Implementation of trade reform in sub-Saharan Africa: how much heat and how much light?

John Nash and Dec

No 1218, Policy Research Working Paper Series from The World Bank

Abstract: Adjustment programs in sub-Saharan Africa have been somewhat less intensive in trade reform than programs in other countries have been. Implementation of trade reform overall, however (but not the most important reforms), has been better in sub-Saharan Africa. Retrogression has also been more frequent. As a group, the intensive adjustment lending countries made significant progress in the 1980s and early 1990s, but there was significant variation among them. For sub-Saharan Africa, progress has been more impressive in recent years then in earlier years. In many countries, adjustment did not begin until the mid-1980s and relatively few measures were implemented up front. For the franc-zone countries, underimplementation rates are lower in the most recent data, and by some - but not all - measures their openness has improved more in recent years. By virtually all measures, however, improvements over earlier periods have not been as great for non-franc zone countries. Reduced protectionwas largely offset by real devaluation in most country groups and, by most measures, incentives to produce import substitutes actually improved in the years immediately after the first adjustment loan. In more recent years, the incentives have fallen modestly. Using a new method for quantifying nontariff protection in terms of tariff equivalence, the author argues that, in general, countries are not in danger of de-industrialization from the rapid disprotection of import-substituting industry. However, franc-zone countries showed greater declines in incentives for import substitution because of their lower rate of real devaluation. One implication may be that their ability to reduce tariffs and nontariff barriers is impeded by their inability to offset them with devaluations as other countries did. Non-franc-zone countries reduced tariff-equivilant protection in recent years by 15 to 49 percentage points more than franc-zone countries. How open are the trade regimes at this point? The decline in tariff-equivalent protection, although not trivial, is insufficient to reduce the protection to moderate levels relative to deep reformers in East Asia and Latin America. The biggest problem is with foreign exchange allocation. Mauritius may be the only non-franc zone sub-Saharan country in which the currency is essentially convertible and has been for some time. This basic reform has not begun in most countries or has only recently been completed (Ghana).

Keywords: Environmental Economics&Policies; Economic Theory&Research; Economic Stabilization; Trade Policy; TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT (search for similar items in EconPapers)
Date: 1993-11-30
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Citations: View citations in EconPapers (7)

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