Importance of Services Sector and Profile of Trade in Services 

 

1). The Importance of the Service Sector in Namibia

 

Services sectors and the trade thereof are very important sectors for Namibia, as they are the fastest growing components of Gross Domestic Product (GDP) and foreign direct investment (FDI). Services form part of almost every activity in an economy. This is particularly true of what are often referred to as producer services such as transport, communications, finance, distribution and business services. According to the Namibia Statistics Agency (NSA), the services sector currently employs 62% of the workforce and contributes over 50% of the GDP hence critical in economic diversification, employment creation, and growth, of the country. Hospitality, wholesale and retail commerce, transportation, financial services, telecommunications, and tourism comprise notable sectors of the services sector.

 

Key Services Sectors:

 

1.    Financial and Banking: The financial services sector, particularly insurance and banking (fuelled by increases in both insurance premiums and banking activities) has experienced significant growth, which has facilitated investments and economic stability. This sector is essential for the support of small enterprises and the promotion of entrepreneurship, both of which are essential to the broader economy.

2.    Tourism as a Priority Sector: Namibia's natural attractions establish it as a prominent player in the global tourism industry. Despite the significant impact of the COVID-19 pandemic, tourism continues to be a significant source of income, contributing approximately 10% to the GDP. Ongoing recovery efforts are designed to restore the sector's substantial economic contribution.

3.    Restrictions in the Transport Sector: The transport sector has encountered challenges, particularly as a result of the liquidation of Air Namibia, which has resulted in a reduction in regional flights. This underscores the necessity of a more robust transportation infrastructure, despite its critical role in logistics.

4.    Telecommunications Expansion: The provision of extensive broadband services by MTC, Telecom Namibia and Paratus Namibia has significantly enhanced telecommunications, thereby promoting social and economic inclusivity throughout Namibia.

5.    In 2024, the retail and wholesale sectors also experienced recovery growth, which aided in the preservation of economic stability in the face of global economic challenges

Namibia’s National Trade Policy (2023-2030) highlights the importance of trade in services, including digital trade as the most dynamic part of global trade and an essential input into the production of goods and services, an avenue for export diversification, and a significant contributor to inclusive growth, job creation and poverty alleviation.

 

2. Trade in Services Dynamics

 

a. Services Trade Balance and Structure

Namibia's service imports and exports generally move in sync, showing signs of growth or decline at the same time.  Generally, Namibia is a net exporter of services. Over the past decade (2013-2022) exports of services were largely higher than its imports of services except for 2013, 2016, 2020 and 2022. 

Namibia's exports of services are concentrated in travel and transport services, which increased strongly in 2022 along with the recovery of tourism as pandemic-related restrictions were lifted. Exports of manufacturing services were significant, which are mainly for services rendered in converting copper ore into blister copper.

Imports of services are concentrated in transport services, maintenance and repair services, and telecommunications, computer and information services, which have grown strongly in recent years

 

 

	Table 3. Namibia’s Balance of Trade in Services (USD000 for 2013-2022)
Code	Service label	2013	2014	2015	2016	017	2018	2019	2020	2021	2022
S	All services	-153485	117789	197148	-152999	124663	158224	75338	-62761	-180291	71800
4	Travel	203431	402803	402259	151328	251305	323163	242039	46140	69969	183059
1	Toll Manufacturing services			111946	102224	132882	136896	120096	128604	100511	98562
3	Transport	-18744	-79377	-76372	-63856	-19615	-34285	-26712	47606	23491	77987
SOX	Commercial services	-134867	19608	159760	-131910	126342	174127	91404	-74501	-174537	64218
12	Government goods and services n.i.e.	-18618	98180	37388	-21088	-1680	-15903	-16066	11740	-5754	7583
7	Financial services	19307	23172	18137	23117	18519	22455	20091	12967	5794	4869
11	Cultural, and recreational services	526	1387	1535	2101	3626	4592	1419	-22969	6642	3435
5	Construction	-44565	-85653	-22855	-72578	-60591	-57657	-9534	11375	15464	2198
8	Intellectual property services	-6267	-5824	-6736	-2673	-2092	105	-1953	-3243	-3060	-7145
6	Insurance and pension services	-20139	-22135	-20599	-15269			-26643		-10715	-17816
9	Telecoms computer, and info services	-43755	-36895	-57412	-32155	-9711	-31873	-24672	-30203	-76906	-67826
10	Other business services	-271209	-292769	-205808	-220503	-176063	-159191	-207324	-159859	-167452	-76638
2	Maintenance and repair services n.i.e.		8639	15664	-3646	4738	-4102	4596	-93499	-138272	-136468

 

b) Namibia’s Exports of Services (USD’000 for 2013-2022)

Table 1. Namibia’s Exports of Services (USD’000 for 2013-2022)
Code	Service label	2013	2014	2015	2016	017	2018	2019	2020	2021	2022	% growth, 2013-22
S	All services	580525	999614	877886	535423	740155	761939	702138	684355	674116	925362	59%
SOX	Commercial services	527895	824798	785455	487181	696507	731428	671264	620126	624254	880127	67%
4	Travel	244088	452393	465058	223561	341068	379569	348583	118068	128498	276798	13%
3	Transport	138832	110717	83298	80011	115737	116242	108820	149583	154294	231519	67%
10	Other business services	13819	30813	27799	14305	7158	5476	4760	140917	141871	178989	1195%
1	Toll Manufacturing services			112189	102589	133330	137279	120514	129052	100996	99020
12	Government goods and services	52630	174815	92431	48243	43647	30511	30874	64229	49862	45236	-14%
2	Maintenance and repair services		52700	34080	16934	26121	30244	34321	34629	37663	42042
9	Telecoms, computer, info services	12842	25686	22229	15921	37323	17891	14382	13142	23374	23233	81%
5	Construction	19546	16036	14326	6019	4185	9101	9154	13076	16081	15152	-22%
7	Financial services	22589	24355	24331	24906	27268	29407	23899	17000	6719	6119	-73%
11	Cultural, and recreational services	870	2277	1793	2470	4002	4828	1766	2183	8288	4708	441%
8	Charges for the use IPR property.	677	2800	345	312	315	1390	588	2475	2294	1718	154%
6	Insurance and pension services	761	760	6	153			4476		4178	827	9%

Source ITC Trademap. Accesses on 24 October 2024

 

c) Namibia’s Imports of Services (USD’000 for 2013-2022)

 

Table 2. Namibia’s Imports of Services (USD’000 for 2013-2022)
Code	Service label	2013	2014	2015	2016	017	2018	2019	2020	2021	2022	% Growth 2013-22
S	All services	734010	881825	680738	688422	615492	603715	626800	747116	854407	853562	16%
SOX	Memo item: Commercial services	662762	805190	625695	619091	570165	557301	579860	694627	798791	815909	23%
10	Other business services	285028	323582	233607	234808	183221	164667	212084	300776	309323	255627	-10%
2	Maintenance and repair services n.i.e.		44061	18416	20580	21383	34346	29725	128128	175935	178510	#DIV/0!
3	Transport	157576	190094	159670	143867	135352	150527	135532	101977	130803	153532	-3%
4	Travel	40657	49590	62799	72233	89763	56406	106544	71928	58529	93739	131%
9	Telecommunications, computer, and information services	56597	62581	79641	48076	47034	49764	39054	43345	100280	91059	61%
12	Government goods and services n.i.e.	71248	76635	55043	69331	45327	46414	46940	52489	55616	37653	-47%
6	Insurance and pension services	20900	22895	20605	15422			31119		14893	18643	-11%
5	Construction	64111	101689	37181	78597	64776	66758	18688	1701	617	12954	-80%
8	Charges for the use of intellectual property n.i.e.	6944	8624	7081	2985	2407	1285	2541	5718	5354	8863	28%
11	Personal, cultural, and recreational services	344	890	258	369	376	236	347	25152	1646	1273	270%
7	Financial services	3282	1183	6194	1789	8749	6952	3808	4033	925	1250	-62%
1	Manufacturing services on physical inputs owned by others			243	365	448	383	418	448	485	458	#DIV/0!

Source ITC Trademap. Accesses on 23 October 2024

 

Namibia's Trade in Services Commitments under the World Trade Organisation (WTO)

 

Namibia has been a member of the WTO since 01 January 1995 and accepted the General Agreement on Trade in Services (GATS) upon its entry into force in 1995. Namibia has liberalised two service sectors under the GATS, which are Business Services (only services related to scientific and technical consulting services such as offshore oil and gas exploration) and Tourism (Hotels and Restaurants and Travel Agencies and Tour Operators Services). The tourism sector has been fully liberalised in all four modes of supply (cross-border supply, consumption abroad, commercial presence and presence of natural persons). These commitments were made beyond the current Government’s control although they can’t be revised at this juncture (These commitments were made before the current government took office and are not currently subject to revision.?)

 

Namibia Schedule of Specific Commitments in trade in services under the WTO General Agreement on Trade in Services can be found here

 

Namibia's Trade in Services Commitments under the AfCFTA

 

1. The AfCFTA Protocol on Trade in Services (Protocol) establishes the rules for liberalising trade in services between State Parties Trade in Services - AfCFTA. The Protocol aims to boost intra-African trade in services based on the four modes of supply:

   • cross-border supply,

   • consumption abroad

   • commercial presence, and

   • temporary movement of natural persons.

2. The Protocol entered into force on 30 May 2019. The Protocol liberalises services trade through market access commitments under Schedules of Specific Commitments, and regulatory frameworks for each sector.

3. The Protocol on Trade in Services outlines the mandate for the negotiations at the AfCFTA.

4. The first phase of the services negotiations is still ongoing and covers five priority services sectors: (i) business; (ii) communication; (iii) financial; (iv) tourism; and (v) transport. 

5. Currently, 48 initial and revised offers from both State and non-State Parties are being considered and the request/offer process is at a fairly advanced stage.

6. Namibia is negotiating trade in services commitments under AfCFTA independently (not as part SACU).

7. Namibia submitted its trade in services schedules, which were adopted by the African Union Authority in February 2023.

8. Namibia's final revised trade in services offer under the AfCFTA can be found here

9. For each country, the schedules of specific commitments outline the terms and conditions on market access, conditions to qualify for national treatment, undertaking additional commitments, and timeframes for implementation of such commitments in each service sector.

 

 

Namibia's Trade in Services Commitments under SADC

 

1. Namibia is part of the SADC Protocol on Trade in Services which entered into force on 13 January 2022, having been ratified by 11 out of the 16 members.

2. Under this protocol, members made sector-specific commitments and schedules using a positive list approach in four services sectors (communication, financial, tourism, and transport services).  

3. The schedules of specific commitments differ across SADC members states.

4. Trade in Services List of Commitments by Namibia can be found here

5. Horizontal commitments apply to, inter alia, measures affecting the entry and temporary stay of certain categories of natural persons and/or requirements related to the establishment of foreign-owned or joint venture companies.

6. Subsectors where Namibia has made specific commitments within SADC Protocol on Trade in Services Priority Sectors are communication, financial, tourism, and transport service.

	SADC Priority Services Sectors	Specific commitments	No specific commitments
1	Communication services		No
	Courier services		No
	Telecommunication services	Yes
	Audiovisual services		No
2	Financial services		No
	Insurance and insurance-related services	Yes
	Banking and other financial services	Yes
3	Tourism and related services		No
	Hotels and restaurants (including catering)	Yes
	Travel agencies and tour operators' services	Yes
	Tourist guide services		No
4	Transport services		No
	Air transport services	Yes
	Space transport		No
	Rail transport services		No
	Road transport services	Yes
	Pipeline transport		No
	Services auxiliary to all modes of transport	Yes

Note: This table indicates which service subsectors have specific commitments, and which do not. It does not cover the level of commitments taken (i.e. the extent of limitations on market access and national treatment).