INFRASTRUCTURE, INFORMALITY AND TRADE COSTS UNDER THE AFCFTA: A GRAVITY MODEL ANALYSIS OF THE CAMEROON-NIGERIA CORRIDOR
Abstract
This paper examines the structural determinants of bilateral trade between Cameroon and Nigeria, within the framework of the African Continental Free Trade Area, with particular emphasis on infrastructure, informality, and trade costs along the Nigeria–Cameroon corridor. Despite geographic proximity, shared borders, and long-standing economic ties, formal trade between the two countries remains significantly below theoretical expectations predicted by the Gravity Model of Trade. Using an augmented gravity model, this study integrates key real-world frictions, namely transport infrastructure deficiencies, regulatory fragmentation between the Economic Community of West African States and the Central African Economic and Monetary Community, and the pervasive role of informal cross-border trade, into the analytical framework. The study further introduces an informality parameter to capture the extent to which unrecorded trade distorts observed trade flows and undermines policy effectiveness. The findings reveal that high trade costs, weak infrastructure, and significant levels of informality jointly explain the persistent gap between potential and observed trade. While AfCFTA provides an institutional platform for enhancing regional integration, its effectiveness is constrained by structural bottlenecks that extend beyond tariff barriers. The study concludes that meaningful trade expansion in the Nigeria–Cameroon corridor requires coordinated investments in infrastructure, digital trade facilitation systems, institutional harmonization, and policies aimed at formalizing informal trade. By advancing a corridor-based analytical framework and explicitly incorporating informality into the gravity model, this paper contributes to the literature on intra-African trade and offers policy-relevant insights for optimizing the gains from AfCFTA in structurally constrained environments.
JEL: F15, F13, F14, O18, R42, O55, K42
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DOI: http://dx.doi.org/10.46827/ejefr.v10i3.2220
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