AfCFTA reshaping African commerce with strong early gains and rising GDP influence

The authors report that AfCFTA membership is linked to a 52.3 percent rise in intra-African trade under the baseline ordinary least squares model. This effect remains consistent across robustness checks, including fixed effects, Poisson pseudo-maximum likelihood and instrumental variable estimations.

A new economic analysis has delivered strong evidence that the African Continental Free Trade Area (AfCFTA) is already reshaping trade patterns across the continent, with measurable gains in intra-African flows and a clear pathway toward deeper economic integration. The findings come from the peer-reviewed study Assessing the Impact of the African Continental Free Trade Area on Intra-African Trade: A Gravity Model Analysis, published in the Journal of Contemporary Business Research.

The research applies an upgraded gravity model to more than three decades of trade data from 22 African economies. The study offers one of the most detailed econometric evaluations to date of how AfCFTA is influencing bilateral trade on the continent. The analysis incorporates variables that earlier models tended to overlook, including inflation, tariffs and political stability, while using advanced estimation techniques to handle zero-trade flows and heteroscedasticity.

Regional integration gains ground as AfCFTA membership boosts trade

The authors report that AfCFTA membership is linked to a 52.3 percent rise in intra-African trade under the baseline ordinary least squares model. This effect remains consistent across robustness checks, including fixed effects, Poisson pseudo-maximum likelihood and instrumental variable estimations.

The fixed effects model shows a positive association of about 35.2 percent, while the PPML approach, which handles zero trade values more effectively, reveals a 37.5 percent rise. In each specification, AfCFTA emerges as a reliable driver of greater commercial exchange. The evidence underscores the agreement’s ability to reduce trade barriers, streamline market access and build more predictable cross-border trading conditions.

The research is released at a critical moment for the trade bloc. With 47 countries having ratified the deal by late 2023, and with new protocols on competition, investment and intellectual property nearing full implementation, policymakers are under growing pressure to demonstrate that continental integration can generate meaningful economic outcomes. The findings from this study provide tangible proof that AfCFTA is delivering measurable gains even in its early operational stages.

GDP emerges as the strongest predictor of trade outcomes

While the AfCFTA variable carries weight, economic size remains the most powerful predictor of how much African countries trade with each other. The study finds that each percentage point increase in GDP corresponds to a roughly 50 percent rise in bilateral trade flows. The fixed effects model places this impact at around 48.5 units of trade for each unit increase in GDP.

These results reinforce an established pattern in gravity model literature: economies with larger productive capacity tend to trade more, diversify more easily and respond more quickly to market opportunities. For Africa, where productivity and industrial capacity vary widely, this finding highlights a worrying structural imbalance. Larger economies such as South Africa, Nigeria, Morocco and Kenya continue to dominate regional trade flows, while smaller or less advanced economies struggle to expand their export bases.

That imbalance is likely to persist unless targeted policies succeed in accelerating industrial and economic development in smaller member states. According to the authors, strengthening productive sectors, improving infrastructure and enabling broader participation in regional value chains will be central to narrowing disparities.

Distance still a major constraint despite policy liberalization

The study highlights the continued importance of physical distance as a barrier to trade. The gravity equation shows that a one percent increase in distance reduces trade by nearly 9 percent. African countries that are geographically distant continue to face steep logistical costs, long transport times and poor connectivity, despite policy reforms meant to encourage trade.

Even under AfCFTA rules, many landlocked and remote economies remain effectively cut off from efficient access to markets. The research indicates that distance coefficients remain strongly negative across all model specifications, although they lose statistical significance in the PPML estimation.

The findings confirm longstanding concerns that the benefits of AfCFTA could be unevenly distributed without major investments in transport corridors, port modernization, digital infrastructure and customs harmonization. Without these upgrades, the study warns that remote regions will remain on the margins of continental trade expansion.

Political stability and tariff structures shape trade patterns

Political stability emerges as one of the strongest non-economic predictors of bilateral trade. The research shows that less stable countries trade significantly less, with political instability weakening investment, slowing production and disrupting supply chains.

The negative coefficient for political instability remains consistent across OLS, fixed effects and PPML estimations, demonstrating that governance conditions are deeply intertwined with economic outcomes. Trade downturns are more severe in economies affected by terrorism, governance breakdowns or prolonged civil unrest.

The study also presents complex findings on tariffs. While tariff reductions often promote trade, the data shows mixed effects on revenue and trade flows depending on economic context. High tariffs suppress trade, yet modest tariff reductions can increase import revenue by stimulating higher volumes. The authors note that tariff structures remain uneven across the continent, complicating efforts to standardize trade policy under AfCFTA.

Landlocked countries face persistent structural disadvantages

The research confirms that landlocked countries, including Lesotho, Uganda and Malawi, continue to face steep trade penalties due to geography. The analysis shows that lacking direct port access significantly raises transport costs and reduces competitiveness. These structural disadvantages persist even when policy reforms are implemented.

The findings reinforce calls from regional bodies for major cross-border infrastructure projects, multimodal transport networks and smoother customs procedures aimed at supporting landlocked economies. Without such interventions, AfCFTA’s benefits are unlikely to fully reach these nations.

COVID-19 shock highlights mixed resilience across member states

The study also includes a smaller COVID-19-specific regression, focusing on how AfCFTA membership affected trade during the pandemic. Unlike the broader analysis, the pandemic-era results show no significant difference between AfCFTA and non-AfCFTA countries in terms of trade performance.

Instead, GDP proved the decisive factor in determining resilience. Countries with more diversified economic structures weathered the shock better than those with narrower export bases. Distance and other structural variables had limited explanatory power during the crisis, likely due to disruptions in global logistics and supply chains.

The authors argue that this finding highlights the central role of economic diversification and production capacity in building resilience against external shocks.

Advanced econometric techniques confirm robust results

The authors employ ordinary least squares regression, fixed effects estimation, PPML high-dimensional estimation and instrumental variable techniques to counter endogeneity concerns.

The instrumental variable approach is particularly important, as it corrects for the possibility that states with higher trade volumes may be more likely to join AfCFTA in the first place. Under this model, AfCFTA remains statistically significant, reinforcing the argument that regional integration plays a causal role in boosting trade.

Variance inflation factor diagnostics also confirm that multicollinearity does not undermine the model’s reliability.

Policy recommendations point to infrastructure, governance and implementation

Based on the findings, the authors outline several policy priorities for African governments and the AfCFTA Secretariat. These include strengthening the agreement’s operational frameworks, harmonizing regulations, streamlining border processes and accelerating infrastructure investment.

The study stresses that political stability, good governance and institutional strengthening are essential for ensuring the long-term success of the agreement. Tariff reforms must also be calibrated to balance national revenue needs with the goal of trade liberalization.

The authors further call for ongoing empirical monitoring as AfCFTA evolves, noting that its full impact will only become visible over the long term as new protocols and trade facilitation measures take effect.