Conclusions and policy implications
The stylized facts described above have a number of important implications for policy, especially at a time when trading under the African Continental Free Trade Area (AfCFTA) has begun:
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Policies should be adopted to address the extensive barriers across the continent to informal cross-border trade (World Bank, 2020). Once fully implemented, the AfCFTA may see a sudden blooming of small-scale, cross-border trade, as the incentives for keeping informal sector trade off the record suddenly disappear.
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The impression of sluggish intra-African trade is wrong: It represents a high share of total African trade and is usually the more dynamic—and certainly the more diversified—element of a typical African country’s exports. This disarms the excessively simplistic but widespread myth that African countries have nothing to trade with one another.
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National trade strategies need to be consistent with these stylized facts—and prioritize intra-African trade rather than expend political capital in prolonged free trade agreement negotiations with extra-African trading partners.