Exporters in Africa: What Role for Trade Costs?

This paper investigates the role of trade costs in exporter dynamics in Africa. In comparison to exporters from other regions, African exporting firms are fewer, smaller and relatively less diversified in terms of products and destinations. African countries also display the highest rates of entry, exit and turnover of exporting firms, exporting products and export destinations. This suggests that Africa’s exporting activity is volatile and subject to a lot of experimentation, with exporters having difficulties in maintaining trade relationships. The analysis also confirms that trade costs are a crucial factor in explaining exporter performance in Africa vis-à-vis other regions, but also among African countries. Trade costs play a disproportionate role in affecting the size of new exporters and the survival of exporters in Africa in comparison to other regions. Also, trade costs differences across African countries are a relevant factor in explaining the lower market diversification of exporters from landlocked countries. A key implication is that the African Continental Free Trade Agreement can entail large benefits in the medium-term, especially in terms of export flows and destination markets. Yet, the diversification of export products will likely remain limited without strengthening productive capacities.

Purpose. This study aims to demonstrate the variables on which African nations depended to realise their desire to create an area of free trade. It also intends to investigate these countries’ constraints in establishing the area, which may stymie their efforts. Results. After thoroughly examining the Free Trade Area’s opportunities and limitations, the study came to the following findings: (1) the African countries’ long-term economic growth and social progress will be made possible by the African Continental Free Trade Area, whose very ambitious goals are based on Agenda 2063’s objectives; (2) African countries and the African Union aim to create a thriving free trade area based on several vital factors. One key factor is the potential to expand the African market, which could reach up to 1.2 billion people, providing abundant opportunities for intra-trade. Many African countries hope to boost neighbouring economies by reducing barriers and improving growth rates. Additionally, the continent's youthful population and wealth of natural resources can facilitate the development of various industries and the availability of diverse products for the continental market; (3) the countries in the continent have been facing long-standing issues that are not new to them. Firstly, trade constraints are seen as non-tariff barriers and high levels of informal trade, making it challenging to establish transparent, free trade zones. In addition, there are weaknesses in intra-regional trade structures and multiple regional agreements. Secondly, there are structural constraints that impede intra-African trade. A lack of manufacturing capabilities is one of these constraints, as most African countries generate income by exporting raw materials without converting them. Furthermore, the youth’s lack of education and skills makes structural transformation in African countries difficult. Furthermore, due to the size of the debt, the vast majority of revenues are directed towards debt repayment rather than investment. Thirdly, because of the social, political, and security constraints that poverty, food insecurity, and political and security instability represent in many African countries, solving these issues for those nations should take precedence over taking part in the free trade area implementation; (4) to sum up, even though there are several necessary components for creating a thriving trade area, they are not enough to overcome the multitude of obstacles and problems that many African nations face. These barriers will hinder the formation of a prosperous free trade zone that includes all African countries, which is essential for achieving overall continental growth that aligns with the region’s goals and Agenda 2063. Scientific novelty. The study explored the potential success of the African Continental Free Trade Area, examining the resources and strengths African countries possess to achieve their goals, as well as the challenges and risks they face. After weighing these factors, the study concluded that achieving the ambitious goals of the free trade zone will be difficult due to the many obstacles it faces. Practical value. The findings of this study hold immense value for African nations aspiring to forge lucrative commercial alliances under the Free Trade Area Agreement. Armed with the insights presented, these nations’ businesses are empowered to select politically and securely steadfast countries, economically and commercially varied nations, and those least burdened by social challenges, particularly poverty and food insecurity.

The paper examined the African Continental Free Trade Area with a view to assessing its potential economic benefits and challenges for regional economic integration. The paper adopted qualitative methodology and approach in obtaining relevant data towards achieving the objectives. Specifically, qualitative data were obtained from secondary sources such as books, journals, periodicals as well as official documents. It argues that the number of states accepting regional economic integration initiative such as the AfCFTA is one of the major features of globalization whose benefits have not been evenly distributed among nations. It argues further that the African Continental Free Trade Area (AfCFTA) presents a major opportunity for African countries to pull 30 million people out of extreme poverty and to raise the income level of 68 million others who live on less than $5.50 per day. The paper reveals that with the implementation of AfCFTA, trade facilitation measures that cut red tape and simplify customs procedures would drive $292 billion of the $450 billion in potential income gains. That is to say, that implementing AfCFTA would help usher in the kinds of deep reforms necessary to enhance long term growth in African countries. It further reveals that the African Continental Free Trade Area (AfCFTA) agreement is capable of creating the largest free trade area in the world measuring the number of countries participating in the agreement. It concludes that achieving economic prosperity by 2063 is such a long period, but African countries must adhere strictly to the principles and objectives of the agreement and avoid anything that will cut short the life span. The paper recommends that the African Union should as much as possible, ensure the protection of the key interests of participating member states by launching in-depth studies as well as mandating member states to commission nationwide enlightenment and sensitization programmes on the AfCFTA so as to give it regional acceptance. It recommends further that the key planners and players should focus implementation on security and terrorism, abide by the agreement of the AfCFA, avoid conflictual policies that may affect free trade especially domestic policies and ensure the availability of adequate transportation system such as road and rail networks.

The purpose of this research paper is to discuss the importance of trade facilitation in the successful implementation of the African Continental Free Trade Area (AfCFTA). The AfCFTA brings a great potential to African economies by creating a single market with the elimination of tariffs and non-tariffs barriers (‘NTBs’); providing a push for the development of industrial capacities; encouraging the emergence of continental value chains; contributing to promoting intra-African trade; creating jobs; and ensuring economic transformation and prosperity in Africa. However, this potential requires a trade environment featured with simplified and harmonized trade border procedures for the smooth movement of goods among African countries. The importance of trade facilitation for the successful implementation of the AfCFTA emerges from the fact that it will work as a panacea for intra-Africa trade ills of increasing trade costs arising from NTBs; inefficient transportation; weak logistics infrastructure; cumbersome regulatory procedures; lengthy customs processes; and incoherent business documentation, thereby placing Africa at a competitively disadvantaged position. The paper concludes that trade facilitation has a crucial role in maximizing the benefits of the AfCFTA. Furthermore, it recommends that the existence of wide productive capacity and diversified manufactured products that can be exchanged regionally, continentally and internationally through a flexible trade facilitation environment, should be supported to galvanize the outcomes of the AfCFTA. AfCFTA, Trade Facilitation, Boosting Intra-African trade, Empowered Private Sector, Industrialization, Sustainable Economic Growth, TBT, SPS, NTB

Relevance. In modern conditions, in the interaction of Russia with foreign partners, there are trends towards changing traditional global value chains and changing logistics directions. In this connection, Russia needs to address the issue of expanding trade cooperation with new partners and the formation of more sustainable value chains.The purpose is identifying and evaluating the main foreign trade indicators that affect the cooperation of Russia and its regions with the countries of the African Continental Free Trade Area.Objectives: to analyze the volume and structure of Russia's foreign trade turnover with the countries of the African Continental Free Trade Area; determine the conditions that can contribute to the expansion of Russia's partnership with the countries of the African Continental Free Trade Area; to propose directions for the development of foreign trade relations between the regions of Russia and the countries of the African Continental Free Trade Zone (on the example of the Kursk region).Methodology. The study is based on the statistical collection and analysis of information on the volume, structure and dynamics of foreign trade with the countries of the African Continental Free Trade Area.Results. The analysis of the main indicators characterizing the mutual foreign trade of Russia and its regions with the countries of the African Continental Free Trade Area has been carried out. The main trading partners among African countries and the conditions for expanding partnerships with them have been identified.Conclusions. It is concluded that the countries of the African continental free trade zone are the main market for certain types of domestic agricultural products of the extractive and manufacturing industries, and Russian enterprises receive the raw materials they need from African countries. At the same time, the expansion of Russia's trade relations with African countries will be facilitated by the conclusion of agreements on the creation of free trade zones, primarily with Egypt, as the main trading partner.

African Continental Free Trade Area provides easy access for commodity markets on the African continent that were previously hampered, easy market access also provides a great opportunity for commodities to experience a decline in availability that was previously not felt. there is an increase in Indonesian palm oil exports to African countries after the agreement of the African Continental Free Trade Area. This research look for how does the African Continental Free Trade Area affect Indonesia's palm oil exports to the African Continent. The method in this research is a qualitative research method. secondary data is used to find answers in this research, trade cooperation and regionalism used to explain the phenomenon, The influence of the African Continental Free Trade Area affects the export activities of Indonesian palm oil which results in an increase in the number of Indonesian palm oil exports to Africa. Good relations between Indonesia and countries on the African continent that have been established for a long time and Indonesia's ability as the largest producer of palm oil products in the world is the right reason for African countries to choose palm oil imports from Indonesia,.

The Chinese government has often been suspected of excessively intervening in the market. The reform of “Streamline Administration and Delegate Power, Improve Regulation, and Optimize Services” (RSDO) is a key initiative by the Chinese government to help enterprises improve their international competitive advantage through institutional reforms. Few studies have empirically tested the effects of RSDO on enterprises’ export diversification. Using the data of 2141 wood-processing enterprises (WPEs) in China in 2014, this study applies zero-truncated negative binomial regression and the Tobit model to evaluate the effects of prefecture-level RSDO on enterprises’ export product and market diversification. The results show that the RSDO can enhance WPEs’ export product diversification without significantly impacting export market diversification. Regarding specific indicators, the reforms of “Streamline Administration and Delegate Power” and “Improve Regulation” significantly positively affect export product and market diversification. In contrast, the optimization of government services shows no significant impact. Heterogeneity tests show that the RSDO promotes export diversification in wooden products and furniture manufacturing enterprises, smaller enterprises, domestic enterprises, and those with weaker operational capabilities. The impact mechanism shows that the RSDO aids sample enterprises in enhancing export product diversification by lowering operational costs and supports export market diversification by encouraging technological innovation.

With the further deepening of the international division of labor and the further extension of the global value chain, the diversification of export products from countries around the world has been further enhanced. "The impact of the initiative on the diversification of China's export products has important practical significance. Firstly, this paper introduces the Herfindal-Hirschman index (HHI) to measure the diversification of export products, and analyzes the current situation of the diversification of export products from countries along the Belt and Road to China based on the data from 2010 to 2019; Secondly, this paper matched CEPII data, United Nations data, World Bank WDI data and the data of the "Belt and Road" cooperation agreement signed with China to form the sample data of 63 countries from 2009 to 2019. Based on the pseudo-natural experiment framework, the dual difference model is used to test the relationship between the participation of countries along the Belt and Road Initiative and the diversification of their exports to China. The research perspective is focused on participating countries and non-participating countries, and a comparative analysis is conducted to explore whether joining the Belt and Road Initiative is conducive to improving the diversification level of export products from countries along the Belt and Road initiative to China compared with countries not participating in the Belt and Road Initiative; Finally, based on the qualitative analysis and empirical analysis above, this paper puts forward a series of countermeasures and suggestions, such as focusing on exporting domestic competitive products, reforming the exchange rate management system and promoting the development of cross-border e-commerce.

This essay assesses and evaluates the extent to which the African Growth and Opportunity Act (AGOA) increased imports from AGOA eligible countries to the United States from 2001 to 2015. The essay then examines how African countries can make the most of the preferences granted under AGOA, arguing that AGOA national utilization strategies have proven successful. In the final part, the essay explores options for future U.S.-Africa trade relations after the AGOA expires in 2025, proposing approaches that would best support African development. In this regard, this essay argues that, since Congress is unlikely to renew AGOA in its current form and since AGOA will likely be replaced with an arrangement requiring some degree of reciprocity, it will be very important for (1) the African Union's Continental Free Trade Area (CFTA) to be implemented before any new U.S.-Africa trading arrangement comes into force and (2) for negotiations for any future U.S.-Africa trading arrangement not to mimic the negotiations conducted for the Economic Partnership Agreements with the European Union.

The state-to-state nature of the dispute settlement mechanism (DSM) of the Agreement Establishing the African Continental Free Trade Area (AfCFTA) could serve as a barrier to ensuring dispute resolution under this regional trade agreement. African countries’ low participation in trade dispute resolution at the World Trade Organization (WTO) and within their own regional economic communities (RECs) indicates that these countries either do not have the capacity to resolve trade issues through contentious litigation or those types of dispute settlement mechanisms are not suited to their needs. However, it is important that the AfCFTA ecosystem provides effective and efficient dispute settlement options for the commercial operators that will seek to take advantage of the benefits of the trade agreement. The AfCFTA non-tariff barrier (NTB) Online Monitoring Mechanism is a welcomed addition to the options available to the private sector. However, AfCFTA State Parties must resolve the complaints lodged on that platform swiftly and adequately. In the absence of continental or regional dispute resolution options, it is foreseen that domestic courts will play a large role in adjudicating AfCFTA-related disputes. Therefore, the options that State Parties could avail to private parties include establishing or capacitating commercial courts and arbitration centres to effectively adjudicate AfCFTA-related disputes. Africa, AfCFTA, dispute settlement, DSU, state-to-state, private sector, direct access, domestic courts, arbitration

This study aims to draw key lessons for the African Continental Free Trade Area using evidence from within the region. Although drawing lessons from the rest of the world is essential, given the unique features of economies in the Africa region, the most relevant lessons can be drawn from the experiences of regional economic communities in the continent. The study draws on the eight regional economic communities that have been recognized by the African Union as pillars on which the continent will rely to implement the African Continental Free Trade Area. The study evaluates the trade creation and trade diversion impacts of each of the eight RECs and examines their performance with the goal of drawing lessons and identifying challenges for the success of the African Continental Free Trade Area. Despite significant heterogeneities, there is more trade creation than trade diversion and a generally positive impact on trade within the regional economic communities. Two regional economic communities in particular—the East African Community and the Southern African Development Community—outperform all the other regional economic communities in terms of boosting intra–regional economic community trade. This is mainly associated with the high level of investment in trade facilitation, the level of synergy between national and regional goals, the density of economic activity, and the advancement in the quantity and quality of regional infrastructure. There are also many challenges that policy makers should address to realize the objectives of the African Continental Free Trade Area and transform the continent. Learning from the regional economic communities is central. But, given the scope of the African Continental Free Trade Area, there is also a need to examine the transition from regional economic communities to the African Continental Free Trade Area, which is expected to be a sticky transition.

There is a rising of a new dawn in African trade. The trade pattern of this region is set to change by the introduction of the African Continental Free Trade Area. This legal trade agreement moved by the African Union seeks to increase Intra - African Trade by creating a single market and allowing a free flow of people and goods has been postulated to curb the abnormality of ascending trading figures among African countries with countries from other continents as compared to the abysmal figures of trade among African countries. This academic piece seeks to unveil the African Continental Free Trade Area by highlighting its constituents, major strengths, challenges, expected impact and what it means for the international trading community. This academic piece seeks to present a simplified introduction to this agreement. Keywords: Intra - Africa, Trade agreement, Single market and Sustainable development. DOI : 10.7176/JAAS/54-08 Publication date : April 30 th 2019

African countries have long recognised that regional integration is vital if Africa is to optimise its growth potential and boost its bargaining power in the global marketplace. This explains the proliferation of several Regional Trade Agreements (RTAs) across the continent culminating in the conclusion of the landmark African Continental Free Trade Area (AfCFTA). However, despite the concerted efforts to boost intra-trade among African countries, African borders remain ‘thick’ because of the continued existence of Non-Tariff Barriers (NTBs) that reverse gains made from initiatives of trade liberalisation. Accordingly, if the landmark Africa Continental Free Trade Area (AfCFTA) is to be successful, it must strive to address and eliminate Africa’s NTBs. It is argued in this paper that while the AfCFTA makes some important strides in reducing NTBs in intra-African trade, there are still some significant gaps in the AfCFTA’s provisions on NTBs that need to be addressed. Some of these gaps include: the lack of a comprehensive legal framework that adequately addresses all the categories of NTBs and the lack of clear guidelines on how to promote harmonisation among conflicting measures among RTAs. This article singles out and analyses provisions on NTBs under the AfCFTA with the aim of determining whether the AfCFTA addresses the challenges currently facing other RTAs in tackling NTBs. The author will identify shortcomings in the legal framework of the AfCFTA with the aim of making proposals to address them.

As a result of efforts toward a single market, African countries are moving forward on the African Continental Free Trade Area (AfCFTA) and preparing to become an integrated market from 2021. According to the World Bank (2020), the economic impact of the AfCFTA is prospected to reach nearly US$450 billion by 2035, which is a promising future for the 54 member countries. While the African Union targets 2035 to complete the AfCFTA, there are still several issues remaining for African countries to implement this trade agreement consistently. This opinion summarizes the potential problem of implementing the AfCFTA. First, even if regional economic groups such as ECOWAS, EAS, and SADC embrace intra-regional trade, the actual trade volume within the region is not that high as we may expect. It turns out that African countries could consider the value chain of raw materials to produce value-added goods for increasing RVC, which takes time. Second, the AfCFTA does not guarantee unconditional free trade between countries when the countries’ priority on protecting producers and trade liberalization conflict with each other. Third, sanitary and phytosanitary measures may push the barrier up of market access for small-scale producers, especially those who sell agricultural products. Lastly, transportation infrastructure in the African continent may be improved to connect country to country. Even if there are still challenges to achieve an economically integrated continent, the AfCFTA may certainly increase intra-continent export volume and contribute to income growth, poverty eradication, and development. It is time to carefully review the potential problems and conflicts for the brighter future of the AfCFTA.

The signing of the agreement that established the African Continental Free Trade Area (AfCFTA) in the year 2019 is believed to be an African-based growth strategy that is self-reliant and is expected to be the world’s largest free trade area after the World Trade Organization (WTO). The agreement is an attestation to the fact that African countries cannot continue to rely solely on the global trading system and global economy of the world economic powers, probably because they are increasingly becoming unpredictable. However, there is an assumption that the aggregate consumer and business spending on the continent could rise if AfCFTA is implemented successfully. This assumption therefore calls for a research like this to evaluate the likely economic impacts of the free trade agreement on different African countries particularly Nigeria which is the giant of Africa and the focus of this study. To achieve the objectives of the study, descriptive statistical approach was utilized to examine how the AfCFTA could contribute particularly on poverty reduction and Nigeria has been struggling for many decades to reduce poverty. These variables were considered: household income, illiteracy level, unemployment level and access to health care. The results of the analyses revealed that the AfCFTA could be slightly beneficial to Nigeria as it would improve the efficiency of the factors of production and product markets thereby enhancing household income generation, reducing the level of illiteracy, unemployment and increasing access to good health, efficient resource allocation and improved industry competitiveness which was expected to help Nigeria record significant reduction in poverty level and increase in economic development. In the light of these findings, the study recommends that government should then design proactive strategies that would reap the full benefits of AfCFTA such as engaging the private sector in identifying receptive and risk surrounding their sectors and paying more attention to the development of the service sector etc. The study has potential limitations such as unavailability of recent data. To tackle this limitation, the study adopted the 2019 survey data on pillars of measuring human development index by World Bank to address the quality of the findings, and research question.
 
 JEL: F10, H13, O10
 
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