High Domestic Costs, Not Tariffs, Limit Impact of Intra-African Trade: World Bank Report
A World Bank report indicates that high domestic trade costs, rather than tariffs, are the primary barrier to economic integration in Africa. The study suggests that implementing deep trade agreements and regional public goods could significantly boost intra-African trade.
Why it matters
Understanding these structural barriers is essential for policymakers aiming to unlock the economic potential of the African Continental Free Trade Area.
High domestic trade costs remain the primary obstacle to economic integration across Africa, according to a report published by the World Bank and the Agence française de développement (AFD).
The study notes that while Sub-Saharan Africa maintains a trade-to-GDP ratio between 55 percent and 60 percent—a level comparable to East Asia—this openness has not yielded corresponding income growth. Over half of the region's global exports consist of unprocessed primary commodities.
In contrast, intra-African trade features greater diversification, with manufactured goods comprising more than 60 percent of regional commerce. However, high overall trade costs continue to isolate neighboring markets.
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