Development and building trade capacity
Acknowledgments
This report was prepared under the guidance of Susan Lund Vice President of Economics at IFC and Anabel Gonzalez Deputy Director-General at the WTO. Marc Auboin (WTO) and Denis Medvedev (IFC) provided leadership for the research and Eddy Bekkers (WTO) Alexei Timofti (WTO) Alexandros Ragoussis (IFC) and Susan Starnes (IFC) managed the project team. Working team members included Karlygash Dairabayeva Leo N. Holtz Serhii Kostohryz Shan Shan Li Steve Mbollo Ibrahim Nana Joshua Ostry Arun Prakash Dario de Quarti Friedemann Roy Yulia Vnukova and Ariane Volk.
Framework for Counterfactual Experiments on Trade Finance Costs
The costs of financing international trade are an important component of total trade costs. This annex contains a description of the determination of financing costs based on the survey and data in the literature and the calculation of counterfactual financing costs. Furthermore details of the employed WTO Global Trade Model are provided.
Executive Summary
Trade is an important component of economic activity in Africa equivalent to around 50 percent of the continent’s gross domestic product (GDP) according to the World Bank. The four largest economies of the Economic Community of West African States namely Côte d’Ivoire Ghana Nigeria and Senegal—which we refer to as the ECOWAS4—traded $208 billion in goods and services during 2021 representing between 25 percent and 63 percent of GDP.
Robustness Checks
A range of robustness checks was conducted to confirm the validity of our analysis. The construction of baseline trade finance costs is based on a careful analysis of the available data as presented in Annex 3 describing the conceptual framework for the counterfactual experiments. However two assumptions had to be included with little guidance in the actual data. Therefore robustness checks are included on these two assumptions.
Conclusions
Côte d’Ivoire Ghana Nigeria and Senegal—the ECOWAS4—are making progress in integrating their economies internationally through trade. The number of firms participating in international markets is growing and exporters are becoming more competitive expanding into new products and reaching new destinations. Potential regional integration associated with the AfCFTA will further support these positive trends and create new opportunities to leverage trade for development.