This is a Digital Artifact for the online course - Trading for Development in the Age of Global Value Chains by World Bank Group to discuss the GVCs in the coffee industry in the East Africa region.

1. Promoting GVCs
in Coffee Industry
in East Africa
S e p t e m b e r 2 0 2 0

2. GVCs matter
for
development
R a i s e
p r o d u c t i v i t y
a n d i n c o m e
P r o v i d i n g t h a t
d e v e l o p i n g c o u n t r i e s
u n d e r t a k e d e e p e r
r e f o r m s
B o o s t
g r o w t h
C r e a t e
b e t t e r
j o b s
R e d u c e
p o v e r t y

3. There is no greater
weapon than a prepared
mind.
Words of Wisdom
Zhuge Liang
“ A g l o b a l v a l u e c h a i n ( G V C ) i s t h e
s e r i e s o f s t a g e s i n t h e p r o d u c t i o n o f
a p r o d u c t o r s e r v i c e f o r s a l e t o
c o n s u m e r s . E a c h s t a g e a d d s v a l u e ,
a n d a t l e a s t t w o s t a g e s a r e i n
d i f f e r e n t c o u n t r i e s “

4. C o f f e e
r o a s t i n g &
p a c k a g i n g
G r e e n
c o f f e e
p r o d u c t i o n
S a l e s &
m a r k e t i n g
Farming in east Africa
countries including
Burundi, Uganda,
Tanzania, Ethiopia,
Kenya and Rwanda
Create a roasted
coffee brand and a
export company in
Rwanda
Direct-sale the
packages to worldwide
on e-commerce
platforms

5. E a s t A f r i c a n c o u n t r i e s - t y p e s o f
p a r t i c i p a t i o n
 Limited manufacturing:
Ethiopia, Kenya, Tanzania
 High commodities: Uganda
 Limited commodities: Rwanda,
Burundi
Many countries in Africa still produce commodities for further processing in other
countries or engage in limited manufacturing

6.  Significant increase in participation in
agriculture and food industries -
suggesting that those countries have
been successfully developing food
processing industries
 In overall participation in agriculture
GVCs between 1990 and 2015,
Ethiopia, Ghana, Kenya, and
Rwanda in Africa stand out - they
increased their GVC participation by
almost 10% or more
 Although GVCs in the agriculture and
food sectors have expanded over the
past two decades, they remain a
small share of GVC trade
 Little of FDI flowing into Sub-Saharan
Africa (Ethiopia, Ghana, Tanzania
and Uganda)
E a s t A f r i c a n c o u n t r i e s –
p a r t i c i p a t i o n i n A g r i c u l t u r e a n d
a g r i f o o d

7. 98%
o f e m p l o y m e n t i n
a g r i c u l t u r e i s i n f o r m a l i n
A f r i c a n c o u n t r i e s
A g r i c u l t u r e G V C s a r e
c h a r a c t e r i z e d b y t h e p r e v a l e n c e
o f i n f o r m a l i t y , w h i c h h a s
i m p o r t a n t c o n s e q u e n c e s f o r
w o r k e r s ’ p o v e r t y a n d
v u l n e r a b i l i t y

8. COFF
T h e p a r t i c i p a t i o n o f s o m e e a s t
A f r i c a n c o u n t r i e s i n a g r i c u l t u r e a n d
f o o d G V C s i s l a r g e l y f o r w a r d b e c a u s e
i t i s l i m i t e d t o s u p p l y i n g o n e
s p e c i f i c p r o d u c t -
H Y P E R S P I C I F I C AT I O N

9. D e v e l o p i n g c o f f e e v a l u e c h a i n s
t h r o u g h s u b c o n t r a c t i n g m o d e l s
o r g a n i z e d b y t h e p r i v a t e s e c t o r
a c r o s s E a s t A f r i c a e n a b l e s c r e a t i n g
j o b s a n d e a r n i n g s o p p o r t u n i t i e s
f o r s m a l l h o l d e r f a r m e r s a n d w o m e n
i n p a c k i n g a n d d i s t r i b u t i o n

10. F I R S T A I D
G U I D E | 2 0 2 0
C a s e s t u d y - R w a n d a ’ s c o f f e e v a l u e
c h a i n
Rwanda adopted strategies to expand agriculture value added and increase
processing to raise returns to smallholder coffee farmers
In the late 1990s, as Rwanda looked to rebuild its economy and create jobs and earnings
opportunities after a civil war, it faced structural challenges to developing internationally
competitive tradables. For one thing, it is small and land- locked and in a poor and fragile
neighborhood. The coffee sector was historically the country’s main export crop and a major
source of earnings for up to half a million rural Rwandans. But at the end of the 1990s, fallout
from the civil war helped put the sector on the verge of collapse because of the low quantity
and quality of its product. To address this challenge, the country put in place a strategy,
completed in 2002, to raise production and move to a higher value- added position in the
coffee GVC. Working closely with the private sector and nongovernmental organizations, the
government introduced a two-pronged approach: (1) upgrade technology and increase
production and (2) boost skills and improve quality.
These interventions proved to be a critical turning point for the sector and spurred upgrading
along the coffee value chain. The upgrading was manifested in more skilled farming
techniques, better use of technologies, and higher productivity. During the first five years of
implementing the National Coffee Strategy, private investment in coffee washing stations grew
by an average of 120 percent a year in locations with the highest cherry availability (the fruit
that contains the coffee bean), water supplies, and road linkages. The total number of coffee
washing stations rose from just two in the entire country in 1998 to 299 as of early 2015.
Meanwhile, the higher-quality coffee began to merit higher prices, with Rwandan coffee now
fetching a premium in international markets. According to the U.S. Agency for International
Development (USAID), as a result of the reforms in the coffee GVC, approximately 50,000

11. GVC participation is
determined by
M a r k e t
s i z e
F a c t o r
e n d o w m e n t
I n s t i t u t i o n s
G e o g r a p h y

12. Example of
national
policy

13. Domestic
policies
I n v e s t i n h u m a n
c a p i t a l
C o n n e c t d o m e s t i c
S M E s w i t h l e a d
f i r m s
by supporting training and
capacity building while
providing information to lead
firms about supply
opportunities
U n b l o c k
c o n s t r a i n t s t o
G V C s
P o l i c i e s f o r
i n c l u s i o n a n d
v u l n e r a b i l i t y
Integrate smallholders

14. Addressing traditional trade barriers still matters for South–
South GVC trade.
The impact of deep agreements on GVC trade may be
heterogeneous across countries at different levels of
development. South–South GVCs tend to be impeded by
traditional barriers, such as high tariffs and long delays at the
border, more than GVC trade between North and South
economies.
H o w c a n i n t e r n a t i o n a l c o o p e r a t i o n
h e l p ?
H o w t h e A f r i c a n C o n t i n e n t a l F r e e
T r a d e A r e a ( A f C F T A ) c a n s u p p o r t
i n t e g r a t i o n i n t o G V C s ?
AfCFTA will likely boost trade and deepen regional integra-
tion in Africa, with positive effects on growth and poverty
reduction.

15. Technological
change
I n v e s t m e n t s i n d i g i t a l
t e c h n o l o g i e s m a y b e
e s p e c i a l l y b e n e f i c i a l f o r
d e v e l o p i n g c o u n t r i e s

16. D i g i t al mar ket p l aces ar e o n
t h e r i s e , f o s t e r i n g G V C
p a r t i c i p a t i o n a n d
co n cen t r at i o n
D ec lining
tr ade c os ts
Low er ing
logis tic s and
c oor dination
c os ts
s hor tening
c offee value
c hains and
r educ e the r ole
of
inter mediar ies
Platform firms and e-commerce generate uneven benefits across
firms and households. Platform firms facilitate participation but also
foster concentration, which affects the distribution of gains from
participation in GVCs

17. Conclusio
n
G V C s c a n c o n t i n u e t o b o o s t g r o w t h ,
c r e a t e b e t t e r j o b s , a n d r e d u c e p o v e r t y,
p r o v i d e d t h a t d e v e l o p i n g c o u n t r i e s
u n d e r t a k e d e e p e r r e f o r m s a n d i n d u s t r i a l
c o u n t r i e s p u r s u e o p e n , p r e d i c t a b l e
p o l i c i e s .
Te c h n o l o g i c a l c h a n g e i s l i k e l y t o b e
m o r e o f a b o o n t h a n a c u r s e f o r t r a d e
a n d G V C s .
T h e b e n e f i t s o f G V C p a r t i c i p a t i o n c a n
b e w i d e l y s h a r e d a n d s u s t a i n e d i f a l l
c o u n t r i e s e n h a n c e s o c i a l a n d

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