For many countries in Africa, it’s not agriculture and manufacturing that’s driving growth as a share of GDP. It’s the services sector.
For decades the typical route out of poverty taken by countries entailed improving agriculture output before advancing manufacturing production. In Africa, agriculture’s share of GDP is declining and manufacturing growth is stalling. Meanwhile, services share of GDP and employment in several countries is increasing, says a new report released at the World Economic Forum on Africa.
The Africa Competitiveness Report 2015—co-written by the African Development Bank, The World Bank, the World Economic Forum and the OECD—says the role services are playing in many economies across Africa is leading to a new debate over the viability of services as a sector to drive long-term growth and improved productivity.
Mauritius, Senegal, Kenya and Cote d’Ivoire have capitalized on increased service export opportunities. The increase has been driven by government policies that have attracted companies engaged in service exports. The report authors say this has resulted in higher levels of service exports than most other countries at the same level of development.
However, services greater contribution to broader sustainable growth in Africa remains hampered by restrictive or poorly formed regulatory policies in many countries.
While Africa’s growth rate averaged around 5% for the past 15 years, many countries on the continent continue to rank low on the global competitiveness scale. The report maintains the continent needs to improve productivity to achieve even higher growth and create quality employment and that will require growth beyond services.
“More research needs to be done to better evaluate the complex roles that service exports play in African economies,” the report says.
photo credit: http://www.weforum.org/