Determinants of South African agricultural exports to African markets

Abstract

Orientation: The ‘Africa we want, 2063 Agenda’ is slowly becoming a reality. On 01 January 2021, business operations of the African continental free trade area officially took off. Member states are currently negotiating concessions and are in the process of fully eliminating trade barriers to allow duty-free access into their markets.

Research purpose: The purpose of this study is to clearly identify constraints that could potentially jeopardise the long-run success of the free trade area by exploring the fundamental constraints limiting increased intra-African agricultural trade.

Motivation for the study: Results of the study will help South Africa to better leverage the African free trade area and take advantage of export market opportunities.

Research approach/design and method: Using panel data that span from 2000 to 2021, the study estimated an augmented gravity model to evaluate the influence of selected explanatory variables on South African agricultural exports to African markets.

Main findings: The results of the fixed effect model revealed that South African agricultural exports are directly proportional to gross domestic product (of both the importer and exporter) and inversely proportional to geographic distance. The results also showed that dummy variables such as infrastructure and participating in the same regional bloc play an important role in exacerbating export-led growth.

Practical/managerial implications: In practice, when structural policies are put in place to address issues such as infrastructure development, countries will experience increased export participation.

Contribution/value-add: The study seeks to contribute to knowledge by identifying the main determinants of greater intra-African trade.