NON-OIL TRADE DIVERSIFICATION UNDER REGIONAL INTEGRATION: LESSONS FOR FRAGILE ECONOMIES
Abstract
This study examines whether regional integration frameworks, the East African Community (EAC) and the African Continental Free Trade Area (AfCFTA), have advanced non-oil trade diversification in fragile, oil-dependent African economies, using South Sudan as a critical case (2019–2024). Employing a desk-based secondary analysis of data from the World Bank, African Development Bank (AfDB), IMF, UNCTAD, and the EAC Secretariat, the study combines descriptive statistics, comparative synthesis against peer fragile states (the Democratic Republic of Congo and Somalia), and correlation analysis linking institutional and policy proxies to trade outcomes. South Sudan's non-oil export share of total exports averaged just 3.2% (SD = 0.2%) over the period, with export concentration remaining extreme (Herfindahl-Hirschman Index = 0.94 in 2024) and non-oil export value contracting by an average of 1.2% annually, in sharp contrast to a 6.9% average expansion among stable EAC peers. Formal compliance with EAC/AfCFTA protocols, captured by a Trade Policy Alignment Index and a Customs Harmonization Score, showed no significant association with non-oil export volume (r = 0.15 and r = 0.09, respectively). By contrast, an Institutional Effectiveness Index, a composite proxy for governance, rule of law, and corruption control, correlated strongly with export volume (r = 0.72, p < 0.01). These results indicate that institutional weakness, not restricted market access, is the binding constraint on diversification in fragile settings. The study concludes that regional integration is a necessary but insufficient condition for structural transformation, and recommends that fragile economies pair trade liberalization with deliberate governance reform and supply-side investment.
JEL Classification: F14, F15, O24, O55
Keywords: non-oil trade diversification; regional integration; AfCFTA; fragile economies; institutional effectiveness; South Sudan
References
Afreximbank. (2025). African trade report 2025: African trade in a changing global financial architecture. African Export-Import Bank.
African Development Bank. (2024). African economic outlook 2024: Driving Africa's transformation. African Development Bank.
East African Community Secretariat. (2023). EAC trade and investment report 2022: Post-COVID-19 recovery and regional value chains. East African Community.
International Monetary Fund. (2024). Republic of South Sudan: 2023 Article IV consultation and first and second reviews under the staff-monitored program with board involvement (IMF Country Report No. 24/160). International Monetary Fund.
Karingi, S., & Fofack, H. (2021). The African Continental Free Trade Area: A structural transformation imperative for the continent. Journal of African Economies, 30(S1), 32–60.
Krugman, P. (2020). The role of geography in trade and development. American Economic Review, 110(12), 3469–3490.
Kuznets, S. (1966). Modern economic growth: Rate, structure, and spread. Yale University Press.
Mavrotas, G., & Siddique, A. (2021). Addressing vulnerability and fragility in developing countries: The role of policy and aid. World Development, 147, 105650.
Ministry of Trade and Industry, South Sudan. (2022). South Sudan national trade policy framework. Government of South Sudan.
National Bureau of Statistics, South Sudan. (2023). South Sudan national statistical yearbook 2022. National Bureau of Statistics.
Olabisi, A., & Stein, H. (2020). Regional integration and the developmental state in Africa. The Journal of Development Studies, 56(10), 1851–1867.
Oluwole, O. O., Ndung'u, S., & Adewale, O. (2022). AfCFTA and the institutional determinants of trade diversification in ECOWAS. Journal of African Trade, 9(1), 1–15.
Rodrik, D. (2021). The ten commandments of structural transformation. National Bureau of Economic Research.
Söderbaum, F. (2019). Rethinking African regionalism: Towards a more critical conceptualization. African Studies Quarterly, 18(4), 1–25.
UNCTAD. (2023). The least developed countries report 2023: The role of trade in sustainable development. United Nations Conference on Trade and Development.
UNECA. (2023). Assessing the progress of regional integration in Africa: Challenges and opportunities for AfCFTA implementation. United Nations Economic Commission for Africa.
World Bank. (2024). South Sudan economic monitor: Investing in humans. World Bank Group.
World Bank. (2025). South Sudan economic monitor, 7th edition: A pathway to overcome the crisis. World Bank Group.
