African Continental Free Trade Area's (AfCFTA) effects on East African exports and household welfare
Résumé
This policy brief investigates the impact of membership in the African Continental Free Trade Area (AfCFTA) and the East African Community (EAC) on export promotion and household welfare in Tanzania, Uganda, Rwanda, Kenya, and Burundi. The analysis reveals a positive association between export performance and investment, imports, consumption, political stability, and government effectiveness. Notably, traditionally relevant factors like GDP and FDI lacked statistically significant associations with export performance. The impact of EAC and AfCFTA membership on exports remains inconclusive. Regarding household welfare, a positive correlation emerged with GDP, domestic savings, trade (imports and exports), rule of law, and corruption control. Counterintuitively, EAC membership displayed a negative and significant impact on household welfare, while AfCFTA membership had a positive but insignificant effect. Policymakers should prioritize investments boosting domestic savings and productive capacity, cultivate a rule-of-law business environment, and implement strategic export promotion informed by import composition analysis. Future research should adopt a disaggregated approach to explore the insignificant effects of economic factors and EAC membership on EAC export performance, while investigating AfCFTA’s true impact and the negative EAC-welfare association.
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