Trade in Intermediate Inputs and Trade Facilitation in Africa's Regional Integration

Abstract Despite concerted efforts, Africa's regional integration process has encountered delays. Since the third stage of the Abuja Treaty in 2008, piecemeal progress has been observed. It therefore begs a difficult but relevant question: why is the regional integration process stalling? The conventional answer lies in challenges such as inadequate financial resources and infrastructure for trade among others. However, an approach is proposed to refocus regional integration on resource‐based industrialization. The level of industrialization is examined in Africa using Balassa's Revealed Comparative Advantage Indexes based on the BACI dataset. Further, an input‐output table analysis on production of Kenya's trade in intermediate inputs is done based on the GTAP 8 dataset. The analysis finds that while the level of industrialization is heterogeneous among African economies, the overall level is low. Also, in the case of Kenya and five regions in Africa, imported intermediate was found to be a critical input to production, lending support to the importance of trade facilitation measures in ensuring timely and cost‐effective sourcing of inputs.