Africa Foreign Investor Survey 2005 - unido

Figure 6.23
Share and value of local content in material inputs for main investor categories
46%
Percentage of local content
44%
42%
40%
38%
36%
34%
1981-1990
2001 and after
FE
1991-2000
South
Global
WOE
Local
Regional
L-TNC
JV
North
1980 and before
32%
30%
28%
0
S-TNC
50 100 150 200 250 300 350 400 450 500 550 600 650 700 750
Note: The bubble size indicates the number of companies in each group
Total expenditures on locally-sourced
materials of the respective group, in Millions of USD
cent of local content and TNCs 43 per cent; in textile,
FEs use 45 per cent of local content and TNCs only 26
per cent; in chemicals production, FEs use 30 per cent of
local content and TNCs 26 per cent; and in auto components
and machinery manufacture, FEs use 37 per cent
of local content and TNCs just 16 per cent.These findings
are also compatible with the thesis that TNCs do not
use as much local content as independent foreign ownermanaged
firms (FEs) do, if not conclusive, because of the
relatively small size of the samples.
Figure 6.24
Auto, Machinery & Equipm.
Non-Metalic Mineral prods.
Food, Beverages & Tobacco
Distribution of manufacturing firms according to
share of expenditures on local material and
subcontracting in total sales
Textile
Paper & Paper prods.
Basic Metals
Chemical, Plastic & Rubber
Publishing & Media
Garment, Apparel & Leather
Wood prods. & Furniture
Construction
31
6
8
11
10
Local expenditures
less than10% of total sales
between 10% and 50% of total sales
exceed 50% of total sales
11
51
10
14
5
20
0% 20% 40% 60% 80% 100%
Percentage of cases
3
40
7
10
4
14
41
2
6
5
5
4
5
3
4
19
Note: Numbers in columns represent
frequency for each category
1
2
1
7
1
Figure 6.23 again presents the percentage of locally
sourced material on the vertical scale and the total value
of local purchases on the horizontal scale.This time the
bubbles represent the main groupings. This diagram
highlights the main findings discussed above, namely,
that Northern firms on average use a higher percentage
of local content than firms with their origins in the South;
owner-managed FEs also use a higher percentage of local
content than subsidiaries of TNCs, but because they are
on average smaller firms, their aggregate expenditure on
local purchases is less than that of TNCs; and older firms
in general use more local content (annex table 6.7).
One way of expressing the economic linkage of manufacturing
firms to the domestic economy is in terms of total
expenditure on local content plus on subcontracting as a
percentage of sales (figures 6.24–6.25 and annex table 6.8).
Nearly half of the manufacturing firms spend less than 10
per cent of sales on local purchases. Just 13 per cent of firms
spend more than half of sales revenue on local content and
subcontracts. Amongst the broad groupings, the firms
established before 1981 have the highest proportion of
firms that spend more than 10 per cent of sales revenue on
subcontracts and materials. Similar to earlier observations
about percentage of local content, the most closely “linked”
subsectors are food, construction and wood products.Auto
components and machinery, mineral products and textile
producers are the least linked subsectors.
For the sample as a whole, an average of 22 per cent of
sales was spent on local expenditures (excluding wages).
The ordering of the subsectors with high levels of local
expenditures differs somewhat from the ranking obtained
by using the 10 per cent cut-off (figure 6.26, annex table
6.9 and annex figure 7). However, this can be mostly
explained as a consequence of the distribution of firms
according to expenditures. If the median value is used to
rank subsectors then, as expected, the food subsector is
88 Africa Foreign Investor Survey 2005