12
Economic Development in Africa Report 2015
period 2001–2004 to the period 2009–2012, the share of services in real output expanded in 45 countries. The expansion was most significant in Botswana, where the share of services in output over this period rose by 15.6 percentage points, from 50.3 to 65.9 per cent. The largest contraction was in Sierra Leone, a postconflict country where the share of services in output fell from 40.3 per cent during the period 2001–2004 to 34.1 per cent during the period 2009–2012. The second largest contraction was in Djibouti, a major services exporter, where the share of services in output fell from 81.5 per cent during the period 2001–2004 to 77.2 per cent during the period 2009–2012, mainly due to the postponement of planned foreign direct investment (FDI) and a reduction in port operations, upon which the country’s economy heavily depends. During the periods 2001–2004 and 2009–2012, of the 45 countries where the share of services in output rose, 30 experienced a contraction in manufacturing. Many African countries have undergone a process of shifting from agricultural to mainly non-tradable services, without undergoing a process of manufacturing development marked by significant productivity improvements, formal job creation, exports of sophisticated goods and the application of technology to the wider economy. Table 1 shows that during the periods 2001–2004 and 2009–2012, of the 45 countries where the share of services in output rose, 30 experienced a contraction in manufacturing. This suggests that the complementary elements between the two sectors have yet to be fully developed in some countries. The services sector in Africa has a critical role to play in the industrial and manufacturing development of African countries, as well as in boosting agricultural productivity. Africa needs to raise investment in infrastructure, encompassing a range of services subsectors, in order to achieve its development goals of structural transformation and economic diversification (UNCTAD, 2014a). Building complementarity, that is, strengthening input–output and demand linkages between services, manufacturing and agriculture remains a necessary continental goal. Africa’s services sector grew at more than twice the world average rate during the period 2009–2012. During the period 2009–2012, the services sector grew rapidly in real terms in Africa, at more than twice the world average rate (see table 2). Growth was particularly strong in Eastern and Western Africa.