Africa has eliminated significant trade tariffs in recent years.
Yet tariffs are only one way of limiting trade. Non-tariff measures – sanitary and phyto-sanitary measures, variances in labelling laws, and rules of origin – can affect commerce as well.
ARII uses four indicators to assess the extent to which a country trades with others in the region. New in 2019, the trade dimension of regional integration also estimates the potential for integration at a deeper level by noting whether countries have signed or ratified the agreement establishing the African Continental Free Trade Area (AfCFTA).
- Share of intra-regional exports over GDP measures the value of the goods that a country has exported within the region as a percentage of that country’s gross domestic product.
- Share of intra-regional imports over GDP measures the value of the goods that a country has imported from within the region as a percentage of that country’s gross domestic product.
- The share of intra-regional trade is defined as the sum of a country’s exports and imports within the region as a proportion of all of the region’s intra-regional trade.
- Average intra-regional import tariffs seeks to capture the effect of policies that enhance or inhibit trade openness. It measures the ad valorem equivalents of the minimum rates of the tariffs that a country has levied on its imports from the other countries in its region.
- The AfCFTA indicator reveals whether countries have signed or ratified the African Continental Free Trade Area agreement (ratified = 2; signed = 1, not signed = 0). It is measured for countries, not for regional economic communities.
Averaging 0.383, trade integration on the African continent tends towards the lower rungs of the score ladder. This is unsurprising: Africa has the highest average import duties and the highest average non-tariff barriers in the world.
As more countries ratify the AfCFTA agreement and start liberalising trade within the continent, regional exports and imports will grow and scores on this dimension will rise. As trade increases, so will the demand for production capacities and regional infrastructure, spurring growth in these dimensions of integration as well.
Eswatini is Africa’s best performer on trade integration, followed by Namibia. The next three countries that trade the most with their region are Lesotho, South Africa, and Zimbabwe.
These rankings reflect the fact that four of the top performers are members of the South African Customs Union (SACU). SACU has achieved a high level of trade liberalisation, boasting a full customs union that renders its economies strongly interdependent. Botswana, SACU’s remaining member, ranks seventh in trade integration on the continent.
Although Zimbabwe is not a member of SACU, it enjoys a favourable tariff rate for the region and has ratified the AfCFTA agreement. Most top-performing countries (for example, Côte d’Ivoire, Eswatini, Namibia, and South Africa) have ratified the AfCFTA agreement as well.
The country whose trade is the least integrated with its region is Somalia. Somalia is preceded by Sudan, Tunisia, Comoros, and Algeria. Tunisia, Somalia, Sudan, and Comoros have the highest import tariffs in the region. Algeria’s poor performance can be attributed to the low volume of its imports and exports within the region.
Countries’ Scores and Rankings on Trade Integration
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.