Informal cross-border trade can play a vital role in improving livelihoods and increased revenue to the regional countries. What can be done to ensure this is achieved?

Informal trade sometimes referred as small cross-border has helped tackle poverty reduction by a great margin by generating revenue for the communities near the borders. It has been highlighted as vital in promoting economic diversification and helped in solving food security challenges in these countries. Women have been empowered through this informal cross-border trade as they are the majority who trade. Policymakers in the region have ignored the sector’s role as a tool for livelihood improvement. They have neglected the sector as a result of challenges these traders persevere.

Over the last decade, development partners and other stakeholders have come in to try to formalize the sector but it has not succeeded. The sector though faces many barriers that hinder its development. First, quasi-official smuggling where some cartels import products in excess, repack and sell to their neighbouring countries. There are no clear regulations to monitor this to make the sector a success. Second, non-formalization of the sector has promoted dubious transactions since the free practice enactment within the region has not been done. Third, circulation of raw and semi-processed products with little or no value addition to the products has led to the supply of low-end products thus endangering the health of the local population. These issues need to be revisited in the next African Continental Free Trade Area which aims to raise intra-African trade. This will help to get rid of counterfeit traders.

What is the way forward?

Despite the barriers, Eastern Africa cross-border trade is promising if the problems are addressed. The use of enormous asset relies on ensuring strict regulations promote value chains and other incentivising reforms. Technocrats to be involved in ensuring promotion of the cross-border trade rather than being left to politicians who are not aware of its role to the country including poverty reduction and job opportunities.

Emphasis on the constraints that traders face: infrastructural, legal and even behavioural. For instance border areas to have a section for these traders for clearance not to share with other vehicles. World Bank case study (2013) at the border of DRC and Zambia found out that small scale traders pay up to 193 percent more than large scale traders to clear a tonne of maize through the formal channel.

Poor behaviour by the officials at the borders and weak governance structures has contributed to rising of trade costs making use of borders unfriendly to these informal cross-border traders comprising of women. These bad behaviours include corruption and harassment.

Trade facilitation is also a key intervention that can promote needs of these traders. These measures include improving competitiveness and increasing productivity in export oriented products through value chains. These interventions must small-scale traders and not just large traders benefitting especially when it comes to women involvement.

Conclusion

Removing barriers to regional trade integration will be much beneficial to the poor, who depend on the small-scale cross-border trading. Other potential benefits that arises from this include: self-employment, poverty reduction being an important goal of the Sustainable Development Goal’s (SDG’s), increased revenues for the respective countries, helping solve food security problems among others.