Management Question

‫المملكة العربية السعودية‬
‫وزارة التعليم‬
‫الجامعة السعودية اإللكترونية‬

Kingdom of Saudi Arabia
Ministry of Education
Saudi Electronic University

College of Administrative and Financial Sciences

Assignment 2
Introduction to International Business (MGT 321)
Due Date: 22/03/2025 @ 23:59
Course Name: Introduction to International
Business
Course Code: MGT321

Student’s Name:

Semester: Second

CRN: 25572

Student’s ID Number:

Academic Year:2024-25-2nd

For Instructor’s Use only
Instructor’s Name: Dr. Swapnali Baruah
Students’ Grade:
Marks Obtained/Out of 10

Level of Marks: High/Middle/Low

General Instructions – PLEASE READ THEM CAREFULLY
•
•
•
•
•
•
•
•

The Assignment must be submitted on Blackboard (WORD format only) via allocated
folder.
Assignments submitted through email will not be accepted.
Students are advised to make their work clear and well presented, marks may be reduced
for poor presentation. This includes filling your information on the cover page.
Students must mention question number clearly in their answer.
Late submission will NOT be accepted.
Avoid plagiarism, the work should be in your own words, copying from students or other
resources without proper referencing will result in ZERO marks. No exceptions.
All answered must be typed using Times New Roman (size 12, double-spaced) font. No
pictures containing text will be accepted and will be considered plagiarism).
Submissions without this cover page will NOT be accepted.

Learning Outcomes:
Knowledge:
1.1: Identify and evaluate the significant trade agreements affecting global commerce.
1.2: Discuss the reasons and methods of governments’ intervention in trade.
Skills:
2.1: Analyse the effects of culture, politics and economic systems in the context of
international business

Critical Thinking
Please read Case 9: “Free Trade in Africa” available in your e-book (International
business: Competing in the global marketplace (13th ed.), at page no.639, and answer
the following questions:

Assignment Question(s):
1. Explain why are African countries more likely to trade with Europe and America
than they are with each other?

(Minimum words: 400, Mark:2)

2. What could the impact of CFTA be on Africa? Discuss.
(Minimum words: 400, Mark:2)

3. What will African countries need to do to make the TFTA a success? What are the
likely impediments to doing this?
(Minimum words: 600, Mark:6)

Important Notes:
• This is an individual assignment.
• All references must be cited using APA format. This includes both in-text
citations and the reference list at the end of the document.
• Originality, Similarity and Plagiarism Check: Your work must be original. All
papers will be submitted through SafeAssign software to check for similarity and
plagiarism. Any instance of academic dishonesty will result in a grade of zero for
the assignment. No exceptions and no second chances!

Answers
1. Answer2. Answer3. Answer-

Cases

639

Free Trade in Africa
On June 10, 2015, representatives from 26 African
nations signed an agreement pledging to work together to
establish a free trade area that would remove or reduce
many tariffs and eliminate time-consuming customs
procedures between them. Known as the Tripartite Free
Trade Area (TFTA), this common market would encompass more than 630 million people and link together
three existing regional trading blocks in Southern and
Eastern Africa with a combined gross domestic product
of $1.2 trillion and more than $102 billion in trade
between member states.
The existing regional trading blocks are the East African
Community, created in 2000; the Southern African Development Community, created in 1980; and an overlapping
Common Market for Eastern and Southern Africa, which
also took shape in the 1980s. The East Africa Community
has made some progress fostering trade between its member countries, which include Kenya, Tanzania, and Uganda.
Countries in the Southern African Development Community have a common set of external tariffs, and several
member states use the South African rand, the most liquid
and widely traded currency on the continent.
However, the existing patchwork of African trading
blocks—there are some 17 in all, with many countries
being members of more than one—has made it difficult
to realize the gains from trade that could flow from an
expanded single market. An African firm selling goods
on the continent still faces an average tariff of 8.7 percent, compared with a 2.5 percent tariff on goods sold
overseas. Other costs of intra-African trade include
often-lengthy stops at borders for customs inspection,
excessive customs-related bureaucracy and red tape, and
a lack of adequate physical infrastructure, including
roads and railways. As a consequence of such factors, it
can take three weeks for a shipping container to travel
the 700 miles from the Kenyan port of Mombasa to

Shutterstock/Matthias G. Ziegler

Kampala, the capital of Uganda. There are also some
vexing local content requirements. The South African
Development Community, for example, requires that
clothes traded within the region are both manufactured
and sourced there to qualify for lower tariffs. However,
because few textiles are produced in the region, the rules
have stifled trade in garments.
For all these reasons, African countries are more likely
to trade with Europe and America than they are with each
other. Only 19 percent of Africa’s $930 billion in trade is
with other countries on the continent. By comparison,
some 60 percent of Europe’s trade is within its own continent, as is 40 percent of North American trade. Other factors contributing to the lack of intra-African trade include
low industrialization levels, restricted movement of labor,
poor infrastructure, and a high dependence on exporting
unprocessed commodities in many countries.
The thinking behind the TFTA is that harmonizing
rules, reducing tariffs, and streamlining or removing customs procedures will allow African firms to sell more
goods and services to their neighbors, enabling them to
achieve greater economies of scale and lower costs, which
would benefit all parties to the agreement. On the other
hand, such agreements may prove difficult to reach and, if
the past is any guide, even more difficult to implement,
given political realities on the ground. Some observers
think that the TFTA is too ambitious an undertaking and
that focusing effort on improving the three existing regional
groups would yield more gains. It’s easier, they argue, to
reach an agreement between five adjacent member states,
as in the case of the East African Community, than 26 very
different countries scattered over the entire continent.
Despite the skepticism surrounding TFTA, Africa
nations have even bigger ambitions. In 2016, African leaders committed themselves to establishing a Continental
Free Trade Area (CFTA) that encompasses all African
countries. Two years later, in March 2018, 44 of those
nations signed an agreement to create a CFTA. The pact
will eliminate tariffs on 90 percent of products, liberalize
services, and reduce nontariff barriers. A second phase of
negotiations, to begin later this year, will focus on investment, competition, and intellectual property rights. Proponents of the deal believe that it will merge Africa’s
fragmented markets into one large continental market,
ignite industrialization, boost economic growth, and create jobs. However, 11 African nations have yet to sign
onto the deal, including Nigeria and South Africa, the
two largest African economies. While both countries
seem to agree with the pact in principle, they view the pact
as incomplete. They point out that countries have not yet
decided which goods will be excluded from the tariff
reductions. Nor have they finalized key annexes to the

640

Part 7

Cases

text. For example, the chapter on “rules of origin” is
incomplete, raising the possibility that goods from outside Africa could be imported, have African labels placed
on them, and then be traded within the bloc as African
goods. There is also strong opposition to the pact from
labor unions within Nigeria, who have called the trade
deal a “radioactive neoliberal policy initiative.”

Sources
“Intra-African Trade: The Road Less Travelled,” The Economist,
April 17, 2013; Martin Stevis and Patrick McGroarty, “African
Leaders Pledge to Create a Free Trade Zone,” The Wall Street
Journal, June 10, 2015; “Trade Within Africa: Tear Down These
Walls,” The Economist, February 27, 2016; John Aglionby,
“Africa Looks to Boost Growth and Jobs with Free Trade
Area,” Financial Times, December 1, 2016; “Why Africa’s Two
Biggest Economies Did Not Sign Its Landmark Trade Deal,”
The Economist, March 29, 2018.

Case Discussion Questions
1.
2.
3.
4.
5.

Why are African countries more likely to trade with
Europe and America than they are with each other?
What are the likely gains from trade to be had from
TFTA if it is fully implemented as a common
market?
Why do you think free trade areas established so far
in Africa have not lived up to their expectations?
What will African countries need to do to make the
TFTA a success? What are the likely impediments to
doing this?
What could the impact of CFTA be on Africa?

‫المملكة العربية السعودية‬
‫وزارة التعليم‬
‫الجامعة السعودية اإللكترونية‬

Kingdom of Saudi Arabia
Ministry of Education
Saudi Electronic University

College of Administrative and Financial Sciences

Assignment 2
Introduction to International Business (MGT 321)
Due Date: 02/11/2024 @ 23:59

For Instructor’s Use only

General Instructions – PLEASE READ THEM CAREFULLY
•
•
•
•
•
•
•
•

The Assignment must be submitted on Blackboard (WORD format only) via allocated
folder.
Assignments submitted through email will not be accepted.
Students are advised to make their work clear and well presented, marks may be reduced
for poor presentation. This includes filling your information on the cover page.
Students must mention question number clearly in their answer.
Late submission will NOT be accepted.
Avoid plagiarism, the work should be in your own words, copying from students or other
resources without proper referencing will result in ZERO marks. No exceptions.
All answered must be typed using Times New Roman (size 12, double-spaced) font. No
pictures containing text will be accepted and will be considered plagiarism).
Submissions without this cover page will NOT be accepted.

Learning Outcomes:
Knowledge:
1.1: Identify and evaluate the significant trade agreements affecting global commerce.
1.2: Discuss the reasons and methods of governments’ intervention in trade.
Skills:
2.1: Analyse the effects of culture, politics and economic systems in the context of
international business

Critical Thinking
Please read Case 9: “Free Trade in Africa” available in your e-book (International
business: Competing in the global marketplace (13th ed.), at page no.639, and answer
the following questions:

Assignment Question(s):
1. Explain why are African countries more likely to trade with Europe and America
than they are with each other?

(Minimum words: 400, Mark:2)

2. What could the impact of CFTA be on Africa? Discuss.
(Minimum words: 400, Mark:2)

3. What will African countries need to do to make the TFTA a success? What are the
likely impediments to doing this?
(Minimum words: 600, Mark:6)

Important Notes:
• This is an individual assignment.
• All references must be cited using APA format. This includes both in-text
citations and the reference list at the end of the document.
• Originality, Similarity and Plagiarism Check: Your work must be original. All
papers will be submitted through SafeAssign software to check for similarity and
plagiarism. Any instance of academic dishonesty will result in a grade of zero for
the assignment. No exceptions and no second chances!

Answers
1. African nations tend to engage in trade more with Europe and America rather than
among themselves because of historical, economic, and infrastructural factors. The
legacy of colonial trade patterns, lack of effective infrastructure, and economic parallels
between African nations play a significant role in this trend.
First, historical factors deeply influence trade dynamics on the African
continent. During the colonial era, African countries were primarily linked to European
powers. The economic systems established then were designed to extract raw materials
from Africa and ship them to Europe. As a result, trade routes, infrastructure, and even
economic policies were directed toward these external markets. In addition to historical
legacies, the structural composition of African economies also restricts trade within the
continent, resulting in trade levels that are four to six times lower (Olney, 2022). The
principle of comparative advantage states that nations will trade products and services
they can make with minimal opportunity cost (Hill, 2021).
A number of African countries have focused on exporting natural resources like
minerals, oil, and agricultural goods (Aijola, 2021). However, they often do not have
the necessary industrial capabilities to convert these commodities into value added
products. On the other hand, Europe and America have sophisticated manufacturing
sectors that can convert the raw materials into final goods. Consequently, Africa trades
more with these regions, finding ready markets for its exports and sources of finished
goods (De Melo et al., 2020). In contrast, since many African countries have similar

economic structures focused on primary commodities, there is less incentive to trade
within the continent, as they offer limited product diversification.
Regional economic integration is a key factor in understanding the low levels
of trade within Africa in comparison to trade with external partners (Hill, 2021). Unlike
regions like Europe, where trade agreements have led to substantial economic cohesion,
Africa’s multiple overlapping trade blocs have resulted in a fragmented economic
landscape. This lack of integration leads to differing tariff structures, regulatory
standards, and customs procedures, making it difficult for African countries to trade
with one another (Abrego et al., 2020). For example, a South African firm looking to
trade with East African countries might encounter varying tariffs and non-tariff barriers
depending on the regional bloc, complicating cross-border trade (Hill, 2021).
The lack of industrialization in many African nations further aggravates this
issue. Without a robust manufacturing base, African countries are unable to produce
and exchange a variety of goods internally (Liu et al., 2020). This pushes them to rely
more on imports from industrialized nations in Europe, North America, and Asia for
finished products, which explains the lower levels of intra-African trade. Additionally,
restrictions on the movement of labor and high dependence on commodity exports
hinder the development of a diversified economy (Baffes & Nagle, 2022). Countries
with minimal industrial activities struggle to compete effectively in a broader market.
Another crucial aspect is the infrastructure deficiencies. The inadequate
transportation networks in Africa hinder and increase the cost of inter-country trade
(Hill, 2021). The case study emphasizes that because of inadequate infrastructure and
ineffective customs procedures, it could take as long as three weeks for a shipping

container to cover 700 miles from Mombasa to Kampala (Hill, 2021). Trade between
African nations is also impeded by customs barriers and complex bureaucracy. Border
checks, excessive paperwork, and varying regulations increase expenses and slow
down trade for traders (Hill, 2021). on trade within Africa deter countries from
engaging in buying and selling goods with each other. African businesses encounter a
mean tariff of 8.7 percent on products sold within the continent, while facing only a 2.5
percent tariff on exports to Europe and America (Hill, 2021). These barriers create an
economic environment that favors trade with more developed markets, where
conditions are often more favorable. Moreover, the multiplicity of overlapping regional
trade blocs in Africa creates difficulties in promoting unified intra-African trade
(Olney, 2022).

2. The African CFTA (Continental Free Trade Area) could significantly transform the
economic terrain of Africa (Hill,2021). Developing a unified market across the
continent could assist African countries in diversifying their economies,
industrializing, and decreasing reliance on exporting raw commodities. By removing
tariffs on 90% of products and opening up services, African companies may gain
unprecedented entry to new markets throughout the continent (Hill, 2021). This could
enable companies to have economies of scale, improve production efficiency, and
reduce expenses.
Intra-African trade currently accounts for only a small fraction of the continent’s
overall trade (Olney, 2022). At present, the main trading partners of African countries
are Europe and America, while trade within the continent makes up only 19 percent of
total trade (Hill, 2021). The CFTA has the potential to promote trade within Africa by

lowering tariffs and tackling non-tariff obstacles like customs delays. This is expected
to result in an increased range of products and services traded within the region,
boosting local economies and strengthening regional supply chains. Furthermore, with
African nations increasing their trade in finished products, there may be a strong drive
towards industrialization and the growth of manufacturing industries in countries with
less developed sectors (De Melo et al., 2020).
The CFTA also promises economic growth stimulation through the establishment
of a more competitive landscape. Free trade between nations promotes competition
among domestic companies, driving efficiency and creation of new ideas (Hill,
2021).As firms strive to capture a larger market share within the continent by investing
more in research and development. This leads to the creation of better products and
services. Greater competition can also lead to reduced prices for consumers, increasing
their accessibility to goods and services. Having access to a broader market will lead
to increased competition among African companies, which in turn will spur innovation
and advancements in quality (Abrego et al., 2020).
The CFTA may also drive industrial growth throughout Africa (Hill, 2021). By
allowing companies to reach a broader market, businesses can attain economies of
scale, resulting in lower costs and higher productivity. This change is essential for
nations that heavily depend on the export of raw materials. A more advanced economy
can create employment options and enhance the skills of the labor force. As the
manufacturing and processing sectors expand, the need for skilled workers will
increase, leading to more investments in education and training initiatives (Abrego et
al., 2020).

The CFTA has the potential to attract foreign direct investment (FDI) (Hill, 2021).
Investors seek stable and expansive markets that offer growth opportunities. More
funding can result in better infrastructure, technology transfer, and jobs creation (Hill,
2021). As businesses set up operations on the continent, they might introduce new
technologies and practices. However, there are potential challenges and risks associated
with the CFTA. The developed, advanced economies within Africa, such as South
Africa, could dominate trade flows. This can create challenge for smaller or less
developed countries to reap full rewards. Labor unions in particular countries like
Nigeria are worried that the CFTA might result in unemployment due to local
businesses finding it difficult to compete with less expensive imports from other
African nations. Furthermore, there are outstanding concerns regarding which goods
will be exempt from tariff cuts and how non-tariff obstacles will be handled.
Furthermore, the effectiveness of the CFTA hinges on member states’ dedication to
following the rules and regulations set forth in the agreement (Hill, 2021). Political
determination is crucial in addressing the bureaucratic obstacles and inefficiencies that
are currently hindering intra-African trade. In order for the CFTA to succeed, nations
need to cooperate in aligning trade policies, enhancing infrastructure, and improving
the regulatory framework.
3. To ensure the success of the Tripartite Free Trade Area (TFTA), African nations need
to focus on infrastructure development, customs processes, political collaboration, and
economic diversification (Hill, 2021). Addressing these areas could enhance trade,
foster industrial growth, and boost economic prosperity for all member countries. One
of the primary barriers to intra-African trade is the continent’s inadequate infrastructure

(Olney, 2022). Many areas lack proper infrastructure like roads, railways, ports, and
communication networks. This hinders the efficient and cost-effective transport of
goods between countries. Developing a cohesive infrastructure strategy demands a
combination of national efforts and collaboration among regions. Securing funds for
these projects is a significant obstacle.
The success of the TFTA is also dependent on the contribution of the private sector.
Governments must foster an environment that promote competitive business
environment. Promoting collaborations between the public and private sectors can
result in increased funding for trade related infrastructure and services. A major barrier
to intra-African trade lies in the complexity and inefficiency of customs procedures.
Lengthy inspections, excessive paperwork, and inconsistent regulations create delays
at borders, increase both the time and cost of trade among African nations (Olney,
2022). African companies enjoy lower tariffs when dealing with non-African countries,
but face higher tariffs and longer delays within the continent. This is due to the complex
custom practices (Hill, 2021).
To address this, African nations must in tandem to reform and standardize their customs
process. Developing a digital trade platform, as in Europe and Asia, could significantly
reduce border delays and enhance trade efficiency (Tian et al., 2024). While lowering
tariffs is important, tackling non-tariff barriers (NTBs) is equally important for the
TFTA’s success. NTBs, such as import quotas, regulatory standards, and customs
delays hinder trade. Trade agreements like this depend on a strong level of trust and
collaboration among member states. However, political dynamics can complicate their
implementation. Some countries exhibit protectionist tendencies, resisting full market

openness to protect local industries from competition. Additionally, concerns about
losing tariff revenue, being a significant part of many national budgets can also hinder
progress. To navigate these challenges, African leaders must unite in their efforts.
Regional integration initiatives, such as those seen in the East African Community
(EAC), can provide valuable examples for other areas.
The success of the TFTA is impeded by the limited economic diversification in many
African nations. As the case study shows, numerous African economies still depend on
exporting raw materials, like minerals and agricultural products. This dependence
narrows opportunities for trade within Africa, as countries often compete in the same
industries rather than offering a diverse range of goods and services. To overcome this,
African nations need to prioritize industrialization and diversify their economies.
Governments should promote policies that attract investment in manufacturing and
industries that add value, expanding the variety of goods available for trade across the
continent (Liu et al., 2020). Additionally, investing in education and skill development
is vital since a skilled workforce is key to fostering industrial growth. By broadening
their economic base, African countries will be in a stronger position to benefit from the
expanded markets created by the TFTA, boosting trade within the region.
Raising public awareness about the advantages of the TFTA is crucial for gaining
widespread support. When people understand that such trade deals can boost economic
growth, generate jobs, and reduce costs, they are more likely to back their government’s
involvement. On the other hand, a lack of awareness can breed doubt and resistance.
To counter this, governments need to actively engage with local communities,

highlighting the benefits of the TFTA. However, they might encounter pushback if
citizens view the agreement as a risk to domestic employment or industries.
Several barriers impede the success of TFTA. A key issue is the overlapping
regional trade agreement of many African nations, with its own set of regulations (Hill,
2021). This overlap complicates the creation of a unified trade area like the TFTA.
Achieving harmonization will demand extensive negotiations and compromises to
align these agreements with the TFTA’s objectives. Another obstacle is the unequal
sharing of benefits. Larger economies, such as South Africa and Kenya, are positioned
to gain more from the TFTA than smaller or less developed nations, which could cause
friction within the agreement (Hill, 2021). To mitigate this, targeted support for smaller
economies, including infrastructure funding and capacity-building initiatives, will be
essential. Political instability also poses a risk to the TFTA’s success. Ongoing conflicts
and insecurity in parts of Africa hinder trade routes and discourage businesses from
operating. Without stable governance, the advantages of free trade might not be fully
realized, as companies are unlikely to invest in uncertain regions.
The TFTA has great potential to reshape Africa’s economy, but its success
hinges on investments in infrastructure, customs reform, political collaboration, and
economic diversification. Overcoming these challenges will require strong leadership
and cooperation among member nations, but if resolved, the TFTA could be
transformative for the continent.

References
Abrego, M. L., de Zamaroczy, M. M., Gursoy, T., Nicholls, G. P., Perez-Saiz, H., &
Rosas, J. N. (2020). The African Continental free trade area: Potential economic
impact and challenges. International Monetary Fund.
Ajiola, F. O. (2021). Economies of African States Since Independence.
Baffes, J., & Nagle, P. (Eds.). (2022). Commodity markets: evolution, challenges, and
policies. World Bank Publications.
De Melo, J., Solleder, J. M., & Sorgho, Z. (2020). Market integration across Africa:
Progress and challenges ahead. African Development Bank.
Hill, C. (2021). International Business: Competing in the Global Marketplace, 13th
Edition. McGraw Hill.
Liu, X., Mattoo, A., Wang, Z., & Wei, S. J. (2020). Services development and
comparative advantage in manufacturing. Journal of Development Economics,
144, 102438.
Olney, W. W. (2022). Intra-African Trade. Review of World Economics, 158(1), 25-51.
Tian, X., Zhu, J., Zhao, X., & Wu, J. (2024). Improving operational efficiency through
blockchain: evidence from a field experiment in cross-border trade. Production
Planning & Control, 35(9), 1009-1024.

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