WB: Africa’s Growth Set to Reach 5.2% in 2014
chinagate.cn, April 9, 2014 Adjust font size:
Trade in services is untapped
Africa’s Pulse notes that globalization of services is a potentially important source of growth for developing countries. Technology and outsourcing are enabling traditional services to overcome their old constraints such as physical and geographic proximity. Modern services, such as software development, call centers, and outsourced business processes, can be traded like value-added, manufactured products, enabling developing countries that focus on such services, innovation, and technology to leverage services as an important driver of growth.
Has Sub-Saharan Africa tapped this potential? At over $50 billion, the region’s services exports trail all other developing regions; however, it is expanding annually at about 12 percent, on average. Traditional services such as transportation and travel have declined from 73 percent of total services exports in 2005 to less than 64 percent in 2012, while modern services exports in the region have increased their share by nearly 10 percentage points from just over 26 percent of total services exports to about 36 percent over the same period.
In some countries such as Mauritius, Rwanda, and Tanzania, modern services exports recorded annual growth rates of over 10 percent between 2005 and 2012, with Rwanda starting from a low base of less than $40 million in services exported in 2005 to over twice that amount at almost $85 million by 2012. In both Mauritius and Rwanda, rapid expansion in modern services is a result of increased activity in tradable business and financial services. Over 60 percent of those employed in large companies in Mauritius work in the service sector, which offers more employment opportunities than either agriculture or manufacturing.
“While Mauritius, Rwanda, and Tanzania have experienced a rapid increase in modern services, others like Kenya are also emerging as places where modern services are becoming drivers of growth and development. This is exciting news for other African countries looking to expand into the globalized services business.” says PunamChuhan-Pole, Lead Economist of the World Bank’s Africa Region, and author of Africa’s Pulse.
