intra-Africa Trade Research Articles

Africa’s lingua franca and its role in the successful implementation of the AfCFTA: a case for Kiswahili as the African commerce and epistemological language

The African Continental Free Trade Area (AfCFTA) is the largest free trade agreement in the world in terms of its membership and it has tremendous potential to lift millions of Africans out of poverty through boosting intra-Africa trade by ensuring that Africa has one gigantic market of over 1.3 billion people. For this to be achieved, this trade agreement must be implemented rapidly and to the letter. This article therefore argues that, among others, the use and adoption of an African indigenous language such as Kiswahili can play an important role in enabling Africans to trade with one another with ease and mutual trust. The adoption and use of this language as a potential lingua franca for commerce and teaching and learning also has the potential to harness the innovation and creativity of Africans as this would be emanating from the age-old ingenuity of our forebears. The main argument made here is that language is both the reservoir and vessel for culture and indigenous knowledge systems (IKS), and without its maximum exploitation, our societies will not industrialise and develop. Methodologically, qualitative semi-open-ended interviews and non-participant observation were conducted in Kenya, Tanzania and South Africa to gauge experts’ views on the utility of Kiswahili as a potential Pan-African language. Pan-Africanism and Afrocentricity are key theories deployed in giving shape to this study.

Examining current regional intensity of trade in Africa: How strong are the trade linkages and implications for intra-Africa trade in the African Continental Free Trade Area

Examining current regional intensity of trade in Africa: How strong are the trade linkages and implications for intra-Africa trade in the African Continental Free Trade Area

Access to finance and intra-Africa trade efficiency

This paper examines the impact of access to finance on intra-Africa trade efficiency using a panel dataset comprising 44 African exporters. Between 2008 and 2021, a stochastic frontier version of the gravity model finds intra-Africa trade to have been lower than its full potential by $1.1 billion on average. Exporters with better access to finance such as South Africa, Morrocco and Mauritius operated closer to their full potential. The effect of access to finance on intra-Africa trade is found to have been stronger between distant trading partners. This suggests that access to finance largely promotes intra-Africa trade through financing transportation and logistics. In view of these results, the analysis recommends policy efforts to improve access to finance in order to maximize trade between African countries.

Intra-Africa trade and the need to rethink the neo-liberal approach

Notwithstanding past trade reforms, trade in Africa and particularly intra-Africa trade, remain dismal. Africa has even created economic communities, fitted with monetary, fiscal, and socio-political anchors, by way of various Regional Economic Communities (RECs) – now reflected by the African Continental Free Trade Area (AfCFTA). Whilst these have yielded marginal benefits, the persistence of low intra-Africa trade calls into question their suitability. Focused on the realities of institutions targeted by these reforms and Africa's context – i.e., weak linkages between institutions, high informality, and low social capital – we posit that reforms have not elicited the hoped-for high intra-Africa trade because of their near total reliance on the neo-liberal approach, which neglects Africa's context. Drawing on Africa's sociology and new institutional economics, we use a conceptual institutional analysis to evolve a political economy based framework that suggests potential solutions: Linking the formal sector that currently underpins economic/trade policies to the informal institutions that are reflective of Africa's norms, values, cultures and expectations (the informal sector), and scaling up production; via the cooperatives production model, strategic procurement mandates, and effectuation of continental transportation infrastructure network, are our recommended pathways to reversing the current dismal intra-continental trade.

Macro-determinants of current account balance performance in selected African countries

AbstractMost African countries are open to international trade as shown by their signatories to various trade agreements such as the Economic Partnership Agreement (EPA) with the EU, and the Forum on China-Africa Cooperation (FOCAC). However, these countries face persistent current account deficits and institutional underdevelopment. The existing literature investigates the underlying factors at country-specific levels while ignoring the role of institutions. Meanwhile, African countries are also rapidly transitioning towards economic integration with the establishment of the African Continental Free Trade Area Agreement (AFCFTA) to deepen intra-Africa trade. Therefore, for unionized policy proposition, this study controls for the effects of institutions and investigates the macro-determinants of the current account balance (CAB) performance using panel data from 2002 to 2020 for 20 African countries. To account for cross-country correlation and country-level heteroscedasticity, the study employed panel-corrected standard errors (PCSE) and feasible generalized least squares (FGLS) techniques for the governance indicators-related step-wise estimations. The results show that after controlling for the effects of institutions, income, trade openness, the price level, the interplay between manufacturing and financial sector development, and the money supply are the significant macro-determinants of the CAB performance in Africa. Further, the marginal info-graphics show that the predictive effects of value addition and financial development on the CAB increase positively with good governance and that improved governance could reverse any negative effects of trade openness on the CAB performance. Based on the findings, the study recommends inter alia that African countries pursue value-addition-oriented trade, zero Central Bank budgetary financing, and institutional quality improvement to enhance the performance of their CABs.

Climate Change Impacts, Food Security, Intra-Africa Trade and Sustainable Land Governance on Food Systems in Africa

Climate Change Impacts, Food Security, Intra-Africa Trade and Sustainable Land Governance on Food Systems in Africa

History of Sub-Saharan Africa’s Long Journey towards Economic Emancipation

Abstract The history of the African Growth and Opportunity Act (AGOA) i.e., the trade partnership between the US and sub-Saharan African states indicates that the initial Clinton Administration blueprint for this venture was to operate for eight years, from 2000 to 2008. However, in 2004 George Bush, the incoming US president, pushed the AGOA mandate to 2015. Before the AGOA order could expire, its mandate was again extended to 2025 by then US president Barack Obama. This study argues that the lofty ambitions inscribed in the design of AGOA seem not to have lived up to their billing. The study finds that the theoretical win-win proposition that was envisioned does not appear to have yielded the desired economic results for sub-Saharan states mainly because the enterprise is likely a one-sided trade deal in favour of the US. Data for this study was gathered from qualitative and quantitative sources. The study concludes that given the pattern of the US engagements with sub-Saharan Africa, which seems only focused on advancing US national interests, the sub-Saharan region needs to devise alternative trade partnerships if its economy is to grow. The study recommends that sub-Saharan Africa focuses on intra-Africa trade. Alternatively, it should strengthen development cooperation with emerging markets such as the BRICS (Brazil, Russia, India, China, and South Africa).

Democracy and Intra-Africa Trade.

Despite numerous efforts by policymakers, trade among African countries remains abysmal. In this paper, we investigate whether democracy influences intra-Africa trade of goods. Using the gravity model on bilateral trade among 48 Sub-Sahara African countries over the period 2000 to 2018, we find that democracy fosters intra-Africa goods trade. This effect is more pronounced in the manufacturing sector. Reversals to autocracy, however, adversely impact intra-Africa trade flows. Our paper therefore highlights democratic development as an important channel for accelerating trade among African countries.

The world trade network: Country centrality and the intra-Africa trade

Global trade is based on a group of multifaceted interactions between nations that can be modeled as an incredibly dense network of intertwined agents. On the one hand, this network might favor the trade performance of countries, but on the other, it can also discourage international trade. In this article, we investigate whether and how much the structure of the trade network may explain for the performances of intra-African trade among certain African nations. We calculated the centrality indexes for the nations and applied them to regression analysis. We then employ a negative binomial regression framework with these indicators as target regressors. In doing so, we also compare the effects of different measures of centrality- specifically, the degree centrality measures and the clustering coefficient. Our findings suggest that, albeit boosting the degree centrality index tends to improve the trade flows inside Africa, on average, the intra-African trade flow was shown to be negatively impacted by the clustering coefficient, which is congruent with theory and our predictions.

Proposition for an AFCFTA-based Tax Dispute Court for the Timely Resolution of Commercial Tax Disputes

The African Continental Free Trade Area (AfCFTA) Agreement is promoted as a developmental game-changer set to foster an impressive growth in intra-African trade. Already, economic forecasts project that the successful implementation of the AfCFTA could boost intra-Africa trade and investments from the current 16 per cent to about 35 to 40 per cent by 2040. However, the success of the AfCFTA implementation is largely dependent on the willingness of its member states to carry out large-scale trade and investment reforms to reap the benefits of the free trade area. One area in dire need of reform is the tax dispute settlement mechanisms (TDSM) found in tax, trade and investment agreements. These mechanisms often act as technical barriers to the realisation of the AfCFTA objectives. This paper seeks to review the TDSM provisions contained in the tax, trade and investment agreements, including the newly drafted AfCFTA investment protocol. It also seeks to provide a comprehensive analysis of the challenges inherent in these instruments with the aim of offering solutions through a progressively binding AfCFTA tax court. The court will enhance the timely and equitable resolution of tax disputes in the AfCFTA and promote a more conducive environment for investment, trade and growth.

The Indigenous Logistics System in Africa: The Case of Nigeria, Past to Present

Background: Centuries after its introduction in Africa, the western-style logistics system has not replicated the same results as it has in other parts of the world. The continent continues to grapple with poor logistics infrastructure and low intra-Africa trade at a time when governments in Africa are committed towards the expansion of trade and manufacturing through the implementation of the African Continental Free Trade Area (AfCFTA) agreement. There is a pressing need, therefore, for the development of a logistics system designed for the African socioeconomic environment and the peculiarities of the people. Methods: This paper examines the operations of the Indigenous Logistics Systems (ILS) in pre-colonial Nigeria and its development over time through qualitative data gathered from the six geopolitical zones in Nigeria and a review of literature. Results: ILS in Nigeria is the cultural creation of the people through the efficient management of available resources and the use of indigenous knowledge. The system derives its strengths and effectiveness from its availability, simplicity, affordability, and trust. Conclusions: The paper concludes that if improved with the application of simple technology, ILS has the answers to the challenges of logistics and Supply Chain Management (SCM) in Africa.

Designing Preferential Rules of Origin for the AfCFTA: Addressing Pre-Existing Challenges at the Regional Level

African countries are still negotiating the RoO for AfCFTA. Rules of Origin (RoO), a mechanism for determining the economic nationality of a product, are an essential part of international trade due to their use in the enforcement of preferential treatment of goods. AfCFTA member states seek to build upon RoO under their existing RECs. However, the design and implementation of RoO under the various RECs are seen as one of the obstacles to intra-Africa trade. This article examines the RoO of Africa’s key RECs, namely the EAC, COMESA, ECOWAS, SADC and the TFTA, with a view to drawing out lessons, the drawbacks that need to be addressed or avoided, and shaping the RoO of the AfCFTA to enhance the achievement of its objective of promoting intra-African trade.

Scoping the Potential for a Digital Led Recovery from COVID-19 in Africa

In this paper, we analyse the implications of the COVID-19 pandemic for Africa's trade in digitizable products, digitally deliverable services (DDSs), and e-commerce, and we outline the challenges of a digitally led recovery from the pandemic for African countries. The analysis is based on macro- and micro-level data and a review of extant literature. We find that almost 60% of the global exports of digital products in 2020 originated from the EU, with another 16% from North America. Africa's share in global exports of digital products, by contrast, was less than 1%. In the case of intra-Africa trade, exports of digital products are concentrated in just a few countries. Online supply in services is found to be more resilient to negative shocks from the pandemic compared to other modes of supply. We also find that e-commerce has important potential for economic recovery, but that its impact in Africa is constrained by high internet costs, weaknesses in postal services and capacities, cross-border trade costs, and lags in electronic infrastructure and digital payment systems. Based on the results of the study, we propose policies at the national, regional, and international levels to leverage digital trade for post-COVID recovery in Africa.

Reaping the Benefits of African Continental Free Trade Agreement (AfCFTA)

Abstract Africa’s Continental Free Trade Agreement (AfCFTA) aims to boost intra-Africa trade and to ultimately improve the lives and welfare of Africans. Through a discursive analysis of human capital theory and its relationship with gains to trade, this paper analyses the state of Africa’s human capital in readiness for AfCFTA and provides some policy recommendations. Gains to trade are theoretically and empirically more beneficial to countries with human capital accumulation. Most African countries still have low human capital levels and may not be able to reap the benefits of an integrated free trade area that AfCFTA portends, in terms of employment generation. African countries require a coherent human capital development strategy. This paper recommends a three-pronged approach that includes identifying specific areas of comparative advantage, shifting focus away from the export of natural resources and primary products and developing the knowledge and skills required in the areas of comparative advantage identified.

Agricultural Trade Liberalisation and Agricultural Total Factor Productivity Growth Convergence in Africa

Reducing income inequality in Africa rests on agricultural total factor productivity (TFP) growth and convergence. Liberalizing agricultural trade has emerged as a force of agricultural TFP growth convergence. Notwithstanding increasing agricultural trade, TFP in Africa is falling while the differences in TFP growth rates remain wide. We provide evidence on the impact of agricultural trade liberalization on agricultural TFP growth convergence. We examine trade by origin, disaggregated into intra-Africa, and rest-of-the-world trade. Also, we recognize the uniqueness of agricultural trade liberalization and analyze the effect of the removal of trade-distorting agriculture support. Using maize and rice data for the period 2005-2016, we apply a Feasible-Generalized- Least-Squares estimation of panel data models derived from Barro and Sala-i-Martin (1990). We find evidence for both absolute and conditional convergence, which is stronger for maize. Moreover, agricultural trade openness speeds up TFP growth convergence for both crops. Convergence speed is higher for intra-Africa trade. Estimations on domestic agriculture support suggest that reduction of support beyond distortion-free levels enhances TFP growth convergence. Our findings call for more agricultural trade liberalization. We appeal that the recently launched Africa Continental Free Trade Area prioritizes intra-Africa agricultural trade liberalization and further elimination of trade-distorting domestic agriculture support.
 Vol. 9, No. 2, August 2022: 71-88

A COMPARATIVE STUDY ON ASIA AND EUROPE ON START-UP LED INNOVATIONS AS A VEHICLE FOR DEVELOPMENT: ANY LESSON FOR AFRICA CONTINENTAL FREE TRADE AREA

This study investigates opportunities that African governments can pursue in furthering their development agenda by leveraging the market's affinity for mobile technology and the momentum built by fintech firms in mobile-based innovation. The study reviews secondary data on innovation-led development initiatives and compares strategies adopted by countries across Europe, Asia, and Africa. The results reveal that Europe and Asia have inculcated structured use of Research and Development in start-up ecosystems to ensure that innovation addresses specific development agendas. In contrast, Africa abounds with high-value natural resources, yet the continent's manufacturing sector is regressing, with intra-Africa trade in consumer goods stagnating at 13% for decades. The study's findings point out that African governments recognize the role start-ups play in addressing unemployment and attendant poverty in Africa. Fintech start-ups and innovators have been at the forefront of delivering financial services using mobile telephony to communities hitherto financially excluded. The success of African mobile money innovations is widely published, and fintech start-ups have attracted the interest of venture capitalists – where 62% of investment funds flowing to start-ups are committed to the fintech sector. There is limited traction in using innovation to address issues like access to potable water, clean energy, affordable healthcare, and quality education.

Review on Ethiopia’s Global Position in Meat Production and Export: Analysis of Sectoral Opportunities and Challenges

Meat and other slaughter by-products being exportable food items have been contributing to the foreign export earnings and GDP growth of Ethiopia since the beginning of meat processing. Even though the country is blessed with huge livestock resources, the share of meat and other slaughter by-products exported from the overall export commodities is not more than 2% and the per capita meat consumption is below the average of Sub-Sahara African countries. This study was therefore, implemented to review the potentials and tradeoffs of meat production, processing and marketing in Ethiopia and seeking strategic intervention options to unleash the potentials after reviewing the available national and international resource materials. The study therefore indicated that, as opposed to Ethiopia’s strategic location to market and sound climatic condition, the country is not benefiting from the huge livestock resources due to knowledge gap; limited compliance to meet the international requirements including food safety standards like ISO, GMP and HACCP; limited promotion done in marketing; limited intra-Africa trade integration; poor linkage among stakeholders; few market outlets and other interlinked problems. On top of these meat consumption trends is almost stagnant and the calorie intake per capita from meat is in a declining state. Therefore, policy support in terms of diverse incentive mechanisms; encouraging more research and development work so as to benefit smallholder farmers, pastoralists and processors and the need for traceability and residue monitoring, market promotion and conducting benchmarking and twinning programs are some of the measures to be taken in order to be competitive in the global market. Better business communication with potential buyers and back and forth linkage with stakeholders along the value chain is also very important for the transformation of the sector from the current staggering stage to globally competitive agribusiness. Key w ords: Meat, Export, Production, opportunity, Challenge DOI: 10.7176/FSQM/114-03 Publication date: April 30 th 2022

The Role of Trade Facilitation and Other Policy Strategies in the Successful Implementation of AfCFTA

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

The Advent of the African Continental Free Trade Agreement as a Tool for Development

Modelled on the North American Free Trade Agreement (NAFTA), the African Continental Free Trade Agreement (AfCFTA), signed at the Extraordinary Summit of the African Union, which convened in Kigali, Rwanda, on 21 March 2018, is designed to facilitate a single continental trade regulation and integration framework for trade disciplines and intentioned to boost intra-Africa trade. AfCFTA came on the backdrop of not less than eight regional economic communities (RECs), which are loosely regulated. The study finds that AfCFTA can become a beacon of development in the African continent, provided an array of issues including addressing the multiplicity of RECs, putting in place a Development-focused migration and labour policy or developing a side labour agreement similar to that of NAFTA to address other issues like harmonisation of treatment and conditions of workforce and pursuing industrialisation that will help manage the negative spillovers of the Fourth Industrial Revolution (4IR). JEL Codes: C23, F10, F13, F14, F15, F17, F19, K33, K41

Africa’s Development and Post Covid-19 Emerging Opportunities: Towards a Political Economic Model for Strengthening Intra Africa Trade and National/Regional Competitiveness in Response to Global Supply Chain Disruption

In view of the general observation that emerging opportunities exist for developing economies in the aftermath of the COVID-19 global pandemic, despite its many health, safety, economic, social and environmental realities, this paper examines how Africa could translate the challenges of the crisis into positive development opportunities from three interrelated salient angles: first is how to consolidate on innovation for local production and reinforce intra-African trade; the second is strengthening innovation for more resilient policies that address youth employment and skills development for regional and global competitiveness; and third, refocusing the digital and green economies, including the strengths of artificial intelligence, big data, e-commerce and the continuity of related environmental objectives. Using the “systems approach”, it proposes three quaternal models, advocating for policy coherence as optimal for development deliverables. This is not only beneficial for helping Africa out of the crisis, but could also meet some novel and future-oriented objectives of capacity building for managing complexities as purported in current global and regional development Agendas 2030 and 2063, as well as the African Continental Free Trade Area (AfCFTA) proposals.