Infrastructure investments for improved market access in subSaharan Africa: A CGE analysis

Abstract

Many governments adopt agricultural policies that affect production incentives across commodities. In addition, severe market failures in the form of high marketing margins often lower the prices that farmers receive. Yet the impacts of excessive market-access costs for farmers has not been sufficiently analysed, particularly in sub-Saharan Africa (SSA). Using the newly available FAO/MAFAP dataset, we augment the GTAP model with domestic support and border protection, as well as data on market development gaps (MDGs) in selected SSA countries. We undertake several policy simulations to explore the impacts of changes in excessively high marketing costs. Our findings indicate that addressing MDGs can bring positive overall benefits, with particularly strong gains accruing to sectors and countries with very negative MDGs, such as the non-traditional crops in Ethiopia. In other cases, reducing positive MDGs, which operate as protection of certain sectors from imports, is projected to lead to a decline in exports and output, such as in the case of Ethiopian oilseeds.