Trade Facilitation, Economic Welfare, and Sustainable Development of West and South Africa

The purpose of this study is to estimate the potential annual economic gain to be had from trade facilitation by the member countries of the South African Customs Union (SACU) and the coastal countries of the Economic Community of West African States (ECOWAS). These measures would decrease the border and documentary compliance time and costs associated with the administration of international trade. They will increase regional trade integration enabling the achievement of the sustainable development goals of these countries. A partial equilibrium welfare economics framework is used. It employs sets of export supply and import demand elasticities for each country that are derived using a general equilibrium estimation method. The annual economic welfare gains resulting from the reduction of excessive trade compliance costs for the ECOWAS region are estimated to between US$1.6 billion to US$2.7 billion (2019 prices). This is between 0.24% and 0.42% of the combined GDPs of these countries. The magnitude of this economic gain is between 6% and 10% of the governments’ budgets assigned for education, and is between 33% and 58% of the amounts of their budgets allocated for health. In the absence of reform, these inefficient practices waste an amount equal to between 15% and 26% of the annual net official development assistance these countries receive. The economic gains for SACU countries from reducing the excess administrative costs for imports and exports of SACU countries would be between US$2.2 billion and US$3.7 billion (2018 prices) or between 0.54% and 0.90% of GDP of the member countries of this region. This gain is 1.6 to 2.6 times greater than the annual net official development assistance received. For South Africa, the gain from reducing these excess compliance costs is between US$2.1 billion and US$3.5 billion, which is 2.3 to 3.8 times greater than the annual development assistance they receive. Keywords: Trade facilitation; West Africa; Economic Community of West African States (ECOWAS); South African Customs Union (SACU); South Africa; Regional Integration; Trade Compliance Costs; Trade Reform; Economic Welfare Gains; Sustainable Development; SDGs 2030.