Services work in Africa 30 March 2012 Lusaka

Pillar I - Analytical Work: - EPAs and services - Professional services in Eastern and Southern Africa - Distribution services in East Africa - Transport services -DTIS updates (Burundi, Zambia) Pillar II - Policy Dialogue: - Global Development Learning Network (GDLN) - Knowledge platforms (professional services, transport, education, health) Pillar III - Capacity Building to Implement Recommendations: National level : IDFs, TAs, new CASs, DPOs, DTISs Regional level: regional DPOs, TAs and knowledge platforms Pillar IV - Institutional Development : Strengthen the capacity of the institutions to: - coordinate and manage regional projects, and - put in place effective monitoring and evaluation mechanisms for regional projects. Framework to inform and guide Africa's services trade programs Cross-Cutting Themes – Connecting Regional and National Policies; Coordinating Hard and Soft Policies and Mechanisms; and Cross-Sector Work

Professional services knowledge platform Filling information gaps Collect and analyze data on: - Market structure - Trade flows - Prices, wages, productivity - Domestic regulation - Trade barriers - Education requirements - Immigration rules Addressing knowledge gaps - Provide information on regulatory experiences and regulatory impact assessments - Propose guidance on trade and regulatory reforms, including good practice - Facilitate networking and information exchanges, especially South-South exchanges Addressing political economy constraints - Translate knowledge into policy choices - Identify interests and preferences of various actors - Facilitate direct engagement of stakeholders - Provide platform for national and regional dialogues Challenge: integrating markets (expanding trade) while achieving regulatory objectives efficiently

Filling information gaps Business surveys - Users and providers of professional services (more than 2200 firms)Usersproviders Self-assessment and diagnostic: Regulatory frameworks - Regulatory surveys, Professional associations Regulatory frameworks Trade policy analysis – World Bank surveys, Ministries of Trade and Ministries of EAC in East Africa Trade policy analysis Cost and procedures to obtain professional qualifications – Interviews with students and professionals Cost and procedures to obtain professional qualifications

Example users - Professional services matter Higher labor productivity (sales/employees) is associated with greater usage of professional services in all East African countries, especially for small firms Productivity of Users and of Non-Users of Professional Services – Average across firms in East Africa

Example providers - Potential for regional services trade is significant Availability of professionals varies across countries and sectors

Example trade barriers - accountancy services Not permitted since commercial presence required to perform most accounting and auditing activities Mode 1 Foreign ownership restrictions: ownership by non-locally licensed professionals not allowed Restrictions on activities that can be performed by foreign accounting professionals Mode 3 Discretionary limits (labor market tests & econ. needs tests) for foreign-licensed accountants Mode 4

Example regulation - accounting services Entry Regulation No university degree, but specialized courses required National qualification examination required Compulsory membership in the professional association Scope of exclusive rights: 5 out of 13 activities Conduct Regulation Prices are regulated Advertising is prohibited Restrictions on business structure Restrictions on multidisciplinary practices

Example education – costs of access to professional education in East Africa Median costs are unaffordable for most due to liquidity constraints/ absence of loans even if internal rates of return and skill premia are high

Addressing knowledge gaps Information on trade and regulatory experiences, RIAs, good practices OECD principles on key market-oriented and trade-and-investment- friendly regulation APEC-OECD Integrated Checklist on Regulatory Reform EU Single Market ASEAN Mutual Recognition Arrangement frameworks on accountancy and engineering services Progress to date with professional services reform in Africa; remaining obstacles Formal/informal networking and information exchanges between national, regional and international stakeholders Professional associations & coalitions of services industries, negotiators & regulators, consumers, international organizations, etc. Professional associations & coalitions of services industries North-South and South-South networks

Example – Coalition of professional services sectors in East Africa Program initiated by the East African Business Council (EABC), supported by TradeMark East Africa (TMEA), to develop a platform where business membership organizations and the private sector engage with each other and leading regional public authorities on issues that relate to the regional integration of the professionals services sector First meeting in February 2012 to develop strategy and establish milestones and deliverables Partnership with the World Banks Professional Services Knowledge Platform for COMESA

Addressing political economy constraints Costs and opportunities generated by professional services reforms What are the economic opportunities generated by reform and regional integration and the cost of maintaining the status quo? Factors that explain the uneven progress with professional services reforms in the COMESA region Why were some sectors reformed earlier and more deeply than others?sectors What triggered regulatory changes in reforming countries? What explains the more rapid progress in certain sub regions in Sub- Saharan Africa? How can we advance the Tripartite process? How can we build on progress in the more advanced subset of countries? Lessons from other countries/regions What can we learn from the experience of countries and regions that have successfully engaged in reform and cooperation? Where did opposition and support come from?

Example – legal workshop in Nairobi, February 2012 Objectives: prepare the ground for COMESA to put in place a policy relating to free movement of lawyers, generate policy ideas from within the legal sector, provide decision makers with necessary background information, and obtain and gather wider support for change within the legal profession What policy options are there for obtaining freer movement? – Harmonisation; mutual recognition; other models (e.g. limited licensing and joint venture arrangements) Who would object to a profession led movement for freer movement of lawyers? What would be their objections? What would persuade them otherwise? (e.g. what people? What evidence? What potential or actual benefits?) What can participants do to engage others/create momentum behind the idea of a regional licence for legal practitioners?

How will the knowledge platform work? Mechanism that brings together regulatory expertise, trade policy makers, the private sectors, think tanks, universities and regional bodies Analytical work and advisory services disseminated through: – Online platform with transparent, easily searchable databases, and social networks; – Face-to-face and virtual interactions between practitioners, policymakers, think tanks, regional secretariats

Thank you! Nora Dihel Africa Region - Poverty Reduction and Economic Management Unit