Lagos 9 July 2015 – Better leveraging of services trade in Africa could yield major employment and growth benefits, the UNCTAD Economic Development in Africa Report 2015 argues, while ongoing negotiations towards a continental free trade agreement offer a unique opportunity to align national and regional policies on services trade to that end.
The report, subtitled “Unlocking the Potential of Africa’s Services Trade for Growth and Development”, and officially launched in Lagos Nigeria, also argues that building continent-wide policy coherence in financial services would boost economic productivity and help reduce poverty.
“Africa must bridge the policy disconnect of services trade in order to unlock the sector’s potential for the continent’s growth and economic transformation,” UNCTAD Secretary-General Mukhisa Kituyi said. “Furthermore, the impact of a continent-wide free trade area will only be meaningful for Africa if services are opened up in parallel with trade in goods. This is because services, such as transport and storage services, are necessary components of trade in goods.”
The establishment of a continental free trade agreement, most recently on the agenda at an African Union summit in June 2015, is in itself a unique opportunity for African countries to align their existing national, regional and global policies on services trade, the report argues.
The report finds that many national development plans mention services trade as a vehicle for development but fail to link it to existing regional plans or regulation on services in the context of their regional economic communities.
For example, several countries such as Burkina Faso have become leading exporters of cultural services, and Kenya and Senegal of business process outsourcing, but these sectors are not integrated with the countries’ commitments made at the World Trade Organization.
Another major area identified by the report where African Governments need to make efforts in aligning the existing national, regional and multilateral regulatory frameworks is in the financial services sector.
The report argues, for example, that it is important for African countries to extensively examine how to align their domestic financial sector regulation with existing regional regulation, as some regional economic communities already have some protocols in place covering aspects of financial sector integration and/or investment at the regional level. This is the case of the Arab Maghreb Union, the East African Community, the Economic Community of West African States and the Southern African Development Community. These protocols envisage the free movement of capital in their respective subregions and will need to be adequately reflected in national policy and regulation so that financial market integration becomes a reality.
At national level, the report recommends that services trade be adequately mainstreamed into national development plans. This requires that a policy formulation exercise be informed by country-wide consultations with all the major stakeholders. At regional level, the report notes that greater coherence could be achieved if a pan-African mechanism is established to allow for the continuous consultation and coordination of a regional agenda and concerns relating to services trade that arise within the regional economic communities and the African Union.