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    Raising Awareness of Services Export Potential

     

     
     
    © International Trade Centre, International Trade Forum - Issue 1/2005

    Photo: ITC/L. Schmid

    There are strong prospects for trade in services, particularly between developing countries. Over the past few years, ITC has refocused its activities in this sector to help countries take advantage of new opportunities.

    Services represent 40% of exports in many developing countries. In five years, this is expected to jump to 70%, with business and professional services representing the lion's share. Most of the opportunity lies in trade among developing countries. The surge of activities in this dynamic sector is due partly to technology, which has made it possible for many services to be marketed and traded online. There are opportunities even for very small firms. However, while service firms already contribute significantly to the domestic economy and may be well positioned to supply to foreigners, they rarely export. "Awareness is the key to unlocking the potential for trade in services," says Doreen Conrad, Chief of ITC's Trade in Services section. "Once people are informed, it releases their creativity and ideas. ITC's programme supports this."

    Regional partnerships



    As part of the programme, services experts from beneficiary countries join a network, ServiceExportNet, to share best practices, challenges, accomplishments and future needs. There are currently 16 countries in the network, which expands each year. 

    In December 2004, ITC hosted the second annual meeting of ServiceExportNet in Geneva. African experts stressed the importance of regional trade, and agreed that increasing public awareness of the services economy would benefit service exporters. 

    Mr Machila, of Zambia's Export Board, observed, "Zambia has eight neighbours - we viewed this as a liability but with the growth in trade in services, we now recognize it as an opportunity." He added, "Services such as logistics, finance and communications are important, because they help move agricultural products to the market for Zambia and the region." 

     Zambia has also attracted foreign students. Mr Machila noted, "Congolese people come to Zambia to learn English… and the Zambia Institute of Chartered Accountants has seen a lot of students within the region train as accountants." 

    "We have recently included service providers in our promotion activities to help them take advatange of, for example, engineering opportunities in neighbouring countries," said Mr Moloi of Botswana's Export Development and Investment Authority. He noted that constraints to expanding the sector abroad include limitations on corporate establishment, currency exchange restrictions and lack of recognitionof professional credentials. 

    Participants from Ghana and Tanzania reported that they are establishing services coalitions to boost the visibility of the sector, and other countries are interested. Several countries reported that for the time being, staff in trade promotion organizations were assigned responsibility for the service sector. Some are including services in export development strategies. Associations and educational institutes are delivering ITC training.

    Branching out



    Feedback from the network has spurred ITC to develop practical new initiatives. For example, it developed a tool that countries can use to initiate and sustain a services umbrella organization, or coalition of services. ITC is deeloping ways to reach out to women entrepreneurs in the services sector, after finding they were under-represented at training events. 

    ITC also expanded the scope of its activities to include the tourism sector. During a seminar at the London-based World Travel Market in November 2004, ITC introduced a process template for developing a tourism export development strategy. The process is currently being field-tested. 

    In December 2004, ITC and the World Association of Small and Medium Enterprises (WASME) jointly hosted a workshop on trade in services. Nearly 20 organizations from Africa, Asia, Europe and the Middle East took part in the four-day event. Participants learned about best practices and worked to develop strategies to promote trade in services, aimed at the public and private sectors.





     

    African services associations capitalize on networking meeting

    In January 2005, 77 service industry associations, representing a total of 77,700 companies from 11 countries (Botswana, Ghana, Kenya, Lesotho, Malawi, Namibia, South Africa, Swaziland, Tanzania, Uganda and Zambia), met at ITC's Bridges Across Borders regional networking event in Lusaka, Zambia. Dipak Patel, Zambia's Minister of Commerce, Trade and Industry, opened the meeting.

    One-to-one consultations between representatives of associations helped them to learn about service firms in other countries of the region with similar or different kinds of expertise.

    Participants sought to identify opportunities to "bundle" the services that potential foreign customers may require. This is because buyers are increasingly interested in packages of related services, such as a group of architectural, engineering, construction and design services for one project. By dealing with a single provider, rather than with individual firms, they can reduce adminstrative procedures.

    Associations also learnt about markets for services in the other countries, gaining precise information about regulatory frameworks, demand and "dos and don'ts" to adopt a more efficient strategy for entry into target markets.

    Their heightened awareness about both exporting opportunities and the importance of partnerships among the countries of the region led to immediate results. Two examples are a project of partnership between a Zambian contractor and a Malawian medical association to build and manage a hospital project in Zambia, and a proposal to form a coalition among trade promotion organizations from six participating countries. Presenters from Ghana, Kenya and Uganda also shared their country's best practices in the field of services.





    Ghana's service exports take off

    "Awareness is key," affirms Collins Boateng, Executive Secretary of Ghana's Export Promotion Council (GEPC). Until 2001, the organization had little knowledge about the export potential of the services sector. But Mr Boateng learned about export possibilities at ITC's Executive Forum and then asked GEPC staff to investigate. At about the same time, an ITC technical assistance project was helping trade support institutions throughout Ghana deliver training on services. Since then, hundreds of small firms have benefited, and a growing number of companies are exporting their services. In 2004, an inter-industry steering committee was appointed, which is working to establish an umbrella services coalition by March 2005. GEPC's medium-term export development strategy includes the service sector.

    For more information about ITC's programme for trade in services, contact Doreen Conrad atconrad@intracen.org

    Writer: Prema de Sousa

    Contributions: Doreen Conrad, Elisabeth Véquaud, Linda Schmid, Emmanuel Barreto, Natalie Domeisen, Dianna Rienstra.

    Editor's note: We will provide more in-depth information about trade in services, and ITC's work in this area, in issue 2/2005 of Forum.