Trade Integration in Africa: Unleashing the Continent's Potential in a Changing World

Departmental Papers, May 5, 2023

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Trade Integration in Africa: Unleashing the Continent's Potential in a Changing World

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Bibliographic details

• Authors: Asmaa A ElGanainy, Shushanik Hakobyan, Fei Liu, Hans Weisfeld, Ali Abbas, Céline Allard, Hippolyte W. Balima, Celine Bteish, Rahul Giri, Daniel S Kanda, Sergii Meleshchuk, Gustavo Ramirez, Robert Zymek, Subir Lall, Benjamin R Kett, Megan M Pohl
• Published: May 5, 2023
• Series: Departmental Papers
• DOI: https://doi.org/10.5089/9798400232794.087

Overview and purpose

• Sets out the benefits that successful AfCFTA implementation could unlock for Africa in terms of income, jobs, and other benefits.
• Based on an empirical analysis of obstacles to trade in goods and services and regional value chain integration.
• Discusses how regional trade integration and supporting policies could help African countries cope with ongoing global and domestic trends.

Key empirical findings

• Substantial tariff and nontariff barriers remain in place across Africa despite multiple initiatives since the 1960s to enhance trade integration.
• The empirical analysis investigates:
  • The role of trade policy in determining bilateral goods trade flows.
  • The role of the broader trade-enabling environment in determining country-level trade in services.
• Findings suggest that:
  • Plausible reductions in tariffs and nontariff barriers under AfCFTA, along with improvements in trade-enabling environment (trade infrastructure, financial development, and domestic security), would substantially boost intra-African trade in goods and services.
  • Such improvements would support integration into regional value chains.

Potential benefits of AfCFTA implementation

• Income and jobs:
  • AfCFTA has the potential to transform regional trade and thereby lift growth and support livelihoods across the continent.
• Trade and value-chain integration:
  • Implementation of AfCFTA and supporting policies could boost trade and income and help African countries integrate into regional value chains.
• Resilience to trends:
  • Regional trade integration could be an important element of a strategy for African countries to cope with rapid population growth, climate change, and emerging geopolitical fragmentation.

Policy-relevant barriers and enabling conditions

• Trade barriers to address:
  • Tariffs.
  • Nontariff barriers.
• Trade-enabling environment factors to improve:
  • Trade infrastructure.
  • Financial development.
  • Domestic security.
• Role of complementary policies:
  • Implementation of AfCFTA should be accompanied by targeted improvements in the broader trade-enabling environment to realize substantial gains in intra-African trade and value-chain participation.

Content in this bundle

• Trade Integration in Africa: Unleashing the Continent's Potential in a Changing World
  • Trade Integration in Africa: Unleashing the Continent's Potential in a Changing World (Markdown version)
  • Trade Integration in Africa: Unleashing the Continent's Potential in a Changing World (PDF)