Intra-African Trade in Services and the AFCFTA

Socrates Majune (), Judy Kiende Kaaria () and Evelyne Nyathira Kihiu ()
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Judy Kiende Kaaria: University of Nairobi
Evelyne Nyathira Kihiu: Kenya Institute for Public Policy Research and Analysis

A chapter in Africa and the Formation of the New System of International Relations—Vol. II, 2023, pp 101-120 from Springer

Abstract: Abstract This paper assesses the prospects of AfCFTA—which commenced trading in January 2021—in boosting intra-African trade in services. We use the PPML estimator of the gravity model on bilateral services trade data for total and eight categories of services in 49 African countries spanning from 1995–2019. For our first objective, we assess the determinants of services trade, particularly the degree of complementarity between trade in goods and trade in services. The second objective establishes the role of trade facilitation on trade in services within Africa. We find that goods complement services, particularly total, transport, construction, other business services and personal, cultural and recreational services. We also find that most ‘hard’ indicators of trade facilitation improve trade in services within Africa compared to ‘soft’ factors whose effect is mixed. For purposes of policy, we find that having a services-specific policy, for instance, the protocol on trade in services in the AfCFTA, is likely to boost intra-African trade in services. This can be achieved by reducing the deficit in infrastructure such as internet spread and broadband subscriptions and the regulatory quality of countries. Relaxing the competition policy, investment policy, research and technology and education and training policies could reduce trade costs and, in turn, facilitate trade in services.

Keywords: AfCFTA; Africa; Gravity model; Intra-Africa; Regional Integration; Trade in services (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:spr:aaechp:978-3-031-34041-3_7

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DOI: 10.1007/978-3-031-34041-3_7

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