African Continental Free trade agreement and inclusive growth in Sub-Saharan Africa: rethinking the role of agricultural trade, government effectiveness and population growth

This article examines how agricultural trade, government effectiveness and population growth influence annual change in inclusive growth (IG) in Sub-Saharan Africa (SSA) within the framework of the African Continental Free Trade Agreement (AfCFTA). Using panel data for 41 countries over the period 2002–2022, we apply IV-2SLS and IVQR estimations to address endogeneity and capture heterogeneous effects across countries with varying levels of inclusiveness. The results reveal that agricultural trade slows the change in IG, with the adverse effects of exports and imports being stronger in countries with initially low inclusiveness. This suggests that export gains often benefit more privileged groups, while less competitive agricultural sectors are more exposed to low-cost imports. In contrast, government effectiveness enhances the change in IG, particularly in less inclusive economies. Rapid population growth, however, significantly reduces the annual change in IG, especially in countries already performing moderately well. To further assess intra-African dynamics, a dyadic model based on bilateral agricultural trade data shows that country pairs belonging to the AfCFTA or the same regional economic community (REC) experience greater combined annual changes in IG, supported by better governance coordination. These findings highlight the importance of strengthening institutions and managing demographic pressures to ensure that AfCFTA-driven trade integration yields broad-based welfare gains.