Aligning national and regional policies on services sector vital for employment and growth – UNCTAD Report

Jul 9, 2015

Ms Almaz Gebru, the UNDP Uganda Country Director, officiating at the country launch of UNCTAD's Economic Development in Africa Report 2015. Next to her (middle) is Mr Tony Muhumuza, National Economist, UNDP Uganda; and Mr Lindani Ndolvu, a trade expert formerly working with UNCTAD's Africa Division in Geneva (Photo: UNDP Uganda)

KAMPALA - Better leveraging of the services sector in Africa could yield major employment and growth benefits, 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. This is one of the major policy recommendation put forward by the Economic Development in Africa Report 2015 launched today Thursday July 9, by the United Nations Conference on Trade and Development (UNCTAD).

The report, subtitled “Unlocking the Potential of Africa’s Services Trade for Growth and Development”, 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.”

Presenting the report to the media in Kampala, Mr.Lindani Ndlovu, a Trade expert formerly working with UNCTAD's Africa division in Geneva, said it is an opportune time for Uganda and other African countries to position themselves to tap in to the growing services trade to achieve sustainable development. For instance, 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.  A good example is Burkina Faso, which has become leading exporter of cultural services, while Kenya and Senegal are doing well in business process outsourcing. However, these sectors are not integrated with the countries’ commitments made at the World Trade Organization.

The report also argues 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 sub regions 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.

“The report comes at a time when the country has launched its second National Development Plan (NDPII) which seeks to strengthen Uganda’s competitiveness to create wealth, and eliminate poverty, inequality and exclusion,” noted UNDP Uganda Country Director, Ms Almaz Gebru, decribing the report as vital in informing stakeholders on how the services sector can be revitalized to enable Uganda attain its national development goals articulated in Vision2040 which aims to transform the country to a middle income status in 30 years.

“Within Uganda’s development context, we need, in part, to think about policy options to improve and revitalize this sector by supporting diversification of trade services, and harnessing these to create not just jobs, but good jobs,” she emphasized.

UNDP Uganda National Economist, Mr Tony Muhumuza, further highlighted the potential of the services trade sector in Uganda, which has been growing at an average of 6 percent for the last five years. A good example he said, is Uganda’s strategic niche positioning as a premier destination for higher education within the East Africa region, while the telecommunications sector is equally growing steadily with the promotion of mobile money banking which is helping to facilitate commercial transactions of goods and services.

“The telecommunications companies are helping to integrate the urban and rural sectors which will greatly contribute to pushing the country on to the road to sustainable development,” he said.

Print copies of the report can be obtained from the United Nations Publications Sales and Marketing Office via email publications@un.org, while electronic versions are available on UNCTAD’s website – www.unctad.org

For more information on the report please contact:

Tony Muhumuza, National Economist, Strategy and Policy Unit, UNDP Uganda. Tel: +256 417 112100 Ext. 169. Cellphone: 0772289169. Email: tony.muhumuza@undp.org

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