum on Nov, 4.

“Since then, we have been implementing the new mandate in various ways … Today we send a strong statement: technical assistance cannot remain isolated from the main forces that shape the course of progress in your countries. We have to combine our efforts to enhance the developmental impact of our endeavours. Together we will grow; the partnership will make us stronger.”

The rationale behind the UNIDO Director General’s thinking is obvious. Strategic partnerships are the best response to increasingly complex development challenges because there is no single development strategy and no single actor that can address all the social, environmental and economic challenges the world faces today.

“Integrated and multi-actor responses are required to tackle problems like climate change, economic recovery, rising youth unemployment, conflict, and emerging problems such as global health pandemics,” argues Ll.

U.N. Secretary-General Ban Ki-moon also believes that “the overarching imperative for our planet’s future is sustainable development.” In opening remarks to the Second Forum, Ban said:  “We have a vision of a just world where resources are optimised for the good of people. Inclusive and sustainable industrial development can drive success.”

Amid applause, Ban added that among the main area of action – climate change – presents an opening for inclusive and sustainable industrial development.

“Smart governments and investors are exploring innovative green technologies that can protect the environment and achieve economic growth. For industrial development to be sustainable it must abandon old models that pollute. Instead, we need sustainable approaches that help communities preserve their resources,” he said.

The UNIDO forum closely examined and endorsed new pilot programmes for country partnerships to promote inclusive and sustainable industrial development in Ethiopia and Senegal.

The programmes are based on close analysis and insights gained by UNIDO experts during visits to the two countries in the course of the previous months. They have identified a number of strong partners, both local and international, and accordingly designed the two partnership programmes.

From left to right: Ethiopia’s Prime Minister, U.N. Secretary-General Ban Ki-Moon, UNIDO Director General LI Yong and Senegal’s Prime Minister at UNIDO’s Second ISID Forum, Nov. 4-5, 2014. Credit: Courtesy of UNIDO

UNIDO’s work in the field of inclusive and sustainable industrialisation in Africa was lauded by Ethiopian Prime Minister Hailemariam Desalegn and Senegalese Prime Minister Mahammed Dionne.

Commending the creation of the new partnership approach, Prime Minister Desalegn said that inclusive and sustainable industrialisation would help his country develop. He said Ethiopia was looking forward to enhancing its economic transformation and that such a partnership model will help implement this vision.

Prime Minister Dionne said economic growth must lead to the eradication of poverty and address the problem of unemployment, adding that inclusive and sustainable industrialisation would help implement Senegal’s development plan by providing the collective action needed to make it happen.

Director General Ll assured the two prime ministers that “UNIDO is fully committed to supporting the governments of Ethiopia and Senegal in implementing the two programmes.”

“These pilot programmes,” he said, “mark the beginning of a larger, more comprehensive and ambitious approach to how UNIDO undertakes technical cooperation with and for Member States to support their industrialisation agenda.”

“If we want to achieve the scale of development needed, we have to explore the full potential of inclusive and sustainable industrial development,” Ll added.

“We have to strengthen productive capacities. We must build enterprises. We must reach out to farmers and entrepreneurs, and promote economic diversification and structural transformation based on adding value to the natural resources of these countries.”

The need for moving away from activities that are low value-added and low-productivity to activities that add more value and boost productivity was explained by the U.N. Secretary-General at the high-level thematic roundtable of the United Nations Conference on Landlocked Developing Countries (LLDCs) on Nov. 3 in Vienna.

There, Ban said: “Think of a coffee bean, just a simple coffee bean. All LLDCs can sell just a coffee bean as it is. But more developed creative countries … grind this coffee bean and sell as a manufactured product at a much higher price.

“The same with unprocessed minerals. Lots of developing countries … sell minerals just as they are. Many foreign companies come and bring all these minerals, and then they sell back with processed manufactures, [at a] much higher [price]. Then with their own mineral resources they have to buy, they have to pay a lot of money.”

ISID takes into account factors such as the structural and knowhow bottlenecks faced by developing countries by “the mobilisation of partners and their resources to synergise with UNIDO’s technical cooperation”, LI told the ISID Forum.

Commenting on the agreed cooperation with Ethiopia and Senegal, he said: “I would say that these two pilot programmes for country partnership mark the beginning of a larger, more comprehensive and more ambitious approach of how UNIDO undertakes technical cooperation with and for Member States to support their industrialisation agendas.”

“Together with our partners, we will finalise the planning of the partnership country programmes, based on the inputs we receive in this Forum.”

Those inputs included recognition that the concerns and development objectives of countries seeking international support must be taken into account and that there is no alternative to public-private partnerships.

These partnerships, participants agreed, must aim at eradication of poverty and not maximisation of the profits of the private corporations involved in such partnerships.

(Edited by Phil Harris)

With annual economic growth rates of over 10 percent and attractive investment conditions due to low infrastructural and labour costs, Ethiopia is eagerly trying to rise from the status of low-income to middle-income country in the next 10 years.

Ethiopia, with some 94 million inhabitants, is the second most populous country in Africa after Nigeria, but it remains a predominantly rural country. Only 17.5 percent of the population lives in urban areas, mainly Addis Ababa.

It is also one of the continent’s fastest growing economies. Between 2015 and 2018 growth is expected to average 7.3 percent, according to a recent study by the United Nations Industrial Development Organisation (UNIDO).

While economic growth since 2006/2007 doubled per capita income to 550 dollars in 2012/13, and the percentage of people living below the national poverty line dropped from 38.9 in 2004 to 29.6 in 2011, government sources admit that eradication of poverty remains a compelling issue.“There is not a single country in the world which has reached a high state of economic and social development without having developed an advanced industrialised sector” – UNIDO Director General Li Yong

The official target of rising to a middle-income country is considered to be realistic, but an East Asian diplomat accredited to the African Union in Addis Ababa says there is reason to be sceptical, partly because although the amount of foreign direct investment (FDI) rose from 0.5 percent in 2008 to 2 percent in 2013, investors continue to face trade constraints.

According to UNIDO, these are mainly related to border-logistics. Djibouti, the main import-export seaport used by Ethiopia, is situated 781 km from Addis Ababa, which makes the cost of land transportation a critical factor.

It is against this backdrop that UNIDO has chosen Ethiopia, along with Senegal, as a pilot country for its ambitious inclusive and sustainable industrial development (ISID) programme, which aims to achieve industrialisation in developing countries in order to eradicate poverty and create prosperity.

According to UNIDO Director General Li Yong, “there is not a single country in the world which has reached a high state of economic and social development without having developed an advanced industrialised sector”.

What distinguishes the ISID programme is that “current modes of industrialisation are neither fully inclusive nor properly sustainable”, he added. UNIDO is therefore not merely promoting industrialisation but trying to approach the needs and challenges of the globalised world that demand future-oriented concepts.

Promoting the sustainability that should be inherent to industrialisation, UNIDO says that the ISID programme takes into account environmental factors together with its partner countries and organisations.

It also fosters an industrialisation that is inclusive in sharing the benefits of the generated prosperity for all parties involved, thereby promoting social equality within populations as well as an equal distribution between men and women to ensure that nobody is excluded from the benefits of growth.

To show how these objectives can be met and to promote ISID, UNIDO organised the Second Forum on ISID from Nov. 4 to 5 in Vienna. In an opening statement, U.N. Secretary-General Ban Ki-moon said: “We have a vision of a just world where resources are optimised for the good of people. Inclusive and sustainable industrial development can drive success.”

The Secretary-General, who is a strong advocate of the sustainable development agenda, also said that in order to achieve this objective, “industrial development must abandon old models that pollute. Instead, we need sustainable approaches that help communities preserve their resources.”

Prime Minister Hailemariam Desalegn of Ethiopia and Prime Minister Mahammed Dionne of Senegal – representing the two pilot countries chosen for ISID – commended UNIDO for implementing a partnership programme, and Ethiopia’s State Minister of Industry, Mebrahtu Meles, emphasised that building industrial zones will accelerate industrialisation, as has been done by Asian countries such as China.

Forum participants expressed optimism about Ethiopia achieving economic growth through inclusive and industrial sustainable development provided that leadership and vision focused on the country’s comparative advantages while improving infrastructure.

They said that regional integration could be key for the development of the country, and called for further exploration of UNIDO’s role as a catalyst of transformational change.

In particular additional efforts were required to enhance the productivity in existing light industries such as agro-food processing, textiles and garments, leather and leather products. There was also a need to diversify by launching new industries such as heavy metal and chemicals and building up high-tech industries like packing, biotechnology, electronics, information and communications.

The ambassadors of China, Japan and Italy to Ethiopia – Xie Xiaoyan, Kazuhiro Suzuki and Giuseppe Mistretta respectively – as well as business stakeholders and development banks assured their continued support in helping Ethiopia take the path towards inclusive and sustainable industrial development, mainly through UNIDO.

(Edited by Phil Harris)