Disentangling regional trade agreements, trade flows and tobacco affordability in Sub-Saharan Africa



In principle, trade and investment agreements are meant to boost economic growth. However, the removal of trade barriers and the provision of investment incentives to attract foreign direct investments may allow for increased trade in and efficient production of commodities considered harmful to health such as tobacco. We analyze and compare tobacco trade patterns to foreign direct investments made by tobacco companies in Sub-Saharan African countries. We estimate and compare the changes in KOF economic globalization measure, relative price measure and smoking prevalence rates. Preferential trade agreements appear to have encouraged the consolidation of cigarette production, which has shaped trading patterns of tobacco leaf. Since 2002, British American Tobacco has invested in tobacco manufacturing facilities in Nigeria, Kenya and South Africa strategically located to serve different regions in Africa. Following this, British America Tobacco closed factories in Ghana, Rwanda, Uganda, Mauritius and Angola. Malawi and Tanzania export a large percentage of tobacco leaf to European countries. After 2010, there was an increase in tobacco exports from Malawi and Zambia to China. This may be as a result of preferential trade agreements the EU and China have with these countries. Economic liberalization has been accompanied by greater cigarette affordability for the countries included in our analysis. The changing economic structure of international trade and investment is likely heightening the efficiency and effectiveness of the tobacco industry. As tobacco control advocates consider supply side tobacco control interventions, they must consider carefully the effects of these economic agreements. Keywords: Trade, Investment, Tobacco Control, Cigarette Affordability Key Messages 1. Preferential trade agreements appear to have encouraged the consolidation and efficiency of cigarette production, which has shaped trading patterns of tobacco leaf. 2. Economic liberalization has been accompanied by greater cigarette affordability in Sub-Saharan Africa 3. Based on these results, countries and tobacco control advocates must consider carefully the effects of economic agreements on health.


Raphael Lencucha