The World Bank has said that services offer promising opportunities for Africa’s trade diversification, growth, job creation and poverty reduction.

But these potentials remain latent on account of regulatory hurdles, limitations to repatriation of earnings, high visa cost, work permits requirements and legal obstacles that providers face in materialising such flows.

Governments across Africa have been urged to focus on less explored areas such as informal trade in services and trade in more sophisticated but equally neglected sectors such as professional services, education and health services, and services related to mining that are rarely associated with services trade in Africa.

This is the content of a new World Bank Group report titled: From Hair Stylists and Teachers to Accountants and Doctors – The Unexplored Potential of Trade in Services in Africa that shed light on uncharted opportunities for services trade in Africa

The report stated that burgeoning services sector is fueling economic expansion in many African nations. Services contribute substantially to GDP, absorb a large proportion of youth employment, improve gender parity, and offer promising opportunities for export diversification

” Both formal and informal trade in services create an opportunity for growth and poverty reduction in Africa ” said Nora Dihel, Senior Economist in the World Bank’s Macroeconomics and Fiscal Management Global Practice.

According to firm-level surveys on professional services presented in the report, more than 16 percent of the interviewed accounting, architectural, engineering and legal firms in the Common Market for Eastern and Southern Africa (COMESA) countries are already engaged in exports, mainly to neighboring countries.

“This contradicts official statistics, which assert that professional services exports for several countries are negligible or nonexistent. Likewise, many hospitals in Sub-Saharan African countries are treating foreign patients and are using tele-medicine; yet official statistics often do not record such trade flows in medical services,” states the report.

It was stated that for example Tanzanian Maasai hair braiders are in high demand in Zambia, while Congolese, Kenyan, and Ugandan hairdressers are sought after by Tanzanian women from all walks of life, from the girl next door to the wife of the minister. All these hairdressers are crossing borders—usually helped by facilitators and fixers to provide their services in a foreign country.

The report however identified encouraged African government to propose concrete policy actions for integrating fragmented services markets in the continent.

It encouraged governments to address these challenges through creating concrete, sector-specific guidance to improving regulatory frameworks and minimizing restrictions to trade needed to deepen regional cooperation on trade in services in Africa.

It suggested strengthening data generation efforts on services trade flows, transaction costs and outcome indicators, monitoring services integration,  focusing on the impact of reforms on lowering trade costs, and putting informal and knowledge intensive services on the agenda of policy makers.

“Trade does not stop even when regulatory barriers that restrict exists, it only takes an informal route,” said Arti Grover, Senior Consultant Economist with the World Bank Group.

 

She added, “Nonetheless, the extent and volume of such trade is diminished. Without such burdensome regulations, the government, the suppliers and the consumers could all be better off.”