Sub-Saharan Africa?

Surely, the incentives of agents (firms) in GVCs are not always aligned. However, although the division of the gains generated by GVCs may naturally be unequal, there is no doubt that downstream firms typically benefit when their suppliers become more productive and vice versa. A direct implication of this simple observation is that firms from high-income countries that import or export goods to less-developed economies might find it beneficial to share process and product innovations with their GVC coparticipants. Furthermore, the stickiness of relational GVCs makes firms particularly prone to benefit from learning by importing and exporting through repeated interactions with highly productive firms at the global frontier of knowledge.

Promoting regional value chains at the regional economic community level could be a second-best approach (after GVC participation) while conditions are being put in place at the continental level to foster Africa’s full involvement in GVCs through the AfCFTA. The last section of this chapter explores ways to foster these regional value chains.

Are Nontariff Measures Limiting the GVC Participation of Firms in Sub-Saharan Africa?

Examining the impact of food standards on bilateral trade flows, Ehrich, Brümmer, and Martínez-Zarzoso (2015) hint at an answer. The study finds that specific standards are excluding farmers in LMICs from high-value chains because of the high investment costs to implement them. At the same time, standards reduce information asymmetries and reveal the changing preferences of consumers, which somehow levels the playing field for firms in the LMICs that can produce at scale. For Sub-Saharan African firms to participate in these GVCs, they must be productive, operate in a country that can credibly enforce contracts to fulfill stringent quality expectations, and operate in a sector with inelastic demand for the final product. Given the weak institutions in Sub-Saharan Africa and the generally low productivity of firms in the region, participation in such GVCs is constrained.

It is therefore relevant to assess what it will take for Sub-Saharan African firms to enter GVCs and access at scale the distribution networks in leading world markets in Asia, Europe, and North America.2 More specifically, are NTMs a catalyst or a barrier to Sub-Saharan African firms’ access to distribution networks in leading markets? This section provides a first attempt to answer this question, by examining the NTM structure of Sub-Saharan African countries using a newly collected NTM database provided by the United Nations Conference on Trade and Development (UNCTAD) and the World Bank. We analyze the import coverage of NTMs for the Sub-Saharan African countries in our database, highlighting the most-used measures, most-affected products, and most-targeted trading partners.

The trade impacts of NTMs are quantified using the estimated ad valorem equivalent (AVE) from Kee and Nicita (2016). We compare the restrictiveness of NTMs with that of tariffs across countries, regions, and markets and infer some policy implications on how to strategically diversify Sub-Saharan African market access through GVC participation.

Data on NTMs and Their Coverage in Sub-Saharan Africa

We use data on NTMs from UNCTAD’s Trade Analysis Information System (TRAINS). Most of the NTM data were collected between 2011 and 2015. The database covers 15 African countries3 and is complemented with tariff and trade product-level data (covering all 15 countries except Liberia), collected using the World Bank’s World Integrated Trade Solution (WITS) tool. NTMs are classified according to the UNCTAD Classification of Non-Tariff Measures (UNCTAD 2015), which includes sanitary and phytosanitary measures (SPS) and technical barriers to trade (TBTs) covered under World Trade Organization (WTO) agreements. We group both types of measures as “SPS/TBT.” Other types of NTMs are preshipment inspections and formalities; contingent trade-protective measures; licensing, quotas, and prohibitions; and price controls—all of which we group as “non-SPS/TBT” measures. We use the quantification of NTMs into AVEs from Kee and Nicita (2016). AVEs are available for Benin, Ethiopia, Ghana, Mali, Niger, Nigeria, and Togo.

Coverage of SPS/TBT measures in Sub-Saharan African countries’ imports is partial, because the observations cover only 20 percent of the product-partner pairs, representing 31 percent of the import value (figure 7.1). It is also highly heterogeneous, with low coverage in Côte d’Ivoire, Senegal, and Togo, and high coverage in Benin and Ethiopia. In some countries, like Benin, Burkina Faso, and Cabo Verde, the frequency and value coverages are very different, with the value coverage generally being larger. This is explained by higher coverage of large products and partners. Conversely, coverage of the non-SPS/TBT measures is comprehensive, with an average coverage higher than 60 percent and little variation across countries. Additionally, non-SPS/TBT measures are not partner- or product-specific, so the value and frequency of coverage are very similar.

The average number of measures applied to an imported product varies by country, being very high in Cabo Verde, Ethiopia, Ghana, Mali, and Niger (figure 7.2). The average number of non-SPS/TBT measures is more than three times the number of SPS/TBT measures, with even higher ratios in Mali (12:1) and Ethiopia (5:1). The most common SPS/TBT measures used by Sub-Saharan African countries are conformity assessments, prohibitions, and labeling requirements for each SPS and TBT variant, accounting for 81 percent of total SPS/TBT measures (figure 7.3). Other common measures are tolerance limits for residues and restricted substances (4 percent) and hygienic requirements (3 percent), both for SPS reasons.

Different subtypes of measures have varied coverage. Preshipment inspection is the measure with the highest coverage, required for almost