A country is well-integrated productively if its productive capacities complement those of other countries in the region; that is, if it specialises in stages of production where it has a comparative advantage and can benefit from economies of scale.
ARII’s productive integration dimension uses three indicators to evaluate a country’s involvement in regional supply and value chains:
- The share of intra-regional intermediate exports refers to a country’s exports of intermediate (semi-finished) goods to the region as a percentage of all of that country’s exports of goods to the region.
- The share of intra-regional intermediate imports refers to a country’s imports of intermediate (semi-finished) goods from within the region as a percentage of all of that country’s imports of goods from the region.
- The merchandise trade complementarity index compares a country’s export profile to the export profile of the region. This indicator is calculated as the sum of the absolute value of the difference between the import shares and the export shares of the countries under study vis-à-vis the region divided by two.
The productive dimension of regional integration is Africa’s weakest point. Africa’s average score for this dimension is only 0.201 out of 1.000, and 33 countries score even lower.
These findings imply that production is not evenly dispersed across the continent and countries are not reaping the benefits of their comparative advantages. This is due in part to poor or inexistent logistics. Well-functioning logistics are necessary to regional supply chains.
It is urgent that African countries improve their productive capacities. They can achieve this by better coordinating pan-African trade and investment policies and by fostering more cooperation among public and private sector stakeholders.
South Africa is the continent’s leader in productive integration, showcasing a perfect score.Regional imports and exports of intermediate products to and from South Africa account for a larger proportion of regional trade in South Africa than they do in any other country on the continent and South Africa has the highest score on the merchandise trade complementarity index.
The second-most trade-integrated country, Nigeria, lies far behind, with a score of 0.364. Nigeria’s flourishing fuel exports contribute to its ranking. Nigeria is followed by Angola, Tunisia, and Zambia. The trade of intermediate products in Tunisia and Angola largely complements the production profiles of these countries’ neighbours. Zambia’s high position can be attributed to its substantial imports of industrial equipment.
The least integrated countries are Republic of Congo, Lesotho, Ethiopia, Mauritania, and Niger. The weakness of the least performing country, Republic of Congo, lies in its low exports of intermediate products. The complementarity of Lesotho’s production with other production in the region is weak, and Niger imports few intermediate goods. The other low-performing countries perform poorly on exports.
ARII uses a 95 percent confidence interval from the mean to identify countries’ performance as low, average, or high. Under linear conditions, a score below 0.333 is classified as low, a score between 0.334 and 0.667 is classified as average, and a score above 0.668 is classified as high.
In this graph, a country’s “All Africa” value refers to how well the country scores compared to all other African countries, not just compared to the other members of the regional economic community/ies to which the country belongs.