World Bank report urges Africa to diversify into export of services

BY BUSINESS REPORTER

 AFRICA will have to diversity its exports to services to spur faster economic growth, a new report by the World Bank says.

The report says African countries have been dependent on export of precious metals and other commodities.

“The continent must encourage more people to trade goods and professional services in accounting, law, education, and healthcare, among others,” states part of the report, posted on the bank’s website.

“The region’s young population also calls for significant numbers of new jobs, intensive trade, and growth.”

A senior official of the bank says that if the continent’s professionals would practice anywhere within the region, many benefits would accrue.

“Imagine the benefits of allowing African doctors, nurses, teacher, and engineers to practice anywhere in the continent, but responsibility for making this happen lies with countries,” says Marcelo Giugale, the bank’s Africa Director for Poverty Reduction and Economic Management.

 

The report titled, De-Fragmenting Africa: Deepening Regional Trade Integration in Goods and Services, diversification from goods to exporting services would enhance development.

The global bank called for liberalisation of the services sector, adding that it can be an effective mechanism for increasing competition.

Boost efficiency

“Competition is essential in order to increase efficiency in services sectors and lead to the achievement of lower priced and better quality services,” the report says.

“Competition pushes service suppliers to reduce waste, improve management, and cut operating costs.”

 

The bank, however, cautions that while the benefits of liberalising trade in services are compelling, it can bring risks and potential costs that may require appropriate government intervention.

“For example, when imports of services through commercial presence are liberalised, it is important that foreign entry leads to more competition and improved service, not merely to a transfer of ownership from a state monopoly to a private one or from a national monopoly to a foreign one,” says the report.