Uneven Gains: The Hidden Barriers to African Free Trade

A study by economists from the University of York, Queen Mary University of London, the IMF, and Miami University analyzed 1,244 firms across 27 economies, finding that trade policy alone is insufficient for broad-based growth. Companies with previous exposure to European markets saw their international sales share jump by 2.8 percentage points, significantly outpacing those with only regional experience. This disparity stems from the logistical and regulatory hurdles that established players are better equipped to navigate.

Scaling Production and Capability

Beyond market access, production capacity acts as a major bottleneck. Firms facing high capital-adjustment costs—such as the need for new machinery or expanded facilities—struggle to capitalize on tariff reductions. Without targeted interventions, such as affordable trade finance and export guarantees, the current trade momentum risks rewarding only the most prepared incumbents. Policymakers must now shift focus from mere border liberalization to industrial and financial support, including improved infrastructure and simplified customs, to ensure smaller enterprises can effectively compete in the expanding regional landscape. The "servicification" of trade—where increased demand for logistics, finance, and communications follows goods production—offers a potential pathway for deeper integration, provided that regulatory barriers in these sectors are systematically dismantled.