Identifying regional trade potential between selected countries in the African tripartite free trade area



Lorainne Ferreira and Ermie A. Steenkamp | South African Journal of Economic and Management Sciences

African countries are separated by more than 100 bilateral borders, which constrain trade and economic integration among these states. However, African governments have offered much support for regional trade and integration, embracing it as an important component of their development strategies (Hartzenberg 2011). As a result, Africa has 141 regional economic communities (RECs), of which several have notable overlapping memberships.

This has created a complex entanglement of political commitments and institutional requirements within the continent that has undermined regional integration. Moreover, it has complicated the coordination and harmonisation among African states in different RECs, causing counterproductive competition among them, with few success stories (Ndomo 2009). Only about 16% of Africa’s total exports is intra-regional, compared to 68% in Europe, 59% in Asia and 55% in America (UNCTAD 2019).

Africa could nevertheless soon witness an important milestone on its path towards increased trade integration with the implementation of the Tripartite Free Trade Agreement (TFTA). Covering 26 countries, representing almost half the population of the continent and a total gross domestic product (GDP) of approximately $1.3 trillion, the TFTA has the potential to be an initiative with the broadest regional economic impact globally (United Nations Conference on Trade and Development [UNCTAD] 2017).

The TFTA will merge three of Africa’s existing RECs: the Common Market for Eastern and Southern Africa (COMESA), the East African Community (EAC) and the Southern African Development Community (SADC). The main objective of the COMESA–EAC–SADC tripartite agreement is to strengthen and deepen economic integration in southern and eastern Africa by improving terms of trade, boosting infrastructure development and industrial growth, and addressing overlapping memberships among the RECs (Luke & Mabuza 2015).

However, realising an ambitious Free Trade Agreement (FTA), like the TFTA, is a multidimensional challenge. Building new infrastructure, confronting issues associated with overlapping memberships and streamlining regulations, customs and border procedures can be a lengthy process. Nonetheless, something needs to be done in the meantime to drive intra- African trade.

As outlined in the literature review, previous studies on the TFTA focused mostly on the impact and significance of the agreement for its member countries on a macroeconomic and sectoral level. This article however identifies, on a disaggregated product level, unexploited intra- regional trade opportunities that serve as low-hanging fruit for exporters and trade promotion entities to start exploring. This can potentially help policymakers to adopt a more practical approach in promoting intra-regional trade in Africa.

This article reports these intra-regional trade opportunities on an importer–product–exporter level in the TFTA region. We first outline the main elements of regional trade theory, the motivations for deeper integration and the status of economic partnerships and competitiveness in Africa. We then discuss our method in which filter 2 of the Decision Support Model (DSM) (Cuyvers, Steenkamp & Viviers 2012) is used, a market selection tool, applied for five consecutive years to identify consistently large and growing import demand potential in different TFTA countries.

The export supply side is added to the model by evaluating the export capacity of the different countries, also over a five- year period. The import demand and export supply are then matched to arrive at export country–product–import country combinations (referred to as matches) with regional trade potential. The use of this regional trade potential then is evaluated by considering actual exports between the identified importing and exporting counties over the period 2010–2014.

We identified a total of 334 matches among the 26 TFTA countries, from which 232 (70%) were newly recognised matched opportunities that are not being exploited at all. The top three product categories identified in these matches include foodstuffs, vegetable products and metals.

This analytical approach is unique for this purpose as it is applied within a regional context where 26 countries’ import demand and export supply are considered and clearly demonstrates the opportunities for increased intra-regional trade within Africa.



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