Regional integration and non-tariff barriers to Intra-Sub-Saharan Africa trade

Abstract

The paper assesses the ex-post trade effect of sub-regional trade agreements (RTAs), financial integration and other non-tariff barriers on intra-regional trade involving 43 Sub-Saharan Africa (SSA) countries. The objective is to find out if RTAs within SSA had increased trade flows to inform current efforts of establishing a successful continental free trade area in SSA. Estimating a gravity model augmented with measures of trade agreements and financial integration, the paper made use of bilateral trade flows and key gravity covariates from CEPII database over the period 1960–2015. After controlling for the endogeneity of the trade agreement dummy, multilateral price resistance and zero-valued trade flows, we find RTAs within SSA and especially among Economic Community of West Afri can States and Southern Africa Development Community members to have had a positive and significant impact on bilateral trade. Financially integrated trading partners also traded more, while we also found distance, landlocked-ness, common currency and colonial link to have an impact on trade costs and bilateral trade flows within SSA. The results indicate the need to focus on policies to expand and integrate regional markets in SSA by removing impediments to trade and improving on trade facilitation measures to significantly improve trade performance under the newly established African Continental Free Trade Area.