Lowering Trade Barriers in East Africa Could Boost Prosperity for Millions
Trade costs are a bigger barrier to trade in Sub-Saharan Africa than tariffs. A study focused on East Africa shows that reducing trade costs through better trade facilitation, lowering nontariff barriers, and liberalizing business services can lead to significant economic gains for countries like Kenya, Tanzania, Uganda, and Rwanda. Deep integration within the East African Customs Union can bring substantial benefits, especially through improved trade facilitation. Multilateral actions to reduce nontariff barriers and services barriers could further increase these gains. In particular, reducing services barriers in Kenya and Tanzania could boost welfare even more than multilateral efforts. This study is the first to assess the impact of liberalizing barriers against domestic and multinational service providers in a detailed trade model, using new databases on trade costs and service barriers.