Latest data from UN Conference on Trade and Development (Unctad) shows that the sector contributes half of the continent’s output, outpacing the manufacturing sector.

 

“Indeed, growth in services has been vibrant in Africa 4.6 per cent per annum — more than twice the average rate for the world during the period between 2009 and 2012. The sector’s performance has undoubtedly contributed to Africa’s growth trajectory of the past decade,” said Unctad in its latest report on economic development in Africa.

 

A number of African countries have already emerged as service-oriented economies, prompting Unctad to identify the sector, along with agriculture, as core to the continent’s growth agenda.

 

The services sector involves organisations, companies, and activities in an economy that provide services such as banking, wholesale and retail, transport and tourism; and a host of others, rather than manufacturing goods.

 

Studies done by the UN organisation show the services sector was the most important driver of growth in 30 out of 54 countries during 2009-2012 period, accounting for more than 50 per cent of real economic growth or, in other words, the rate at which a nation’s GDP grows from one year to another. The sector weathered the 2008-2009 global crisis by maintaining reasonable growth.

 

Unctad even concluded that the sector can play an important role in cushioning the continent from the effects of global economic shocks, “by sustaining domestic consumption and domestic output when exports are adversely affected by international crises.”

 

READ: Five ways to ignite intra-African trade in services to support growth

 

East Africa

 

The sector, for example, accounted for one-third of formal employment during 2009-2012, and the continent’s services exports and imports totalled $271 billion in 2012.

 

According to Marco Kamiya, an urban economist at UN Habitat, if the informal sector were included, the role of the service sector would be even greater.

 

This is because the informal sector, which is currently the leading source of employment in many countries, is predominantly service-based.

 

In fact, a survey done by the UN Economic Commission for Africa (Uneca) in selected African countries also confirmed services as one of the fastest growing sectors in the continent.

 

The survey showed Kenya as having the highest informal sector employment in East Africa outside agriculture, at 77.9 per cent of the total, which is higher than Rwanda’s 73.4 per cent, Uganda’s 59.2 and Tanzania’s 8.5 per cent.

 

“As Africa’s middle class continues to grow, and given the current population and urban trends, this sector is expected to expand even more,” said Mr Kamiya.

Source : www.theeastafrican.co.ke