What Inhibits Manufactured Exports in Sub-Saharan Africa: Firm Level Evidence?

Abstract

The poor performance of many less developed and developing countries including African economies have been
attributed to low growth of exports in general and manufactured exports in particular. In trying to remedy the situation, Sub-
Saharan Africa (SSA) economies including Nigeria have adopted different strategies to woo foreign investors in the form of
foreign direct investment (FDI) due to insufficient domestic investment that can propel the economic growth process.This study
attempts to investigate constraints to manufactured export using firm level evidence from seven SSA economies (Kenya,
Nigeria, Tanzania, Cameroon, Mauritius, and South Africa). Employing probit regression and ordinary least squares (OLS), the
study found that output per labour, raw materials per labour and indirect cost were the major constraints to manufactured
exports. Also, high production and transaction costs (indirect costs) were found to constitute the constraints for exporting both in
SSA at large. Based on findings, there is need for provision of export incentives, which may come in two parts: measures
designed to increase firm-level efficiency as this would help firms to attain certain level of international competitiveness
necessary for sustainable exporting; and measures designed to reduce the transaction and production costs associated with
exporting.