This document discusses trade and regulation of services in Africa. It notes that services are important for growth, employment, poverty reduction, and economic diversification through exports and foreign direct investment. However, African countries face barriers to accessing competitive services that limit their competitiveness. These include high costs for finance, transport, logistics, customs brokerage, distribution, and professional services due to issues like lack of access, transport cartels, and poor quality. The document discusses how opening services trade could help address these issues and support infrastructure investments, but that services trade remains a low priority in Africa. It outlines lessons that could be learned from successful services exporters and how to mainstream trade in services into development programs.

1. Learning event, Addis Ababa
June 5-6, 2013
Trade and Regulation of Services
in Africa

2. • Services matter for growth, employment and poverty
reduction
• Exports of services can drive diversification
• Imports of services and FDI can lead to more competition,
lower prices, higher quality and greater variety
– Access to competitive services matters for competitiveness!
Why services and trade in services in Africa?

3. …. Traditional exports undermined by lack of
access to services along the whole value chain
Lack of finance
limits access to
seeds and
fertilisers
Transport
cartels result
in high costs
Logistics and
customs
brokerage are
poor quality
and expensive
Distribution services
are not linking poor
producers to poor
consumers
Farmers typically receive less than
20% of consumer price
High cost
professional
services constrains
productivity
Communications
are key in linking
buyers to sellers

4. Competitive services matter for
returns to infrastructure investments
• Inefficiencies in port of Dar equivalent to a 22%
tax on container imports and 37% on energy
• Need to link infrastructure and regulatory
reforms of services
– Eg road building and removing transport cartels

5. But low profile in Africa for services trade
• How can we raise awareness about the services trade
potential of African countries?
– In clients/in the Bank/in other development agencies
• What are the main lessons that Africa could derive
from successful services exporters?
• How can we mainstream trade in services into our
country programs
• Need for better indicators!

6. A complex process
• Heterogeneity of services sectors
• Multiple modes of supply
• Nature of services barriers
Opening up to trade in services

7. Source: Stern et al (2012)
Scope of services covered in the General
Agreement on Trade in Services (GATS)
1. Business service
2. Communication
services
3. Construction services
4. Distribution services
5. Educational services
6. Environmental
services
7. Financial services
8. Health-related and social services
9.Tourism and travel-related services
10. Recreational, cultural, and
sporting services
11. Transport services
12. Other services not elsewhere
included

8. A synthetic view of modes of supply
Source: Manual on Trade in Services Statistics, 2012

9. Entry/Establishment Operations
Non-discriminatory Licensingprocedures Safety, quality,
environmental standards
prudential measures in
banking
Discriminatory Nationalityorresidency
requirements
Limitations on operations
applicabletoforeigners
Source: Stern et al (2012)
Explicit services barriers

10. Market failures Services sectors Policy action at the national level
Monopoly/
Oligopoly
Network services:
telecommunications; transport
(terminals and infrastructure),
environmental services (sewage)
and energy services (distribution
networks)
Developing procompetitive
Regulation to protect consumer
interests where competitive market
structures do not exist
Asymmetric
information
Intermediation and knowledge
based services: financial services,
professional services, etc.
Strengthening domestic regulation
to remedy market failure in an
economically efficient manner.
Externalities Transport, tourism, etc.
Social objectives:
Universal service
Transport, telecommunications,
financial, education, health
Devising economically efficient
means of achieving social
objectives in competitive markets.
Source: Mattoo and Sauve (2003)
Regulation and services

11. • Increased competitiveness and efficiency of the domestic
market provided by services liberalization
• Direct gains to consumers and user industries, but also
indirect impact on the overall competitiveness of economies
• Risks and potential costs given the need to regulate many
services sectors
Benefits and risks

12. • What are the economic opportunities generated by reform
and regional integration and the cost of maintaining the status
quo?
• What triggered regulatory changes in reforming countries?
Why were some industries reformed earlier and more deeply
than others? Why did politicians commit their capital to push
forward the reform?
• What can we learn from the experience of countries and
regions that have successfully engaged in reform and
cooperation?
Political economy of services reforms