Africa stands to gain more from reforms that improve exporters’ ability to move goods across borders than from measures focused solely on imports, according to new research by the African Export-Import Bank (Afreximbank), showing the need for governments to prioritize export competitiveness as they implement the African Continental Free Trade Area (AfCFTA).
The study found that improvements in trade facilitation in exporting countries have a stronger and more consistent effect on boosting intra-African agricultural trade than similar reforms undertaken by importing countries. The findings suggest governments can achieve larger trade gains by investing in infrastructure, customs modernization and digital systems that help domestic producers reach regional markets.
Using trade data between 2007 and 2020, researchers found that improvements in physical infrastructure, information and communications technology, business regulations and border procedures in exporting countries all had statistically significant positive effects on intra-African agri-food trade. Better roads, ports and airports generated the largest gains, followed by improvements in ICT.
By contrast, reforms in importing countries produced weaker results. Of the four trade facilitation indicators examined, only two significantly increased agricultural trade, suggesting that improvements on the import side alone are insufficient to drive regional commerce.
The researchers attribute the imbalance to policy priorities across much of the continent.
“According to Sakyi and Afesorgbor (2019), this could be explained by the fact that, in terms of trade facilitation measures, most African countries are more focused on promoting exports than imports. This can be seen in the export promotion strategies in many African countries.”
The findings have implications for governments seeking to expand trade under the AfCFTA. While many countries have invested in reducing tariffs, the report argues that greater returns could come from upgrading export infrastructure, digitizing customs procedures and reducing the time and paperwork required to move goods across borders.
The paper also found that the strongest trade gains occur when exporting and importing countries simultaneously improve infrastructure, border efficiency and the business environment, indicating that coordinated reforms across trading partners generate larger benefits than unilateral action.
Implementation of the AfCFTA’s trade facilitation agenda according to the research, particularly investments in transport corridors and customs harmonization, will be critical to increasing intra-African agricultural trade and strengthening the continent’s food security.
