# **4.2 Scenario # 2: Improving Connectivity in the Africa Region**

In this section, we investigate the outcomes of a counterfactual scenario that focuses on improving connectivity in Africa _without creating an extensive and ambitious free trade area_ . Table 6 presents the results for this scenario, showcasing the impacts of improved roads, ports, and border delays by country (without mode preference) in columns (1) and (2), and the results assuming a preference for sea routes in columns (3) and (4).

Overall, improving infrastructure connectivity in Africa would increase trade by 7.56 percent and GDP by 1.15 percent, relative to the baseline scenario. This could reach up to 1.46 percent if maritime transport is prioritized. The gains are not evenly distributed across the three levers considered: roads, ports, and land borders. Although the implementation of one-stop border posts accounts for a substantial share of the estimated gains in the simulated scenario,<sup>35</sup> the impact of other levers is not trivial. Improvements in road infrastructure alone increase GDP by 0.11 percent on average. This increase in GDP rises to 0.33 percent when road infrastructure improvements are combined with reductions in port delays. Related infrastructure projects are particularly attractive from a cost-benefit perspective. According to the PIDA Priority Action Plan, the estimated investment in transportation infrastructure $25.4 billion.<sup>36</sup> Based on the GDP impacts estimated above, road infrastructure development could yield a cumulative rate of return of 4.1 percent for the African continent, calculated as the sum of the GDP gains for the countries in our sample. The rate of return for the continent rises to 12.6 percent if road development is complemented by port improvement projects.<sup>37</sup> At the country level, the results exhibit significant heterogeneity. When border delays are high, road network development primarily boosts internal connectivity. However, when combined with additional reductions in border and port delays, intra-continental and intercontinental connectivity significantly improves, generating substantial benefits. Major increases in trade flows are observed in Burkina Faso, Burundi, Cameroon, Cˆote d’Ivoire, the Arab Republic of Egypt, Kenya, Malawi, Senegal, Uganda, Zambia, and Zimbabwe. Uganda, Zambia, and Zimbabwe, being landlocked countries, indirectly benefit from port investments in transit countries such as Tanzania or Mozambique.

Differences in outcomes without and with maritime preferences stem from variations in the assumptions used to construct the transport network and its counterfactuals. For instance, Egypt experiences a significant decrease in transport costs when a maritime preference is assumed. In this case, flows transition from longer maritime routes in the baseline scenario to shorter land routes when land border delays are substantially reduced between Egypt and its neighbors. This explains why the average impacts are considerably larger with the maritime preference than without.

GDP effects arise from the interplay of complex general equilibrium effects, relying on a country’s characteristics and position in the global trade network. The countries that gain the most include Botswana, Cameroon, Namibia, Niger, and Zambia. Egypt and Tunisia also observe substantial GDP gains when assuming a mar-

> 35In line with previous studies, customs delays have been shown to be a significant barrier to trade. For example, Volpe Martincus, Carballo & Graziano (2015) find that if all exports in Uruguay had been subject to physical inspection, and if such inspections had lasted two days, then total exports in 2011 would have been 16.4 percent lower than they actually were. Using transaction-level data from El Salvador, Carballo, Graziano, Schaur & Martincus (2022) show that upgrading transit systems to streamline border processing in developing countries can be a high-return investment (with a back-of-the-envelope estimated return of US$3 to 1).

> 36Link to PIDA Priority Action Plan

> 37Considering that the general equilibrium analysis is done in comparative statics we do not apply a discount factor to compute the return.

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