Why the extent of intra-African trade is much higher than commonly believed

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:

  1. 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.

  2. 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.

  3. 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.

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