How do sanctions shape intra-African trade? Implications for AfCFTA implementation

Abstract

This study examines the role of sanctions in shaping intra-African trade. Despite efforts to boost intra-African trade, Africa’s share of global trade remains low, stagnating at around 15 percent. Using an augmented gravity model and Poisson Pseudo Maximum Likelihood (PPML) estimation, this study analyzes the effects of various sanctions (trade, financial, arms, military, and travel) on bilateral exports among African countries. The findings reveal that trade sanctions significantly reduce exports within the continent. Financial sanctions, restrictions on military assistance, and travel bans also negatively affect trade, though to varying degrees. The results underscore the need for African nations to mitigate the adverse effects of sanctions by strengthening economic resilience, enhancing trade facilitation measures, and fostering diplomatic engagement. This study provides policymakers with valuable insights on how to navigate geopolitical challenges while maximizing the benefits of the AfCFTA.