(DTIS) Update, Volume 1 – Main report - Enhanced Integrated ...

A striking feature of Burundi’s services trade policy is its relatively high level of openness. A recentWorld Bank survey of applied trade policies in five services sectors - financial services (banking andinsurance), telecommunications, retail distribution, transport and professional services in over 80countries shows that Burundi’s overall restrictiveness index of applied services polices (explicit marketaccess and national treatment barriers plus selected discriminatory regulatory measures) is well belowthe EAC average (Figure 6.2). In fact, the results of the survey suggest that Burundi is completely openin telecommunication and retail services (Figure 6.3).KenyaTanzaniaUgandaFigure 6.2: Service traderestrictiveness index, Burundi andcomparatorsFigure 6.3: Breakdown of Burundi'sservices trade restrictiveness by typeof service403020100RwandaBurundi0 10 20 30 40Source: World Bank (2012), Services TradeRestrictions DatabaseSource: World Bank (2012), Services TradeRestrictions Database. Note: the sectoral scores areaverages across subsectors and modes of supply.Reducing or eliminating explicit trade barriers is only one part of the story. How can we reconcileBurundi’s poor services performance with its relatively liberal services trade policy? Such results clearlyshow that to improve the performance of services sectors trade reform needs to be integrated into anopen and transparent process of regulatory reform, in which decisions on the nature and pace of reformare informed by careful analysis and an understanding of good practices. For example, it is important toensure that the regulatory frameworks in place do not restrict directly or indirectly competition in servicemarkets and slow down their expansion in spite of the extensive liberalization measures. An equallyimportant problem is the absence of regulation, which can create a legal vacuum that actually constrainsbusiness growth and allows many opportunities for unfair competition and corruption.A key challenge of services reforms relate to the coordination of regulatory reform withliberalization. Indeed, coordinating regulatory reform with liberalization of trade in services is the mainrecurring challenge raised by Burundian officials in several services talks. Liberalizing services trade istypically more complex than liberalizing goods trade and can require considerable technical capacity.The ability to implement such a reform process is constrained by limited capacity within government andthe private sector.This chapter provides practical advice to the Government of Burundi regarding reform in twoservices sectors. These two sectors – financial and business (professional) services – were selected inconsultation with the Government of the Republic of Burundi. Both sectors are important for Burundi’sgrowth and export diversification, and are priority sectors in the EAC and COMESA servicesnegotiations. The analysis presents a diagnostics regarding the level of development and the availabilityof financial and professional services and services providers in Burundi. The analysis identifies whichpolicies explain the underdevelopment of financial and professional services in Burundi and the117 / 153