Despite years of regional integration efforts, African countries trade more with Europe and Asia than with each other. This column estimates the gap between the current and potential trade efficiency of 45 African exporting countries and their 43 trading partners over the period 1996 to 2020. The findings highlight the existence of untapped trade potential between African countries and show that removing trade barriers across regional communities can boost intra-African trade.
Enhancing regional integration in Africa can promote inclusive growth, foster innovation, and ultimately improve human development (UNDP 2011). Regional integration, by ensuring free movement of factors of production, would allow the use of economies of scale through market enlargement, the exploitation of technological outsourcing, and the attraction of a surplus of foreign direct investment. Mbaye (2025) demonstrated that labour mobility can foster Africa’s innovation capacity and drive economic growth. Integration and trade can boost employment opportunities and empower individuals, thus reducing poverty.
The relatively small size of African markets, along with significant barriers, keep trade between African countries at a low level compared to other regions of the world (Figure 1). Economic and regional integration in Africa is a priority for many policymakers, as reflected in the African Union’s stated goal to establish the African Continental Free Trade Area by 2034. Regional Economic Communities (RECs) are tasked with accelerating the implementation of reforms aimed at removing trade barriers among member states to achieve an integrated regional market and, ultimately, a viable continent-wide monetary union.
Figure 1 Sub-Saharan intra trade and trade with the rest of the world
Source: Author’s construction with trade data provided by WITS
Trade potential refers to the maximum level of trade that can be achieved between two partners. Based on the production economics literature initially used to evaluate the efficiency of firms, efficiency in trade relationships occurs when actual trade (i.e. the observed level of trade) matches the maximum level. The gap represents untapped potential, and enhancing regional integration can help close it.
Studies by Foroutan and Pritchett (1993), Chauvin and Gaulier (2002), Avom and Mignamissi (2013), and Désiré and Njikam (2014) have concluded that the trade potential of African countries is weak or even exhausted. According to these studies, the low level of trade between African countries is explained by their specialisation in natural resources, which they can only extract from each other in limited quantities. Therefore, dismantling all trade barriers in various RECs would not significantly boost intra-African trade, as a lack of diversification already constrains the continent’s trade potential.
In contrast, authors such as Achy (2007), United (2013), Djemmo Fotso (2014), and Geda and Seid (2015) emphasise the untapped potential of deeper integration, estimating that it could significantly enhance trade among African countries. In the same vein, Fofack et al. (2021) estimate that the African Continental Free Trade Agreement (AfCFTA) could increase intra-African trade by 24% in the short term and possibly more in the long run (see also Figure 2).
Figure 2 Estimated gains from the AfCFTA
Source: UNCTAD (2018)
In a recent paper (Bakouan 2025), I examine Africa’s trade potential and the capacity of regional integration to improve intra-African trade. I find large unexplored export capacities and show that reducing trade barriers could boost trade. Greater trade efficiency could be achieved by adopting a single currency for the continent, reducing road transport costs for landlocked countries, improving institutional quality, and facilitating trade. Therefore, implementing trade facilitation reform programs alongside the African Continental Free Trade Area will positively impact trade efficiency.
Intra-African exports determinants
Based on the assumption that any discrepancy between maximum trade and observed trade flows is due to inefficiencies – as in Ravishankar and Stack (2014) and Bhattacharya and Das (2014) – I use a stochastic frontier gravity-model approach that estimates the gap between current and potential trade efficiency of 45 African exporting countries and their 43 trading partners over the period 1996 to 2020.
The findings suggest that several factors promote trade between African countries, including sharing a common border, having a common official language, and establishing regional trade agreements (RTAs) such as shared currencies or free trade agreements, as well as the quality of institutions. The positive and significant coefficient estimates for the RTA dummy confirm the trade-enhancing effect of regional integration. Using the same currency also has a positive impact on trade, as it eliminates exchange rate risk. Additionally, economic communities in different regions have contributed to an increase in trade.
In contrast, factors such as bilateral real exchange rates, geographical constraints like distance and being landlocked, and corruption control tend to depress African countries’ bilateral exports. The impact of the bilateral real exchange rate is weakly negative, which can be attributed to the challenges of converting local currencies during transactions. Geographical isolation, such as that caused by being landlocked, increases transport costs and further reduces trade – an effect that is even greater in developing African economies. According to Coulibaly and Fontagné (2006), European landlocked countries trade 30% less than other trading partners, while landlocked non-European countries trade 40% less. The results also show that control of corruption has a negative impact on trade between African countries. This finding aligns with the concept of ‘lubrication of the wheel’ proposed by Méon and Weill (2010), which suggests that corruption can sometimes facilitate trade by bypassing restrictive procedures.
Intra-African export performance and potential
Trade efficiency assumes that trade between countries is close to its maximum potential. The most efficient bilateral trade relationships are identified by calculating an efficiency score that corresponds to the percentage of maximum trade realised. Hence, an efficiency score of 100% means that the maximum level of trade is realised and there are no trade capacities; thus, removing all trade barriers cannot increase the trade level. However, the inefficiency relationship implies an efficiency score below 100%, which means that the existence of trade potential corresponds to the gap (100% minus the efficiency score).
My analysis reveals that the highest bilateral trade efficiency scores are found in the Arab Maghreb Union (AMU) (e.g. 175% for Tunisia–Algeria and 113% for Tunisia–Mauritania). Mauritania and Morocco are also near their potential, at 98%. The results suggest that trade potential is maxed out in the Arab Maghreb region.
In the Southern African Development Community (SADC), Zimbabwe and Madagascar have the highest bilateral trade efficiency score (65%), followed by Zimbabwe–Uganda (58%) in the Common Market for Eastern and Southern Africa (COMESA). The trade potential of these countries is less than 50%, which is considered small.
The results indicate that many African trade relationships are inefficient, as reflected in the efficiency scores. Most of the scores are below 50%, suggesting that significant trade potential exists. The lowest efficiency score observed in the Economic Community of West African States (ECOWAS) is 13% between various pairs including Cabo Verde-Guinea, Ghana-Senegal, Sierra Leone-Senegal, and Sierra Leone-Togo. The trade potential of ECOWAS is not yet exhausted and remains significant. These results align with previous studies concluding that Africa has considerable unexploited trade potential. Indeed, for most countries, trade potential remains significant. Compared to East and Southern Africa, West African economies still have substantial scope to increase trade. These findings confirm those of ECA (2010), which show that the trade potential of West and Central African countries is higher than that of East and Southern Africa.
Policy implications
These findings have important policy implications for promoting African intra-exports performance to boost growth, and thereby reduce poverty:
- Deepen regional integration: African countries should remove tariffs and non-tariff barriers to increase intra-trade and facilitate knowledge mobility. Regional integration would enhance cooperation and encourage investment in regional infrastructure, enabling access to markets for landlocked countries and improving trade efficiency. Greater efficiency could also be achieved through the adoption of a single currency.
- Improve trade facilitation: African countries should adopt measures to reduce administrative barriers and delays, thereby lowering corruption and improving trade between countries.
- Effectiveness of the African Continental Free Trade Area (AfCFTA): The AfCFTA enlarges market size, boosts trade, and enables economies of scale. The implementation of trade facilitation reform programmes in conjunction with the AfCFTA would have a positive impact on trade efficiency.
Conclusion
Since independence, regional integration has been presented as a pathway for Africa to strengthen its position in the world economy. My results highlight the existence of untapped trade potential between African countries and show that removing trade barriers across regional communities can boost intra-African trade. By strengthening regional integration, African countries can boost their trade flows and reduce poverty. Integration is essential for Africa to pool resources effectively and address significant development challenges.
Source : VOXeu
