On May, 26, 2021, the research and development unit of Co-creation Hub (CcHUB), Design Lab launched a platform that provides unique and easy trading opportunities amongst African countries under the African Continental Free Trade Area (AfCFTA). SCI Trade Opportunity Index is a novel and innovative tool that measures what potential trade opportunities exist between countries, based on their social connectedness index, trade flows, and other factors including distance, language spoken, etc
According to the World Bank report (2020), the AfCFTA represents a major opportunity for countries to boost the increase in aggregate production in their economy and reduce poverty. The agreement could boost regional income by 7% or $450B. Tariff liberalization accompanied by a reduction in non-tariff barriers would boost income by 2.4% (about $153B), the remainder ($292B) would come from trade-facilitation measures. But inefficient infrastructure, administrative challenges, limited access to data, and fear of difficulty in building inclusivity would be some of the challenges the trading agreement would surely face.
“There is limited access to data and information… if the data is not there and the intelligence is not there, helping the business community to understand what is available to them is clearly going to be an issue.”CcHUB Co-founder and CEO, Bosun Tijani said.
The SCI Trade Opportunity Index platform was built on a model that has been used for years on international trade to explain trade flows of goods and services across countries (the gravity model). In the adopted model, we layer the measure of the intensity of social ties between countries, among other additional factors.
“Evidence in literature has shown that trade flow is also affected by people… The people factors and product factors were used to build SCI trade”Agift Ajala, PhD -Economist and Data Scientist, Coventry University, UK
The SCI Trade Opportunity Index utilizes the social connectedness index from Facebook among other indicators to reveal and explore trade opportunities within Africa. Interested traders can get access to unique information on the potential value of trade between countries, such as the country’s trading potential with others (COPI ranking), detailed analysis of new opportunities, and highlights of special commodities (marginal products) that countries are currently producing but also have the potential to boost their exports under the AfCFTA (Country reports).
“We showcased commodities and showed where the countries can export to boost their economy…the juice of the whole report is found in the section we highlighted special commodities… These are commodities that the country is currently producing but also have the potential to boost export proceeds for the country under the AfCFTA.”Dorcas Kareithi – Study Design and Analysis Manager, CcHUB
We at the CcHUB believe that a data-driven solution such as presented by SCI Trade Opportunity Index can boost intra-African trade and subsequently lead to a prosperous continent.