Revisiting the impact of trade facilitation measures in Africa: A structural gravity approach

This study investigates the trade impacts of trade facilitation (TF) and computes ad-valorem tariff equivalents of trade facilitation for Africa. Its contribution is twofold. First, a structural gravity model is used to estimate the impact of TF on trade at a disaggregated level. We also extend our results using different indices that measure TF. Second, in a partial equilibrium framework and using some counterfactuals, it simulates the impact of TF in African countries. Our findings indicate that time to trade has a strong and negative impact on trade, whereas logistics performance and the trade-enabling index positively and significantly impact trade. The analysis suggests that African countries benefit most from TF improvements, particularly those with long delays and weak infrastructural and logistics performance. We find that a one-day custom delay has a 0.9% tariff equivalent. At the product level, the agriculture, food, and some manufacturing sectors, which are the leading African imports, benefit the most from implementing TF. In contrast, mining-related products, which are the major export components of Africa, benefit the least. An ambitious and realistic TF implementation of reducing trade delay by half enhances Africa’s exports and imports by 30.2% and 12.7% respectively.