African economies argued to collect data on informal cross border trade

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The Food and Agriculture Organization of the United Nations (FAO) in collaboration with the Consumer Unity and Trust Society Africa Resource Center (CUTS) have argued African countries to collect data on informal cross border trade.

The call was made during the two-day regional validation workshop in Kigali “Formalization of informal trade in Africa, trends, experiences and social-economic impacts”  aimed to assess the findings of the study: “Formulation of informal cross border trade in Africa; focusing on women small traders”.

Under taken by FAO and CUTs, the  two-day-workshop brought together participating countries; Rwanda Kenya, Uganda, Tanzania, Ghana, India, Germany and Italy, to look at the best practices across Africa region, and how  to come out with recommendations that can be applied in many countries.

Informal Cross Border Trade (ICBT) which constitutes a major form of informal activity on the continent makes up an estimated 30-40 per cent of total intra-SADC trade, with an estimated value of $17.6 billion.

Typically women represent up to $70 of ICBT in the continent, trading a variety of commodities either in raw and semi -processed, including agriculture products like manioc flour, tomatoes, corn, onion, fish, alongside specific products like palm oil, while men sell a wider variety of products, often with a higher value like second clothing.

It is mainly practiced by the unemployed, small and medium enterprises and some large firms, and even formal workers desiring to supplement their salaries. ICBT on that hand presents unique benefits to those engaging in such activities such as creation of employment.

But equally the sector presents challenges as well that is: access to traveling documents, trading licences, excessively long waiting times at borders, overcharging by custom officials, lack of social security and inadequate of knowledge of travel procedures.

Due to this nature of this trade and the dirt of adequate legal framework, traders are often faced with unique challenges, like corruption through soliciting of bribes, harassment of women, sexual abuse and confiscation of goods.

Governments are therefore typically concerned about the negative aspects of ICBT, which in includes the fact that a times the informal imports present unfair competition to domestic industries and counterfeit goods.

The comprehensive research study therefore demonstrates the importance of informal trade to Africa economies by distilling a collection of facts from a body of literature and to find out the different experiences and trends in transition for formalization among the African countries.

” This workshop is a recognition of the importance of informal trade, also the importance of the role that women play. Policy makers can make decisions that will improve the way small scale cross border traders are treated so that their contribution to the national economy can be known however some governments don’t know the approaches and have no reliable data.” said Attaher Maiga, FAO Country Representative to Rwanda

“You cannot make good policy decisions if you don’t have reliable data.So data collection is quite critical in this undertaking to have a good assessment of what is the magnitude of cross border trade which is a silent issue.” Maiga pointed out Adding that “Collecting data is very important, but more importantly women in most countries are over 70-80% involved, sex dis-aggregated data is important to clearly identify women role.”

According to FAO, cross border trade across the African region is said to be almost about 42 per cent in contribution to the Gross Domestic Income (GDI), which is very significant.

FAO further states that this informal sector is not recognized to full extent,which means it is something which is not captured well leading to what is called loss in social economic development.

Maiga noted that the reason why data collection is necessary and very important to recognize, is to see how to measure it and include it in national policy decisions so that informality becomes more formal.

East Africa Community (EAC) has offered a number of facilities to the cross border traders particularly through Simplified Trade Regime (STR) especially the small traders who regularly transact in values lower than 2000 dollars. This regime enables them import their goods duty free.

“Rwanda is one of the countries with the best informal cross border trade practices in the East African region” Victor Ogallo, Head of Policy Research and Analysis Kenya Private Sector Alliance (KEPSA) said

The Government of Rwanda, through responsible institutions, in a bid to promote ICBT has continuously engaged stakeholders that are national, bilateral and regional and establishing national cross-border trade coordination and monitoring committee which have significantly reduced the cross border trade challenges, especially Non-Tariff Barriers.

Trade information desks were established at some borders aimed at improving visibility and provision of information to stakeholders.

One Stop Border Post (OSBP) which combines activities of two countries at a single location to remove unnecessary obstacles which hinder legitimate trade, extended working hours: Moving from 12 working hours to 24/7 operations among others

Alice Twizeye, Director of External Trade from the Rwanda Ministry of Trade, Industry and East Africa Community, Affairs (MINEACOM) said though there other challenges though like illiteracy, lack of markets but the government is tackling the issues through capacity building and building cross border market infrastructures for traders to have addresses.

“We have formulated them into cooperatives, over 70 have been formed around borders and we have created awareness to increase knowledge of traders, teaching and training them on simplest ways of booking keeping.” Twizeye said

Much as the government has made some strides in Rwanda, there is also need to support the activities aimed at raising more awareness to increase the knowledge in ICBT, especially to empower women to know their rights, understand proper application of rules and reforms as well as new developments in the informal cross border trade.

At the end of the two-day workshop, it is expected that there will be a validated and adopted report to be disseminated by CUTS-ARC to relevant stakeholders, particularly those in charge with implementation such as Governments and Regional Economic Communities.

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