Abstract
Background: Logistics will play a vital role in the process of boosting intra-regional trade among member states. Despite logistics integrating role in trade between countries, generally, African countries had faced with formidable challenges in logistics infrastructures development, and customs and border clearance. Objectives: The main objective of this article was to analyse the effect of trade logistics performance on the intra-regional trade of Africa. African countries’ logistics performance in international trade was measured using the World Bank Logistics Performance Index (LPI) and its components. The article emphasized examining the relevance of trade logistics for the implementation of the Continental Free Trade Area of Africa. Method: Descriptive analysis was undertaken to analyse African countries’ trade logistics performance, based on 2010–2018 LPI measures. The gravity model of international trade with Heckman maximum likelihood regression was used to explore the effect of trade logistics performance on the intra-regional trade of Africa. Results: African countries experience lowest average LPI score relative to its trading partner regions, particularly in terms of quality of trade- and transport-related infrastructures, customs, and border clearance, and competency and quality of logistics services. The study on gravity model estimates shows that improvement in any of LPI components, that is, infrastructures development, customs clearance, competence and logistics service quality, international shipments, tracking and tracing, and timeliness, can lead to significant growth on the trade between African countries. However, being geographically landlocked has a statistically significant negative effect on bilateral trade flow. Conclusion: Successful improvement in African countries’ trade logistics performance including logistics infrastructure, customs clearance, and logistics service quality will enhance trade between African countries. This, in turn, will have a paramount contribution to the effective implementation of the Continental Free Trade Area of Africa.
Highlights
There are evidences which show that the share of African region in the global market areas is small, with a dramatic fall
In the last few years, there was a marked difference between Africa and other regions in terms of intra-regional trade share
The main purpose of this study is to examine the strategic importance of trade logistics coordination for effective
Summary
There are evidences which show that the share of African region in the global market areas is small, with a dramatic fall. There are many plausible reasons for lower trade performance of Africa in international trade, domination of African export by few products and weak regional integration were the two main reasons. Primary commodities such as fuel, mining products and agricultural products had dominated African countries’ exports (WTO 2013). Out of the region’s total merchandise export, intra-regional export of Africa was only 16% in the same year (Mwaba 2017). African Union (AU) expects boost on the intra-regional trade of Africa when the region’s countries implement regional-level economic integration initiatives, that is, Continental Free Trade Area (Economic Commission for Africa 2017). Despite logistics integrating role in trade between countries, generally, African countries had faced with formidable challenges in logistics infrastructures development, and customs and border clearance
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