Size, geography, and GVC participation of firms in Nigeria and Rwanda: Implications for the AfCFTA

Abstract

Global value chains (GVC) have recently become an important developmental issue and have become prominent within the development community. Empirical studies on the peculiar nature of firms (small-scale) in the GVC are sparse, especially in Africa. Thus, the present study empirically examines whether or not the size of the firm matters in their GVC participation in Africa. It also investigates if a firm’s geographical location spurs GVC participation. The study answers the above research questions using the World Bank's Enterprise Survey database for two African countries, namely: Nigeria, and Rwanda. Adopting a logit regression model, the findings show that firms in Africa are predominantly small-scale and sole proprietorships. The size of the firm, the legal status of the firm, firm access to ICTs, managerial experience, and the geographical location of the firm are crucial drivers of firms' GVC participation in Nigeria and Rwanda. Policy implications and recommendations for the AfCFTA are discussed in the paper.

Keywords

• AfCFTA
• Firm size
• Firm Geographical location
• Global value chain