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SU ST A IN ABLE C O MMERC E C O N SU LT IN G
Southern Africa Services Exports
20th February 2008
TRALAC Conference, Cape Town
Dr. Nick Charalambides
SU ST A IN ABLE C O MMERC E C O N SU LT IN G
Context
ServicesLiberalisation
Export competitivenessAgic, Manufacture
ServicesExports
SU ST A IN ABLE C O MMERC E C O N SU LT IN G
Overview
• Where are there opportunities?
• What is happening at country level?
• What are the key drivers of services exports?
• Where is there most scope for “home grown” producers?
• What are the constraints for services exports?
SU ST A IN ABLE C O MMERC E C O N SU LT IN G
Global TrendsUS$ billions
0
500
1000
1500
2000
2500
3000
1996 2005
Travel
Transport
Commercial
SU ST A IN ABLE C O MMERC E C O N SU LT IN G
Computer related services ($ bn)
France
Netherlands
UK
USA
Germany (right axis)
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
1990 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
SU ST A IN ABLE C O MMERC E C O N SU LT IN G
Services exports: Botswana
0.0
5 000.0
10 000.0
15 000.0
20 000.0
25 000.0
30 000.0
35 000.0
Pu
la m
illio
n
Exports of services
Exports of goods
SU ST A IN ABLE C O MMERC E C O N SU LT IN G
Services exports: Mauritius
60.5%21.8%
11.9%
1.6%
1.5%
1.3%Travel
Transportation
Other business services
Communicationsservices
Computer andinformation services
Financial services
Construction services
Insurance services
Personal, cultural,
Health
Education
SU ST A IN ABLE C O MMERC E C O N SU LT IN G
Key drivers of exports?
• Characteristics of services: Often intangible– Brand and Reputation– Network of established customers
• FDI has been fundamental in many export success stories
SU ST A IN ABLE C O MMERC E C O N SU LT IN G
FDI and Services Exports
• E.g. of Mauritius the key exporting sectors of tourism, offshore banking and BPO, foreign firms account for 84%, 90%, and 80% respectively of total employment
• Botswana: In tourism, Of the 331 enterprises licensed and operating between March 1997 and February 2001, more than two thirds were foreign
SU ST A IN ABLE C O MMERC E C O N SU LT IN G
Opportunities for Home Grown?
• High technical content, low operational risk
• Regional Approach?– Education– Financial services– Construction (S.A. Madagascar)– Business services
• Niche? Where might the edge be?
TTTT SU ST A IN ABLE C O MMERC E C O N SU LT IN G
Mobile phone boom in Africa
Source : ITU, 2006
1998
120
80
40
0
Million users, from 1998 to 2005
Fixed phone
Internet
Mobile phone
2005
SU ST A IN ABLE C O MMERC E C O N SU LT IN G
M applications?
• The fortune at the bottom of the pyramid:– Wizzit, MPESA, Smartswitch– Trade @ Hand– Too often donor driven
• Tailor made content
SU ST A IN ABLE C O MMERC E C O N SU LT IN G
Constraints: Market Access
• Barriers vary greatly by sector, mode, by country• But OECD markets are generally open to CRS,
ITES (banking, accountancy, professional)– Challenges generally relate to second order issues
• Data protection (Domestic)• MRA• Visas (Business Travel Card)
• Regional: many constraints
SU ST A IN ABLE C O MMERC E C O N SU LT IN G
Constraints: Business
• Reputation and Profile
• Market information: 48% of Mauritian owned enterprises find market information a serious constraint; 23% for foreign owned. Services Export Help Desk
• Skilled labour
• Need for fast adaptation of regulation
SU ST A IN ABLE C O MMERC E C O N SU LT IN G
Constraint to Opportunity
• Regional centres of excellence
• Mutual recognition
• Regional labour market
• …Build and share expertise
SU ST A IN ABLE C O MMERC E C O N SU LT IN G
Liberalisation not sufficient
• High costs of business services
• But:– “We are at the “end of the road” (Namibia)– Sectors are already open but there is little
investment (Lesotho), – New entrants have not lowered prices by
much (Mozambique)
SU ST A IN ABLE C O MMERC E C O N SU LT IN G
Some challenges
• Why is Botswana, Swaziland not exporting advertising, BPO, legal services… to the most important hub of economic activity in southern African
• … which is one hour away by plane
• What opportunities are there in the region?
• Where is the edge for local entrepreneurs?