URBAN FORUM GLOBALIZATION AND LINKS WITH URBANIZATION

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URBAN FORUMGLOBALIZATION AND LINKS WITH
URBANIZATION

• Local Economic Development and the Linkage with
  Globalization
• The Case of Yemen
• Yemen Port Cities Development Program (PCDP)
• Omar Razzaz
• December 12, 2002

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Local Economic Development and the Linkage with
Globalization

• Outline
• Rationale for LED National constraints/Local
  opportunities
• Operationalizing Local Economic Development Four
  Elements
• The Yemen Case Port Cities as the LINKAGE
  between Local and Global

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National Constraints/ Local Opportunities

• National Constraints
• The conventional model of public sector led
  growth is now obsolete (MNAs case)
• New Miracles are hard to come by FDI is
  elusive
• Creating employment opportunities for young
  entrants in the labor market is now the prime
  development concern (at least in MNA)
• Local Opportunities
• Much of the new job growth is occurring in small
  and medium enterprises, many of which are
  informal
• Role of local government significant for labor
  mobility, business environment, and quality of
  life
• Elected Councils provide important voice channel

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Operationalizing Local Economic Development

• Four Elements
• Strategic Need to fully consider locational
  issues, comparative advantage of cities, and
  regional and local linkages
• Programmatic coordinate policy and investment.
  Some short-term visible gains, but within
  long-term program, taking into consideration
  gestation of reforms, capacity building.
• Integrative Support Local Councils in their task
  to make allocation decisions and policy choices
  across sectors.
• Flexible but institutionally grounded Avoid
  upfront specification of all investments. Set up
  process and criteria for targeted intervention.
  Keep Elected Councils at the Locus, but open
  process to other stakeholders.

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1st Element Strategic Approach

• Strategic Location of Yemen
• Comparative Advantage of its Port Cities
• Aden Trans-shipment and Trade
• Hodeidah Agro-industry
• Mukalla Fisheries industry
• Within Port Cities
• Backward and forward linkages (potential,
  existing, and barriers) between ports,
  airports,free zones, light industry and
  commercial areas, formal and informal sectors.
• Economy oil dependent but oil quickly being
  depleting
• Rich trading culture
• Recently decentralized Government
• Water shortage in the dense highlands
• Poverty and unemployment high
• Security
• Weak legal and regulatory framework
• No FDI outside the oil sector

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The Port City of Aden
Regional Competitors
Jabal Ali

• 1.1 Million TEUs in 2001
• Operated by DPI
• 10 Transshipment
• Rates 148/20ft 220/40ft

Jeddah

• 149,000 TEUs in 2001
• Operated by DPI
• Possible Significant Future
• Expansion
• Serving Population of 6 Million
• Ship Rate 1,125/20ft

• High Efficiency Port
• Located at the external entrance
• to the Arab Gulf
• Transshipment Operations to
• Surrounding regional ports

Khor Fakkan
Aden
Salalah

• 1.19 Million TEUs in 2001
• Operated by SPS
• 90 Transshipment
• Rates 148/20ft 220/40ft
• Ship Rates 1,000/20ft
• 1,325/40ft

• 377,000 TEUs in 2001
• 80 Transshipment (Estimate)
• Rates 56/20ft 84/40ft
• Serving Population of 18 Million
• Ship Rates 1,300/20ft 2,550/40ft

Djibouti
Port Cities Development Program - Aden
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The Port City of Aden
City of Aden A Platform for Industrial
Production Serving National Export Markets
Port of Aden (PA) A Potential Regional
Transshipment Hub. 17 shipping lines 490,000 TEUs
in 2002
Aden Free Zone (AFZ) 1,550 Hectares dedicated
for warehousing, light industry and
marine servicing activities
Aden International Airport (AIA) Renovated
Expanded Modern Facility with direct service to
regional, European Asian destinations
Port Cities Development Program - Aden
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Existing and Potential LINKAGES
Airport
Aden Free Zone
Aden Container Terminal
Port of Aden
Bulk Cargo, Container, Passenger/cruse, small
Vessels
Fuel, Food Water Bunkering
Dry Dock
National Dockyards Company
City of Aden
City Based Suppliers of Products and
Services (Formal and Informal)
Port Cities Development Program - Aden
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The Port City of Aden
An Inhibitor to Adens Competitiveness - Business
Environment
Lease or Purchase of Land
Link to Infrastructure
Obtaining Tax Customs Exemptions
CUSTOMS Export Import Process
TAX Zaka
Banks
COMMERTIAL COURT
Smuggled Goods
Land Transport
License company registration Process
Product Quality Standards
OPERATION/PRODUCTION
LICENSING PROCESS/ SET-UP START-UP COMPANY/PLANT
EXPANTION
MARKETING/ EXPORT
Port Cities Development Program - Aden
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2nd Element A Programmatic Approach

• The PCDP goal is to enable Port Cities to become
  engines of economic growth and development for
  the country. The PCDP will assist Port Cities
  to
• develop a vision, a strategy and an action plan
  for local economic development
• improve the performance of key Government
  agencies which interface with the private sector
  at the local level (customs, business licensing
  and registration, industrial land, public
  services) and
• revitalize port city business districts/clusters
  that are key to growth and employment generation.
  

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2nd Element A Programmatic Approach (Cont.)

• TYPE APL
• Duration 12 Years
• Credit amount US97 million
• Phases
• Phase I Strategic development,improving
  public/private interface (local reforms), and
  small investments in Aden clusters.
• Phase II National reforms on Customs and Ports
  and strategic investments in national assets in
  three major port cities.
• Phase III Implementation of reforms, private
  sector involvement in ports, and program rollout
  to small tertiary ports.

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3nd Element Integrative Approach
Physical Infrastructure
Urban Management Municipal Finance
CDS To identify priorities
Local Economic Development
Public Agency Reforms
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4th Element Flexible but Institutionally Grounded

• Starting in Aden, with support from the Cities
  Alliance, the CDS focuses on broad participation
  and ownership of outcomes of the PCDP.
• For the first time, Local Council started to work
  with the stakeholders to outline the vision of
  the city, analyze prospects, elaborate Action
  Plan and identify priorities for implementation.

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4th Element Flexibility Focus on Process
CDS Workshops
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4th ElementFlexibility Three Funds with Criteria
Revitalization Investments
Strategic Studies/Plans
Public Business Processes
Selection Criteria
Selection Criteria
Selection Criteria
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CONCLUSIONS

• We have attempted to adapt our product to
  national and local concerns (employment), address
  cross-sectoral constraints, and allow for the
  gestation period needed for institution building.
• Cross sectoral approach is not without its risks.
• But if we are serious in our focus on outcomes
  rather than project inputs and outputs, then we
  seriously have to consider options which go
  beyond the typical single investment project.