Determinants of Intra Sub-Saharan African Trade: Evidence from ECOWAS and CEN-SAD Countries

Abstract

This study investigates the determinants of intra-regional trade in the Economic of West African States (ECOWAS) and the Community of Sahel-Saharan Sates (CEN-SAD) over the period of 1995-2018.The study employs the modified Poisson models, which captures the source of zero counts. Data on the real exchange rate, population, and gross domestic product were sourced from World Bank Development Indicators. Import flow, time of import, and time of export were computed from WITS (COMTRADE). Further, the study obtained data on voice and account, law and order, government effect, regulatory quality, reduction in political violence, control of corruption from World Wide Governance indicator. The results of the study indicated that imports within ECOWAS are driven by one governance variable or the other either in the importing countries or the partner countries. Besides, trade facilitation is a binding constraint to imports, while population and GDP are important drivers of intra-ECOWAS trade. For CEN-SAD, it is evident that the gravity variables are responsible for imports, whereas governance variables have no significant effect on imports. The implication of these results is that authorities in ECOWAS and CEN-SAD should strengthen governance institutions as doing so will boost trade within the region. Also, it is necessary for government, particularly in CEN-SAD, to come up with policies that will allow for accountability and transparency.