Africa’s trade negotiators have in the past relegated services to the last stage in regional agreements despite the recent awakening that they are embedded.
The intrinsic interconnectedness is hard to extricate, say, when a car is sold with a financing scheme and maintenance contract. This way, services and goods are kindred spirits because they have to be traded together. But they are also distinct. Services are borderless and intangible, unlike goods.
At times, one has to travel to provide them (doctor) or consume (a tourist), resulting in a proximity burden— a need for physical contact. Other times, it is a simple click like downloading a music video.
Contrary to goods prone to levies or paperwork, services trade is mostly associated with “beyond” taxes at the border that are not black and white any more.
Rather, they are disguised as domestic competition policies, labour regulations, cultural cooperation, sanitary and phytosanitary (SPS) requirements, and so on.
In international trade terms, such domestic policies and regulations are referred to as “soft” factors of facilitating trade.
African countries have made remarkable strides in promoting services trade within the continent. South Africa waived visa requirements for Kenyan travellers this year for a maximum of 90 days annually.
Safaricom (a Kenyan listed company) launched in Ethiopia. Rwanda has recruited teachers from Zimbabwe to bridge the skills gap.
Specifically, under the African Continental Free Trade Area (AfCFTA), the push to negotiate trade in services simultaneously with goods trade is laudable. Under AfCFTA, 46 State and non-State parties submitted service offers in the five priority service sectors (transport, tourism, finance, communications and business).
Of the 46 members, the AU (African Union) Council adopted final schedules of service-specific commitments for 10 countries and a combined schedule for five EAC member countries.
Trading in goods – the blood brother of services — has begun under AfCFTA. So far, eight signatories (Rwanda, Ghana, Kenya, Tunisia, Cameroon, Egypt, Tanzania and Mauritius) commenced trade in 96 products, including processed meat products, batteries, ceramic tiles, sugar, and dried fruits.
These strides can be lengthened by lowering hurdles associated with discriminatory “soft factors” and eliminating red tapes associated with “hard” factors such as mobile subscriptions, internet access and broadband subscriptions.
Recent research titled “Intra-Africa trade in services and the AfCFTA” by researchers from the University of Nairobi and the International Livestock Research Institute (Ilri), has amplified the need to focus more on “hard” factors compared to “soft factors” for leap-frogging growth in services trade in Africa.
Simply put, it is a clarion call to develop digital, information, and communication infrastructure that extends internet coverage and mobile and broadband subscriptions.
Limited mobile penetration and internet access may be attributed to wanting last mile, road, rail, and air connectivity at both local and transboundary levels. It is praiseworthy that the Programme for Infrastructure Development in Africa (PIDA), an initiative of the African Union Commission (AUC) resulted in the connection of 17 countries with regional fibre optic cables; the construction of 16,066km of roads and 4,077km of railways across the continent; the establishment of 3,506km of transmission line capacity and 700 megawatts of new power generation.
However, much more can be done on domestic and inter-continental infrastructural development for the continent to be teeming with phygital — digital and physical experience for customers — services trade.
Disruptive technologies have taken the world by storm, especially after Covid-19 giving rise to distance learning and telemedicine.
Dr Majune and Judy Kaaria are researchers at the University of Nairobi. Evelyne Kihiu is a reseracher with the International Livestock Research Institute.
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