Potential impacts of free trade areas and common currency on sustainable agricultural export in Africa

• Published date: 01 February 2022
• Author: Richardson K. Edeme,Chigozie Nelson Nkalu,Chinenye E. Iloka
• Date: 01 February 2022
• DOI: http://doi.org/10.1002/pa.2392

ACADEMIC PAPER

Potential impacts of free trade areas and common currency on

sustainable agricultural export in Africa

Richardson K. Edeme

1,2

| Chigozie Nelson Nkalu

1,3

| Chinenye E. Iloka

4

1

Department of Economics, University of

Nigeria, Nsukka, Nigeria

2

Institute of Business Research, University of

Economics, Ho Chi Minh City, Vietnam

3

Department of Economics, Aberdeen

Business School, University of Aberdeen,

Aberdeen, UK

4

Planning and Research Department, National

Population Commission, Abuja, Nigeria

Correspondence

Chigozie Nelson Nkalu, Department of

Economics, University of Nigeria, Nsukka,

4100002, Nigeria; Department of Economics,

Aberdeen Business School, University of

Aberdeen, Scotland, UK.

Email: nelson.nkalu@unn.edu.ng; c.nkalu.20@

abdn.ac.uk

This study probes the potential impacts of free trade areas and common currency in

fostering agricultural export based on data from 45 countries in Africa from 1996 to

2018. The main concern is to determine whether exogenous events like becoming a

member of Arab Mighreb (AMU), Community of Sahel-Saharan States (CS-SS), Com-

mon Market for Eastern and Southern Africa (COMESA), East African Community

(EAC), Economic Community of Central African States, Intergovernmental Authority

on Development (IGAD), Economic Community of West African States (ECOWAS),

Southern African Development Community (SADC) or becoming a member of African

Continental Free Trade Area (AFCFTA) can potentially accentuate agricultural export.

From the main finding, there is evidence that membership becoming membership to

AMU, CS-SS, AMU, CEN-SAD, COMESA, EAC, ECCAS, ECOWAS, IGAD or part of

SADC has a positive marginal impact on agricultural export, its influence is not imme-

diate. Also, the positive marginal impact on agricultural export for becoming a mem-

ber of AFCFTA continues to decline after 1 or 2 years than the current year.

Common currency and economic growth have a positive marginal impact on agricul-

tural export for the period covered by the study.

1|INTRODUCTION

The concern to lean on agricultural export to accentuate sustainable

economic growth and development has been of great interest to

economists and policymakers. In an economic growth, literature

emphasis has been laid that export is strongly enhanced when coun-

tries have access to foreign markets and stability in macroeconomic

factors. In support of this assertion, Tovonjatovo and Dong (2015),

Chen, Sousa, and He (2016) note that one of the greatest strategies

of economies that have witnessed rapid improvement in export is tak-

ing advantage of foreign markets. However, improving market access

is tenable with the removal of trade restrictions which can be

achieved through free trade agreements. Arguing further, Corbo, Kru-

ger, and Ossa (1985), WTO (2011) asserts that the desire by most

countries to attain sustainable growth can also expose them to

intense integration as a result of regional integration and at the same

time increase foreign exchange volatility. It is in this regard that sev-

eral efforts have attempted to examine the link between trade inte-

gration, exchange rate and exports. Despite the efforts so far, there is

a lack of study quantifying free trade areas and sustainable agricultural

export in Africa.

Countries in Africa desire to achieve sustainable growth and

improve economic wellbeing to a greater percentage of citizens. It is

perceivedthat agricultural export is imperative in achievingthis (Edeme,

Ifelunini, & Nkalu, 2016; OECD/FAO, 2016). Butkus, Karpavicˇius, and

Matuzevicˇi

utė(2018) observe that agricultural export engenders global

economic integration and diversification and open up small and back-

ward economies. In Africa, despite the huge potential inherent in agri-

culture, the sector has not contributed meaningfully to the economic

development, endangered by poor regional integration (Beyene, 2014;

Shobande, Ezenekwe, & Uzonwanne, 2018). Earlier, Ngaruko (2003)

came up with the conclusion that agricultural export commodities are

Received: 23 July 2020 Revised: 12 August 2020 Accepted: 13 August 2020

DOI: 10.1002/pa.2392

This is an open access article under the terms of the Creative Commons Attribution License, which permits use, distribution and reprodu ction in any medium,

provided the original work is properly cited.

© 2020 The Authors. Journal of Public Affairs published by John Wiley & Sons Ltd.

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https://doi.org/10.1002/pa.2392