intra-African Trade Research Articles

The impact of information and communication technologies on international trade: A case of Sub-Saharan Africa

The aim of this research is to analyze the effect of information and communication technologies (ICT) on the bilateral trade flows of the countries of Sub-Saharan Africa (SSA). We use the method of generalized least squares (GLS) panel to correct for correlation and heteroskedasticity problems. We have employed the gravity model extended to ICT to examine the effects of key ICT indicators on bilateral exports and imports. The sample includes 44 African countries of the subcontinent, including 43 countries as partners (importers/exporters) and one reporter country (exporter/importer) and covers the period 2010 to 2019. The results show that access to mobile telephony and the internet, as well as the development of e-commerce, have a great potential for improving intra-African bilateral trade and that the effect of ICT is not unequivocal according to the category of flow considered. However, it emerges from these results that the development of ICT as it is today has not yet succeeded in overturning the argument of physical distance as a barrier to trade in sub-Saharan Africa. The key conclusion is that the establishment of better-quality ICT services and infrastructure is more critical to intra-African trade. African policymakers should accommodate sufficient support to establish the ICT infrastructure and expand ICT penetration by reducing the costs of communication, transactions and access to ICT.

Trade Policy Space, Aid for Trade and, Intra-African and External African Manufactured Exports

Boosting intra-African manufactured exports is a critical objective of African leaders. The present analysis examines whether trade policy space and Aid for Trade (AfT) flows can contribute to achieving this objective. The analysis covers an unbalanced sample of 36 African countries over the period from 2004 to 2020, and uses estimators that allow obtaining the short-term (i.e., within-country effect) and long-term (i.e., between-country effect) effects of each regressor. The estimators are the combination of the feasible generalized least squares estimator on the one hand, and the Seemingly Unrelated Regression on the other hand, in the context of a hybrid model. The findings indicate that both trade policy space and AfT flows can help promote - including in a complementary way - African manufactured exports, especially intra-African manufactured exports. In this regard, trade policy space and AfT flows are instrumental in meeting African leaders’ objectives of promoting intra-African trade. The implications of the findings are discussed.

Regional trade agreements and economic integration in Africa: assessing the impact of the African Continental Free Trade Area (AFCFTA)

This article examines the impact of Regional Trade Agreements (RTAs) on economic integration in Africa, focusing on the African Continental Free Trade Area (AfCFTA). As the largest free trade area globally, AfCFTA aims to create a unified market for goods and services across 55 African Union member states, fostering economic growth, reducing trade barriers, and enhancing intra-African trade. This article assesses the potential economic benefits of AfCFTA, including increased market access, industrialization, and job creation. It also considers the challenges of implementation, such as infrastructure deficits, varying levels of economic development, and non-tariff barriers. Through case studies of key African economies, including South Africa, Nigeria, and Kenya, the article explores how AfCFTA is reshaping trade dynamics and regional cooperation. Furthermore, it evaluates the role of AfCFTA in addressing Africa’s dependence on external markets and enhancing global competitiveness. The article concludes by providing recommendations for policy reforms, capacity building, and regional cooperation needed to maximize the benefits of AfCFTA. By analyzing both opportunities and challenges, this article offers insights into how AfCFTA can drive deeper economic integration and sustainable development across the African continent.

Regional (economic) integration, political stability uncertainty and (intra-African) exports

The economic literature reports ambiguous effects of regional economic integration (REI) and political stability on exports. Therefore, this research analyzes the effects of REI and political stability on intra-African exports, compares them to the effects on intra-African imports and explores the combined effect of REI and political stability on intra-African exports. We use the two-stage least squares and fixed-effects approach which includes the two-step feasible generalized method of moments (GMM) estimation to address endogeneity issues in a panel of 49 African countries over the period of 1996–2022. The results show that REI and political stability lead to an increase in intra-African exports. However, while REI results in an increase in intra-African imports, political stability results in a decrease; similar findings are highlighted for overall intra-African trade as well as for total exports of goods and services. The results remain robust across diverse estimation techniques. Furthermore, they reveal that political stability plays a role in amplifying the relationship between REI and intra-African exports. Supporting the African Continental Free Trade Area agenda, these findings imply that African policymakers need to (i) strengthen REI to increase intra-African trade and (ii) improve political stability to ensure that a greater part of REI is canalized in a more effective way in order to boost intra-African exports.

The Prospects of AfCFTA in Promoting Industrialization and Economic Diversification in Africa

African Continental Free Trade Area (AfCFTA) functions as a boost for Africa's economic development by enhancing intra-African trade. This is because trade is an engine of growth and development. For the fact that most African nations that are located within the same region engage in similar and competitive production, the ensuing economic cooperation and trade exchanges not only have the promise of increasing trade but also stimulating other ancillary economic activities, creating new job opportunities, speeding up economic growth, promote the standard of living, and promote economic development. However, AfCFTA's record has not been very impressive. The main obstacles to intra- regional commerce among African countries include heavy reliance on trade in primary goods, high product and market concentration of exports, and inadequate regional manufacturing networks. This study therefore examines continental economic trends and Intra African Trade: Prospects for African Continental Free Trade Area. The study adopted qualitative methods of data collection and analysis and the comparative theory of integration. The study found that the low level of trade diversification implicated the capacity of the African Continental Free Trade Area (AfCFTA) to achieve improved intra-regional trade performances in Africa. African countries maintain as much as 77% export specialization, with higher external/world trade at 84.6 percent of their total import and export trade. The study recommended that Governments should invest in infrastructure development, including building roads, railways, ports, and airports, as well as improving access to electricity and broadband. Governments should adopt modern trade facilitation measures such as electronic customs systems, single window platforms, and risk management techniques and should align their technical regulations and norms with global best practices and standards, as those created by appropriate international standard-setting organisations like the International Organisation for Standardisation (ISO).

Reducing Wait Times at Customs to Boost Trade: How Implementing the Trade Facilitation Agreement Can Expand Trade among AfCFTA Countries?

Abstract All WTO members participate in the Trade Facilitation Agreement (TFA), a rules-based bottom-up approach built on monitorable provisions (e.g., the publication of information, advance rulings, appeal or review of decisions, transparency and border agency cooperation) aimed at reducing time in customs. The paper draws on the OECD indicators of the state of implementation of provisions in the TFA summarised in a TFI (Trade Facilitation Index) to estimate the reduction in waiting time at customs for a large sample of 160 countries. Implementing the TFA could be a significant complement to the African Continental Free Trade Area (AfCFTA)'s objectives. The paper's estimates suggest that a realistic implementation of TFA measures could reduce time in customs for imports by 3.7 days and by 1.9 days for exports. Using extraneous estimates from customs-level transactions, this translates to a reduction tariff Ad-Valorem Equivalent (AVE) in the range 3.5%–7% for imports and 8% extra growth for exports. The large differences in interests across AfCFTA participants—landlocked-coastal, resource-rich and resource-poor, large-small—suggest large gains from reducing tariffs on intra-African trade. However, tariff reductions face the zero-sum hurdle of negotiations involving rent transfers across and within countries. By avoiding rent-transfer issues, this paper suggests that taking seriously the TFA provisions would be a powerful complement to the AfCFTA's tariff-reduction agenda.

African Union (Au) and Challenges of Intra-African Trade: A Study of African Continental Free Trade Pact, 2018- 2023.

The study assessed the efforts of the African Union in addressing the challenge of poor intra-African trade using the AfCFTA between 2018 and 2023. The study specifically examined how the implementation of the AFCFTA impacted on intra-African trade profile, as well as how the African Union fared in deepening Africa’s market integration using the mechanisms of the AfCFTA. Anchored on the documentary method and Neo-functionalism, the study ascertained that the implementation of the AFCFTA has undermined the intra-African trade profile. The study also revealed that the African Union has not fared well in deepening Africa’s market integration using the mechanisms of the AfCFTA. Accordingly, the study contends that the AfCFTA deal, though a laudable initiative, may not surmount the enduring structural challenges to regional integration to reposition African economies and expand opportunities for all Africans as projected. The study thus underscores the fact that despite AfCFTA deal, Africa is likely to remain an ultimate loser in the growing regional trade arrangement which is a major feature of the world trading system. Among others, the study recommends that the African Union, through the mechanisms of AfCFTA, should work towards removing all non-tariff barriers and reducing tariff barriers that undermine intra-African trade. Keywords: AfCFTA, Intra-African Trade, Market Integration, Non-Tariff Barriers, Region Trade Challenges.

An old wine in a new bottle? Towards an alternative theoretical approach to AfCFTA's institutional autonomy and private-sector-driven cross-border business integration

ABSTRACT This article argues that unless the African Continental Free Trade Area (AfCFTA) departs from the old ways of doing things, free trade will not automatically enable Africa to tackle the various trade constraints hampering intra-African trade as a result of the enormous challenges that will confront it. To ensure that AfCFTA is not an ‘old wine in a new bottle,’ there is a need for a paradigm shift to move from top-bottom to bottom-top, inter-governmental to inter-people, inter-state to people-to-people, state-centric to human-centred and public sector led to private sector-driven integration. The role of the state at the onset should be facilitative and complementary. This should serve as a recipe for massive cross-border business integration and autonomy of the continental free trade area. By relying solely on secondary data, this study is essentially a desktop study and, therefore, it is basically qualitative, analytical, theoretical and descriptive.

The Growth Opportunities for Nigeria in Joining the African Continental Free Trade Area.

This Article examines the African Continental Free Trade Area (AfCFTA), focusing on its inception, goals, challenges, and specific implications for Nigeria. Africa, with abundant natural resources and cultural diversity, faces hindrances like poor infrastructure and governance, limiting intra-African trade. Established in 2018, AfCFTA aims to create a competitive single African market by eliminating tariffs and barriers. AfCFTA objectives span tariff elimination, customs harmonization, dispute resolution, and cooperation on technical barriers. Challenges include infrastructure gaps, non-tariff barriers, economic diversity, competition adjustments, informal trade, political instability, capacity constraints, and financing issues. Mitigating these requires strategies like infrastructure development, trade facilitation, capacity building, and harmonizing standards. Nigeria, as Africa's largest economy, could benefit from AfCFTA by accessing cheaper goods. However, implementation faces delays due to unmet trade requirements. The National Action Committee outlines pillars for effective implementation, emphasizing institutional development, export growth, improved trade facilitation, and infrastructure development. Despite Nigeria's delay, the upcoming Guided Trade Initiative in October 2023 is anticipated to accelerate its participation in AfCFTA, fostering economic growth and trade relations within the continent. Keywords: Global trade, globalization, AfCFTA, Trade Block, Commerce.

The Full Enforcement of Socio-economic Rights in Africa: A Dream or a Reality?

The adoption of the African Charter on Human and Peoples’ Rights (African Charter) on 27 June 1981 in Nairobi, Kenya was recorded as historic step towards the protection of human rights in Africa. However, to date, Africans’ socio-economic rights are not fully or at all enforced. The author argues that Africa must take a new approach, a strategic one towards economic development in Africa and consequently the enforcement of socio-economic rights. He submits that several strategic approaches, such as development of new laws on the natural resources, producing quality products and services, image related strategies which involve great marketing of Africa, its products, and services. The author is of opinion that there is a link between economic development and the enforcement of socio-economic rights. It is further argued that intra-African trade will enhance sustainable development and economic growth and it is important. It is submitted that African countries must focus more on intra-African trade, which will accelerate sustainable economic development and consequently the enforcement of socio-economic rights, which will in turn reduce poverty and better the lives of millions of Africans who are in dire need of socio-economic rights to be enforced due to the living conditions they are in. Keywords: Africa; socio-economic rights; natural resources, strategic economic development.

The African Continental Free Trade Area and Financial Development for Female Labour Force Participation in Africa

The study assesses how financial development dynamics can moderate the incidence of African trade integration on female labour force participation. The focus is on 47 African countries for the period 1995 to 2019 and the empirical evidence is based on Fixed Effects regressions. The findings show that financial development moderates African trade integration to engender an overall positive effect on female labour force participation. Moreover, financial depth proxied by liquid liabilities should reach a threshold of approximately 14.304 (% of GDP) in order to completely dampen an initial negative incidence of intra-African trade integration on female labor force participation. It follows that financial development becomes a necessary and sufficient condition to moderate intra-African trade integration in order to positively affect female labor force participation only when the established threshold of financial depth is attained. Other policy implications are discussed.

Determinants of South African agricultural exports to African markets

Orientation: The ‘Africa we want, 2063 Agenda’ is slowly becoming a reality. On 01 January 2021, business operations of the African continental free trade area officially took off. Member states are currently negotiating concessions and are in the process of fully eliminating trade barriers to allow duty-free access into their markets.Research purpose: The purpose of this study is to clearly identify constraints that could potentially jeopardise the long-run success of the free trade area by exploring the fundamental constraints limiting increased intra-African agricultural trade.Motivation for the study: Results of the study will help South Africa to better leverage the African free trade area and take advantage of export market opportunities.Research approach/design and method: Using panel data that span from 2000 to 2021, the study estimated an augmented gravity model to evaluate the influence of selected explanatory variables on South African agricultural exports to African markets.Main findings: The results of the fixed effect model revealed that South African agricultural exports are directly proportional to gross domestic product (of both the importer and exporter) and inversely proportional to geographic distance. The results also showed that dummy variables such as infrastructure and participating in the same regional bloc play an important role in exacerbating export-led growth.Practical/managerial implications: In practice, when structural policies are put in place to address issues such as infrastructure development, countries will experience increased export participation.Contribution/value-add: The study seeks to contribute to knowledge by identifying the main determinants of greater intra-African trade.

African Continental Free Trade Area Agreement (Afcfta) And The Challenges Of Regional Integration In Africa

The African Continental Free Trade Area Agreement (AfCFTA) represents a significant milestone in Africa's pursuit of regional integration and economic development. Envisioned as a pan-African initiative, the AfCFTA aims to establish a single market for goods and services, promote intra-African trade, and foster economic growth across the continent. This paper examines the challenges of regional integration in Africa and explores the potential benefits of the AfCFTA Agreement in addressing these challenges. This study uses qualitative research methods, with secondary data from scholarly publications, journal articles, reports from international organisations and literature studies that were thematically analysed. The results of the study shows that the challenges of integration in Africa are mostly driven by disparities in economic development and industrial capacities among African nations, persistent trade barriers, non-tariff obstacles, weak institutional frameworks, the paradox of sovereignty, and inadequate infrastructure. The study also reveals that the adoption of the AfCFTA Agreement in 2019, has brought more African nations involved in addressing these challenges of economic integration, and fostering deep cooperation within the continent. This paper concludes that the AfCFTA Agreement has the potential to be a transformative force in advancing regional integration and economic prosperity in Africa. However, a pragmatic approach is continually needed to address these challenges of integration. This paper thus recommends fostering inclusive growth and economic diversification through targeted policies that can address economic disparities among African nations. Also, emphasising the inclusion of marginalised sectors, such as small and medium-sized enterprises (SMEs) and informal traders, which is essential for maximising the AfCFTA's potential benefits and fostering sustainable economic growth. 
 
 Keywords: AfCFTA, Africa, Economic Integration, Regional Integration, Trade barriers.

What determines Tanzania's trade? A gravity approach

Based on the gravity model, this study examines the determinants of trade flows between Tanzania and its trading partners and attempts to predict the country's trade potential. Using a panel dataset of Tanzania's trade flows of 100 countries from 2000 to 2016, this study finds that the results are consistent with the predictions of the gravity model, with positive and negative coefficients for gross domestic product and distance, respectively. The predicted trade potential reveals that neighboring countries and some middle and superpowers have significant trade potential. Considering the important contribution of trade to economic growth and notwithstanding Tanzania's active membership in regional economic communities, such as the East African Cooperation, Southern African Development Cooperation, and the anticipated engagement in the African Continental Free Trade Agreement, this study provides policy recommendations to reduce trade barriers and diversify production to promote intra-African trade and enhance trade with the rest of the world.

OVERLAPPING TRADE FLOWS AND POTENTIALS FOR INTRA-TRADE EXPANSION IN AFRICA: THE CASE OF NIGERIA’S AGRICULTURAL TRADE

African countries' endorsement of the African Continental Free Trade Area (AfCFTA) agreement framework has been regarded as a potential game-changer for intra-African trade and key to unlocking sustained economic growth and development. The euphoria surrounding this proposed introduction of a single continental market for goods and services, with free movement of businesses, persons, and investments, is closely linked to the positive relationship between trade and development as documented in the literature. However, it needs to be clarified from the literature what role overlapping trade flows may play in limiting the potential of the AfCFTA to boost intra-trade in Africa. This paper constructs trade overlap and trade expansion indices between Nigeria and selected African countries to investigate the scope for expansion of agricultural trade between Nigeria and the selected trading partners. The study finds the existence of considerable trade overlap and export expansion potential for Cassava among other agricultural products, between Nigeria and Equatorial Guinea, Guinea Bissau, Mauritania, and Sierra Leone. The study then opines that any overlapping trade flows that currently exist in the trade of Cassava between the selected partners can be redirected following the expected removal of customs tariffs once the AfCFTA is fully implemented.

Boosting intra-African trade performance: the role of maritime transport logistics

Boosting intra-African trade performance: the role of maritime transport logistics

The Nigerian Cabotage Act and the Ideals of the African Continental Free Trade Area: An Unwholesome Alliance?

AbstractOne of the primary goals of the African Continental Free Trade Area (AfCFTA) is to establish a single market for goods and services in order to achieve economic integration in Africa. Experts opine that the AfCFTA can be a game changer for improving intra-African trade and may pave the way to economic diversification and inclusion. To maximize the potential of the AfCFTA, African nations must eliminate or minimize trade and non-trade barriers that can undermine the AfCFTA's true intention. Nigeria is the largest economy in Africa; therefore for the AfCFTA to flourish, Nigeria must implement targeted industrial, structural and policy changes to facilitate the achievement of the AfCFTA's objectives. This article addresses protectionist cabotage as a non-tariff trade hurdle to AfCFTA aims, as well as the need for Nigeria to abolish or liberalize its restrictive regime on domestic cabotage trade. It proposes that Nigeria should take the lead in campaigning for a regional cabotage regime and eliminate its protectionist policy.

The success of the African Continental Free Trade Area: potentials and constraints

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.

An Assessment of Agenda 2063’s First Ten-Year Implementation Plan and its Implication on the African Continental Free Trade Area

Trade under the African Continental Free Trade Area (AfCFTA) began on 1 January 2021. The AfCFTA intends to bring African countries closer in terms of economic integration and has numerous potential gains for state parties and the continent at large. However, the policies on continental integration are not new to Africa. To improve continental economic integration, the Organisation of African Unity and its successor, the African Union, adopted the Abuja Treaty, the Action Plan for Boosting Intra-African Trade, and the Tripartite Free Trade Area. These policies have not been implemented yet, which creates uncertainty regarding the implementation of AfCFTA. To achieve its objectives, the AfCFTA requires member states to implement a complementary set of measures as part of Agenda 2063’s First Ten-Year Implementation Plan ranging from 2014 to 2023, which seeks to accelerate structural transformation in Africa. The implementation will ensure that some non-tariff barriers are eliminated to facilitate intra-African trade. However, the low aggregated implementation score of 51 per cent against the 2021 targets might have negative implications for the AfCFTA. The member states and regional economic communities are far from meeting the 2023 targets. There is low progress for Aspiration 1 of Agenda 2063 with an overall score of 37 per cent against the 2021 targets. Therefore, the article analyses the implication of the implementation or lack thereof of the First Ten-Year Implementation Plan on AfCFTA.

Can WTO membership boost intra-African trade?

This study uses the modified gravity model to examine the determinants of trade in goods within African countries. The panel data covers the period between 2000 and 2019 for all 54 countries in Africa. The article contributes to the existing literature on trade determinants in Africa, including distance and economic size in the study of bilateral trade, by augmenting the gravity model with the inclusion of WTO membership. The gravity model is applied using three different methods of estimation: Ordinary Least Squares (OLS), Poisson Pseudo Maximum Likelihood (PPML), and Gamma Pseudo Maximum Likelihood (GPML) models. Our findings show that the GDP of both exporters and importers, sharing common language and borders positively affect intra-African trade, while the impact of distance is significantly negative. We also found that being a WTO member significantly enhances international trade between African partner countries. This study can help formulate better trade policies for African countries.