The vast majority of African countries are members of the World Trade Organization (WTO). Only Algeria, Libya, Sudan, South Sudan, Ethiopia, Eritrea, Somalia, Comoros, Equatorial Guinea and Sao Tome and Principe remain outside the organization, but most of them have agreed to join. Nevertheless, most trade policies are protectionist in nature.
In more than half of the African countries, the weighted average most-favored-nation rate exceeds 10%; in all others, except Mauritius (the only African country that actually has free trade), it exceeds 5%. In the case of effectively applied tariffs, the picture looks equally grim: most African countries applied higher, and sometimes significantly higher, tariffs than their ASEAN-5 competitors, not to mention the EU and the US. Only four members of the Southern African Customs Union (SACU), i.e. Botswana, Lesotho, Namibia and Swaziland, joined Mauritius in the low-tariff group.
In addition to tariffs, there are many non-tariff barriers (NTBs) that complement protective measures. In many cases, these barriers can effectively stop cross-border trade in goods and especially services. They are not easy to detect and measure, and we do not have estimates of their tariff equivalent.
In addition to explicit NTBs, such as technical barriers to trade (TBTs), sanitary and phytosanitary (SPS) measures, and certification, restrictions on the free movement of people should also be mentioned. African nationals require a visa to visit more than 75% of other African countries. North and Central African countries have the most restrictive visa policies for their neighbors (AEO, 2017).
Restricting the free movement of people limits trade, especially (but not only) services. Clearly, in a region where modern communication platforms and digital trade remain underdeveloped, the role of direct contacts between traders is important. Visas are also detrimental to cross-border shuttle trade and intra-African tourism. In this context, the signing of a protocol on the free movement of people in Kigali is good news. The bad news is that several important countries, such as South Africa (plus their SACU partners), Nigeria, Tanzania, Côte d’Ivoire, and all North African countries, have not signed the protocol.
In general, both tariff and non-tariff barriers strongly discriminate against intra-continental trade compared to trade with foreign partners. Developed countries, especially the EU and the US, offer lower import tariffs than neighboring African countries. In addition, almost all African countries benefit from the Generalized System of Preferences (GSP), i.e., unilateral trade privileges in the form of zero or very low tariffs offered by developed countries as a form of development assistance.
A complex network of regional agreements
In recent decades, African countries have entered into several, often overlapping, trade agreements aimed at promoting sub-regional economic integration. Most of these declared ambitious goals (building a customs union), and three of them (SACU, the West African Economic and Monetary Union [WAEMU], and the Central African Economic and Monetary Community [CEMAC]) were meant to complement existing (from colonial times) monetary unions. However, none of them included trade in services, and most did not address issues such as non-tariff barriers or investment regimes.
The sad story is that existing sub-regional trade agreements in Africa do not work or work only partially for various political reasons. The SACU seems to be a positive exception.
Poor infrastructure and logistics.
In addition to formal and informal trade barriers, poor infrastructure and logistics are another factor impeding intracontinental trade. Even a cursory glance at the economic map of Africa suggests the underdevelopment of transcontinental road and especially rail networks. Modern transport organization and trade logistics are rare. Bureaucratic and corrupt border and customs procedures, as well as numerous security risks (stemming from armed conflicts and organized crime) further complicate the transportation and transit of goods between and within countries. As a result, the cost of moving goods in African countries is five times higher than in the United States.