Intra-African Trade: Issues Involved in Improving Ghana's Trade with the Rest of Africa

Abstract

This paper aims to find out why Ghana’s trade to Africa is low and how it can be improved. This is necessary because Ghana is looking at achieving middle income GDP per capita status by the year 2015 thereby reducing poverty and one of the ways proposed is through the increment in Ghana’s export volume. Thus in 2004, the government of Ghana developed the Ghana trade policy document to serve as a guide in achieving the goal. This paper focuses on the determinants of Ghana’s trade with other African countries through analysis of Ghana’s trade performance, the trade policy document of Ghana, Trade Cost and Regionalism^[i]. An export equation is estimated using trade data on 49^[ii] importing African countries using the gravity model. The result shows that the determinants of trade cost are very significant in explaining Ghana’s trade except tariff. Most importantly is that the improvement in the importers infrastructure will increase Ghana’s trade significantly. Also proper regional integration is very significant in increasing Ghana’s trade.

Keywords: Trade, Trade Cost, Gravity Model, Regionalism

Notes:

[i] This focuses primarily of the Economic Community of West African States (ECOWAS) and how this regional body affects Ghana’s trade.

[ii] Countries used are Algeria, Angola, Benin, Botswana, Burkina Faso, Burundi, Cameroon, Cape Verde, Central African Republic, Chad, Congo, Dem. Rep., Congo, Rep., Cote d'Ivoire, Djibouti, Egypt, Arab Rep., Equatorial Guinea, Ethiopia, Gabon, The Gambia, Guinea, Guinea-Bissau, Kenya, Lesotho, Liberia, Libya, Madagascar, Malawi, Mali, Mauritania, Mauritius, Morocco, Mozambique, Namibia, Niger, Nigeria, Rwanda, Sao Tome and Principe, Senegal, Seychelles, Sierra Leone, South Africa, Sudan, Swaziland, Tanzania, Togo, Tunisia, Uganda, Zambia