Services have emerged as the key driver of economic growth in southern Africa and account for more than half of GDP. Increases in the contribution of services to GDP have been stimulated by both demand and supply-side factors. On the demand side, broader economic growth, coupled with export revenues and a growing population, has contributed to the increasing importance of services in the economies of many countries in the region. On the supply side, countries have implemented measures to improve access to basic services, are attempting to improve the competitive environment of their services sectors, and, through their regional integration efforts, have improved transport and logistics services in the region. However, further supply-side efforts are required to ensure that economies in the region can take advantage of the opportunities offered by services and services trade.
Services can contribute to the achievement of sustainable development objectives, as articulated in the Sustainable Development Goals (SDGs), in a number of ways including, but not limited to, driving economic growth, increasing the competitiveness of SMEs, improving female participation in services sectors, and expanding access to vital basic and network services.
Services regulations can support the attainment of the SDGs in a two-track manner. Appropriate regulations which encourage efficiency and productivity can boost competitiveness and economic growth which, in turn, support the attainment of the more general SDGs such as SDG 1 (reducing poverty) and SDG 8 (decent work and economic growth). Secondly, tackling market failures in specific sectors and encouraging universal access targets for particular services can contribute to sustainable development objectives such as SDG 4 (quality and universal education) and SDG 7 (affordable energy).
Digital trade is the fastest growing and most dynamic sector in the global economy and has the potential to not only promote economic efficiencies and productivity gains, but also to support the achievement of sustainable development objectives in developing economies. This digital economic transformation, buttressed by the globalization of the internet, is significant for two primary reasons: cross border flows of digital goods are becoming increasingly important sources of exports in their own right and because digital products can and will be further utilized to support flows of physical goods. However, the regional and domestic regulatory environment in many regions and countries has been unable to match the sector’s pace of innovation, an area of vital importance given the regulatory-intensive nature of the sector, and remains underdeveloped.