Trade in services take roots in EAC
ARUSHA: TRADE in services is emerging as a key driver of economic transformation across the East African Community (EAC) bloc.
It now accounts for a growing share of the region’s Gross Domestic Product (GDP), employment and cross-border trade, according to Acting Executive Director of the East African Business Council (EABC), Mr Adrian Njau.
In a statement released over the weekend, Mr Njau noted that in 2022, the services sector contributed approximately 46 per cent to the GDP of EAC partner states, leading sectors include finance, tourism, transport, education, ICT and professional services.
He further said that services account for over 30 per cent of formal employment in the region and are increasingly tradable, representing about 24 per cent of intraEAC trade.
Mr Njau said that services are gaining prominence under global and continental frameworks such as the African Continental Free Trade Area (AfCFTA).
According to Mr Njau, an integrated services sector plays a pivotal role in driving economic growth, regional integration and development among EAC Partner States.
Despite its growing importance, he observed that trade in services still faces significant challenges, including regulatory fragmentation and market access constraints.
Overcoming these challenges, he said, requires a coordinated, evidence-based policy advocacy agenda that ensures the private sector’s voice is heard in shaping the regional services trade framework.
“To address these issues, the East African Business Council has developed a Regional Policy Advocacy Agenda on Trade in Services,” he said.
“This strategic tool is designed to enhance the private sector’s influence in policy and regulatory reforms, promote structured public-private dialogue and align both national and regional efforts to unlock the full potential of services trade within the EAC and beyond.” Mr Njau explained that the agenda was developed through a robust consultative process involving businesses, sector associations, regulators, trade negotiators and policymakers from all EAC partner states.
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It reflects the collective priorities and aspirations of the region’s services sector and offers a roadmap toward a competitive, harmonised, and integrated regional services market.
He also noted that as AfCFTA member states move forward with the Guided Trade Initiative which aims to boost services trade across Africa EAC countries are actively engaging in phase II negotiations.
These focus on liberalising additional services sectors, including construction and related engineering services, environmental services, health and social services, cultural and recreational services and other unspecified services.
Under the Common Market Protocol (CMP), which came into effect in 2010, EAC partner states committed to liberalise seven priority service sectors: business, communications, distribution, education, financial, tourism and travel and transport services.
“Liberalisation under the CMP followed a positive list approach,” he explained.
“This meant Partner States only committed to opening specific sub-sectors based on their national development priorities. As a result, different countries made varying commitments, leading to an incomplete liberalisation process and ongoing trade restrictions across the region.”
Mr Njau pointed out that although partner states agreed under the CMP to progressively eliminate restrictions and avoid introducing new ones, trade barriers remain widespread.
He said that the services sector’s potential as a strategic driver of competitiveness, economic growth and structural transformation can only be fully realised if partner states honour existing commitments, remove domestic regulatory hurdles and eliminate barriers that continue to fragment the market and increase transaction costs.
