60% of Africa’s trade costs come from within countries-World Bank

About 60 per cent of the costs of trading across Africa arise from problems within countries, rather than tariffs or border charges, highlighting the economic burden created by inefficient customs, weak infrastructure, fragmented regulations and poor logistics, the World Bank has said.

The finding is contained in the World Bank’s Integrating Africa: From Threads to Hubs report, which argues that Africa’s trade integration challenge is less about opening borders and more about making the systems behind those borders work together.

According to the report, domestic institutional constraints account for the largest share of trade costs, including inefficient customs clearance, unaligned regulatory frameworks, inadequate logistics services, fragmented transit systems and poor infrastructure.

“About 60 per cent of total trade costs stem from unilateral sources,” the World Bank said.

The report said these domestic barriers are compounded by problems at borders, including differing product standards, non-recognition of licences and permits across countries and weak transit arrangements.

It therefore challenges the conventional approach of focusing primarily on tariffs as the main barrier to intra-African trade.

“The key insight is that Africa’s trade bottleneck is not tariff barriers but regulatory and procedural fragmentation both behind and at the borders,” the World Bank said.

The economic implication is significant because reducing tariffs will have limited impact on the cost of trading if businesses still face lengthy customs procedures, unreliable transport networks, poor infrastructure and multiple regulatory requirements after goods cross the border.

The World Bank said African countries should therefore focus on making their trade systems interoperable so that goods, trucks, data and payments can move efficiently across jurisdictions.

“This understanding reframes the integration agenda: reducing trade costs in Africa is not primarily about liberalisation but is about making systems interoperable,” it said.

The report argued that successful regional production and trade networks depend on the ability of different national systems to work together.

“Do not ask whether the border is open; ask whether systems can talk, whether trucks and goods can move, whether data and money can flow, and whether firms can operate across jurisdictions,” the report said.

The finding is particularly relevant to West and Central Africa, where cross-border road transportation remains a major channel for regional trade but continues to face high logistics costs, regulatory fragmentation and limited competition.

Nigeria’s recent selection by the African Continental Free Trade Area (AfCFTA) Secretariat as the pilot country in West Africa for the Simplified Trade Regime (STR) provides a practical test of the approach advocated by the World Bank.

The STR is designed to simplify cross-border trade for small-scale traders by reducing cumbersome customs procedures and transaction costs.

Nigeria Customs Service spokesperson, Abdullahi Maiwada, said the initiative would support intra-African trade and improve conditions for small traders who often face complex procedures and high costs.

The development aligns with the World Bank’s emphasis on simplifying customs and reducing domestic barriers to trade.

The challenge is becoming more important as Africa’s trade continues to expand.

The World Trade Organisation reported that Africa’s merchandise exports increased 14 per cent year-on-year in the first quarter of 2026, placing the continent among the fastest-growing regions during the period.

The World Bank’s assessment suggests that much greater gains could be achieved if African countries can reduce the domestic costs that currently prevent businesses from fully benefiting from regional market access.

For Nigeria, improving customs efficiency, roads, ports, transit systems, standards and digital trade infrastructure could therefore be as important to AfCFTA success as tariff reductions.

The broader economic opportunity is clear: reducing the 60 per cent of trade costs generated within countries could lower the cost of moving goods across Africa, strengthen regional supply chains, increase competitiveness and make it easier for Nigerian businesses to access the continent’s wider market.