Figures of the week: International trade in services

On May 28, the United Nations Conference on Trade and Development (UNCTAD) released a report detailing the growth in international trade in services in 2018. The report states that global services exports increased by 7.7 percent between 2017 and 2018, reaching a total of $5.8 trillion. As Figure 1 shows, Africa tied with Asia and Oceania for the highest growth rate in services exports, at 9.4 percent.

Figure 1: Annual growth rate of total services exports by region, 2018 (percentage)

Source: UNCTAD. 2019. “International Trade in Services 2018.”

Despite this impressive growth, the real value of Africa’s services exports remains low, accounting for only slightly over 2 percent of world services exports. As Figure 2 shows, world services trade is still dominated by developed economies in Europe and North America and by developing economies in Asia and Oceania. The composition of trade also differs by world region: The services sector in developed countries is dominated by financial, insurance, business, and intellectual property services, while African services exports are dominated by travel, which accounts for 42 percent of the continent’s total services exports.

Figure 2: Exports of services by region and service category, 2018 (billions of US$)

Source: UNCTAD. 2019. “International Trade in Services 2018.”

Within Africa, the extent and composition of services exports also varies by region, as shown in Figure 3. North Africa leads the continent in value of services exports, at over $50 billion, while Central (Middle) Africa’s services exports total less than $5 billion. Travel accounts for the highest share of services exports in every region except West Africa, where other services—mostly composed of financial, insurance, and business services—play a more prominent role.

Figure 3: Services exports in Africa by region and service category, 2018 (billions of US$)

Source: UNCTAD. 2019. “International Trade in Services 2018.”

The entering into force of the African Continental Free Trade Agreement (AfCFTA) on May 30, 2019 presents a significant opportunity for African countries to continue increasing their trade in services. African Union members have agreed on a January 2020 deadline to submit negotiated market access offers for five priority services sectors: transport, communications, financial services, tourism, and business services. It will be key for countries to pay attention to the importance of services as the AfCFTA negotiations continue, as services will play a leading role in intra-African integration and the future of continental trade.