2.2 Sectoral performance IV: Economic Report on Africa 2007
2.2 Sectoral performance IV: Economic Report on Africa 2007
The share of the services sector in Africa’s GDP in 2004 amounted to 49.0 per cent,
a slight decline on the previous year (table 2.7). The two potential drivers of growth
in the service sector are tourism and financial services, and these components are
discussed below.
The financial sector
While the financial sector is generally considered an important factor for growth, its
performance in the case of African countries has been less than satisfactory. Financial
systems remain largely underdeveloped both in terms of the size and range of financial
instruments and services offered. Most countries still do not have a functioning
capital market. Even where capital markets exist, they are very shallow and illiquid
(Ndikumana 2003). Except for South Africa, African capital markets are mainly
limited to equity markets with an underdeveloped bond market and virtually no
futures markets.
Despite the series of financial sector reforms that the countries have undertaken
since the 1980s, financial systems still exhibit substantial degrees of inefficiencies in
their functions of savings mobilization and allocations of resources into productive
activities (Senbet and Otchere 2006). It is worth noting that financial sector reforms
have resulted in a gradual move towards market-based interest rate determination
and curtailment of the government’s presence in the financial sector through privatization
of government-owned banks. While these are welcome developments, there
are many important challenges that African countries need to address to make the
financial sector a real engine of growth and employment creation.
One of the key manifestations of the inefficiency of financial systems in African
countries is the high interest rate spread, which is a symptom of lack of
competition and of inefficient management (resulting in high operating costs)
in the banking sector. In fact, contrary to expectations, interest rate spreads have
increased in the post-reform era (UNECA 2006b). Another important weakness
of financial systems in Africa is that credit allocation tends to be concentrated
into short-term and speculative activities. This is partly due to the lack of
stable long-term finance but also to the high risk aversion exhibited by banks.
The shortage of long-term lending constitutes an important constraint to private
investment expansion.
It is clear that African countries need to find ways of increasing access to finance
especially for the purpose of long-term investment for accelerated growth. This will
require achievement of higher levels of domestic savings mobilization and better
pooling of resources into long-term instruments. The development of a vibrant
bond market and creation and consolidation of long-term finance mechanisms such
as pension funds constitute key elements of a national strategy to deepen financial
systems in order to boost domestic investment and accelerate growth.
The tourism sector
Many developing countries now regard tourism as an important and integral part
of their economic development strategies. It is estimated that 808 million tourists
traveled world-wide in 2004 and generated about $682 billion. Africa received 41.3
million tourist arrivals, which represent only 5.1 per cent of global tourist trips. In
terms of receipts, Africa received 3.6 per cent (or $25.2 billion) of the $682 billion
world tourist receipts. Within Africa, the North Africa subregion registered the
highest market share of tourism activity on the continent in 2004 (38.2 per cent),
followed in descending order by Southern Africa (27.5 per cent), East Africa (22.7
per cent), West Africa (9.4 per cent) and Central Africa (2.2 per cent) (see tables
A2.3, A2.4 and A2.5).
In 2006, the top four countries in terms of tourism receipts are South Africa ($6.3
billion), Egypt ($6.1 billion), Morocco ($3.9 billion), and Tunisia ($1.9 billion).
The seven major destination countries with over a million arrivals in 2004 were
Egypt (7.7 million), South Africa (6.8 million), Tunisia (5.9 million), Morocco (5.4
million), Zimbabwe (1.8 million), Algeria (1.2 million) and Kenya (1.1 million).
Despite tourism’s growing importance as a source of foreign exchange earnings for
African countries, the industry remains underdeveloped mostly because of poor
tourism infrastructure (or weak capacity for accommodation), inadequate information
and marketing (measured by internet use) and high health risks (such as
malaria). Political and social instability also constitute major deterrents to tourism
in some African countries. In addition, the insufficiency of air transport between
Africa and the rest of the world and between African countries themselves continues to be a crucial constraint to tourism. Another key challenge faced is the negative
image of Africa portrayed by the media, often on the basis of exaggerated facts and
plain ignorance.
22 Sectoral performance IV Economic Report on Africa 2007 - To learn more about this author, visit United Nations Economic Commission for Africa's Website.
Like this article? Share it with your friends
The services sector
The share of the services sector in Africa’s GDP in 2004 amounted to 49.0 per cent,
a slight decline on the previous year (table 2.7). The two potential drivers of growth
in the service sector are tourism and financial services, and these components are
discussed below.
The financial sector
While the financial sector is generally considered an important factor for growth, its
performance in the case of African countries has been less than satisfactory. Financial
systems remain largely underdeveloped both in terms of the size and range of financial
instruments and services offered. Most countries still do not have a functioning
capital market. Even where capital markets exist, they are very shallow and illiquid
(Ndikumana 2003). Except for South Africa, African capital markets are mainly
limited to equity markets with an underdeveloped bond market and virtually no
futures markets.
Despite the series of financial sector reforms that the countries have undertaken
since the 1980s, financial systems still exhibit substantial degrees of inefficiencies in
their functions of savings mobilization and allocations of resources into productive
activities (Senbet and Otchere 2006). It is worth noting that financial sector reforms
have resulted in a gradual move towards market-based interest rate determination
and curtailment of the government’s presence in the financial sector through privatization
of government-owned banks. While these are welcome developments, there
are many important challenges that African countries need to address to make the
financial sector a real engine of growth and employment creation.
One of the key manifestations of the inefficiency of financial systems in African
countries is the high interest rate spread, which is a symptom of lack of
competition and of inefficient management (resulting in high operating costs)
in the banking sector. In fact, contrary to expectations, interest rate spreads have
increased in the post-reform era (UNECA 2006b). Another important weakness
of financial systems in Africa is that credit allocation tends to be concentrated
into short-term and speculative activities. This is partly due to the lack of
stable long-term finance but also to the high risk aversion exhibited by banks.
The shortage of long-term lending constitutes an important constraint to private
investment expansion.
It is clear that African countries need to find ways of increasing access to finance
especially for the purpose of long-term investment for accelerated growth. This will
require achievement of higher levels of domestic savings mobilization and better
pooling of resources into long-term instruments. The development of a vibrant
bond market and creation and consolidation of long-term finance mechanisms such
as pension funds constitute key elements of a national strategy to deepen financial
systems in order to boost domestic investment and accelerate growth.
The tourism sector
Many developing countries now regard tourism as an important and integral part
of their economic development strategies. It is estimated that 808 million tourists
traveled world-wide in 2004 and generated about $682 billion. Africa received 41.3
million tourist arrivals, which represent only 5.1 per cent of global tourist trips. In
terms of receipts, Africa received 3.6 per cent (or $25.2 billion) of the $682 billion
world tourist receipts. Within Africa, the North Africa subregion registered the
highest market share of tourism activity on the continent in 2004 (38.2 per cent),
followed in descending order by Southern Africa (27.5 per cent), East Africa (22.7
per cent), West Africa (9.4 per cent) and Central Africa (2.2 per cent) (see tables
A2.3, A2.4 and A2.5).
In 2006, the top four countries in terms of tourism receipts are South Africa ($6.3
billion), Egypt ($6.1 billion), Morocco ($3.9 billion), and Tunisia ($1.9 billion).
The seven major destination countries with over a million arrivals in 2004 were
Egypt (7.7 million), South Africa (6.8 million), Tunisia (5.9 million), Morocco (5.4
million), Zimbabwe (1.8 million), Algeria (1.2 million) and Kenya (1.1 million).
Despite tourism’s growing importance as a source of foreign exchange earnings for
African countries, the industry remains underdeveloped mostly because of poor
tourism infrastructure (or weak capacity for accommodation), inadequate information
and marketing (measured by internet use) and high health risks (such as
malaria). Political and social instability also constitute major deterrents to tourism
in some African countries. In addition, the insufficiency of air transport between
Africa and the rest of the world and between African countries themselves continues to be a crucial constraint to tourism. Another key challenge faced is the negative
image of Africa portrayed by the media, often on the basis of exaggerated facts and
plain ignorance.
22 Sectoral performance IV Economic Report on Africa 2007 - To learn more about this author, visit United Nations Economic Commission for Africa's Website.
Like this article? Share it with your friends
 | |
 |
No article feedback found. |
| |
Leave Your Feedback |
 | |
| |||
George LudwigGeorge Ludwig is a recognized authority on sales strategy and peak performance psychology. An international speaker, trainer, and corporate consultant, he helps clients like Johnson & Johnson, Abbott Laboratories, Northwestern Mutual, CIGNA, and numerous others improve sales force effectiveness and performance. Though it's George's strategies and processes that help corporations increase productivity and performance, it's his tremendous energy and dynamism that spark the transformation. Again and again, clients remark on his amazing ability to unleash human capacity and inspire men and women to break out of their comfort zones. The result is a whole new type of salesperson. His customized presentations teach achievers to make stunning advances in their lives. From helping salespeople realize cherished dreams to helping corporations exponentially accelerate revenue streams, George Ludwig leaves audiences and individuals empowered, emboldened, and clamoring for more. George is the best-selling author of Power Selling: Seven Strategies for Cracking the Sales Code and Wise Moves: 60 Quick Tips to Improve Your Position in Life & Business. - Visit George Ludwig's Website |
|||
Linda RichardsonLinda Richardson is the Founder and Executive Chairwoman of Richardson, a global sales training and performance improvement company. As a recognized leader in the industry, she has won the coveted Stevie Award for Lifetime Achievement in Sales Excellence and she was identified by Training Industry, Inc. as one of the “Top 20 Most Influential Training Professionals.” Ms. Richardson is credited with the movement to Consultative Selling and is the author of ten books on selling and sales management, including Sales Coaching — Making the Great Leap from Sales Manager to Sales Coach, and Stop Telling, Start Selling. She teaches sales and management at the Wharton Graduate School of the University of Pennsylvania and the Wharton Executive Development Center. Linda is a frequent speaker at industry and client conferences, has been published extensively in industry and training journals, and has been featured in numerous publications, including The Wall Street Journal, Forbes, Nation’s Business, Selling Power, Success, and The Conference Board Magazine. Learn more about Richardson's sales training and performance improvement solutions at http://www.richardson.com web - Visit Linda Richardson's Website |
|||
|
To learn more about the Evan Elite Author Program please contact us. | |||
 | |
|  |
Subscribe to United Nations's articles
 | |
|
|  |
 | |
|
| |
 | |||||||
|
 | ||
|
||
 |
||
 |
||
|
| ||
 |
| Have you written articles that would be of value to entrepreneurs? Become an expert on our site by publishing them! Expose yourself to a wide audience, drive more traffic to your website and get more sales! Click Here for details. |
|
|
 |
| Modeling the Masters: Learn the true secrets behind Walt Disney's business success factors & grow your company! Video produced by Phanta Media |
|
|
 |
"Learn straight from Evan how you can Make a Full Time Income (And More) from a Website"
Click Here To Learn More |
|
|
|
|
Get advice & tips from famous business owners, new articles by entrepreneur experts, my latest website updates, & special sneak peaks at what's to come!
|
|
|
 Challenges Of Change Fitness Sales Success Red Realestate CSS Template 4 QuickBooks Blunders Find & Keep Profitable Clients |
|
 | ||
 |
Top 50 Raising Capital Blogs
Top Blogs To Watch In 2008 | |
 |
Top 50 Political Blogs
Top Political Blogs of 2009 | |
| ||
 | ||||
| ||||
|
| ||||
| ||||
|
|
|
|
|
||||||||||||
|
Email us your ideas on how to make our website more valuable! Thank you Sharon from Toronto Salsa Lessons / Classes for your suggestions to make the newsletter look like the website and profile younger entrepreneurs like Jennifer Lopez and Sean Combs!
|
|
|
| ||||||||||
|
| ||||||||||
|
|
||||||||||