Debunking the informality of Cross-Border Trade (CBT) in Southern Africa.

 

Debunking the informality of Cross-Border Trade (CBT) in Southern Africa

 The article seeks to debunk the common usage of the word ‘informal’  in relation to cross-border activities carried out by the native Africans across the borders.  the author introduces the need to approach cross-border trade activities from a constructivist view of formality and recognize it as a formal sector. This has been necessitated by continued labels put on this trade despite its positives to the region as a whole. To  Devey & Valoidia  (2009)when studying cross-border trade formality and informality should be viewed as a continuum and not as exclusive dichotomies The CBT involves the movement of the physical movement of not only goods but also people across borders.  Cross-Border Trading has remained an important form of trade in many developing countries. CBT according to studies assisted in the cushioning of the African continent from the global financial crisis as people took advantage of the disparities in the availability of food across the continent and differences in currency rates as they trade across the borders.    

 To Olabisi 2014 CBT in Africa has increased since the 1990s because of the economic liberalization policies, population growth, and urbanization. CBT does not occur in a vacuum as it takes place within the broader trade and developmental context internationally, regionally, and nationally. According to Morris & Saul (2000) there is a direct link between CBT trade openness and regional economic growth. Ndiaye (2008), asserts that the real integration process of Africa is taking place through the unrecognized CBT more than in formal trade and the populations of Africa are much at ease in this informal trade. This has resulted in the suggestion that the real economy of Africa lies in the informal economy and CBT. Egbert (2006) refers to CBT as a mass phenomenon that though well researched or analyzed by anthropologists and sociologists is largely ignored by economists. This has resulted in failure by policymakers to take into serious consideration the contributions of this trade. Research has shown that CBT contributes about 30-40% of intra-SADC trade and has immersible contributions to the socio-economic and political development of the region.

Research by Ama and others in 2014 proved that CBT addresses the important livelihood issues with its contribution to the different economies despite its neglect by the mainstream trade policymakers and various institutions thereby undermining its visibility and profitability.  It should be emphasized that CBT is an important economic activity contributing to the economic growth and government revenues of many economies. The greatest part of peace enjoyed in the region should also be attributed to the CBT which has maintained harmony [as families engage in the CBT activities to cushion hardships experienced from the economic shocks across the region. Makisale and Magai (2015) estimate that over 30% of the GDP of thirty-seven countries comes from the informal economy and to be specific in Tanzania it contributes to 40 percent, as confirmed by Mbilinyi and Mutalemwa (2010).

The classification of CBT as informal trade has been regarded as a source of harassment from border officials and all law enforcement agencies.  SADC Today 2008 narrates that CBT by Small, Micro and Medium Enterprises (SMMEs) is normally considered informal trade as the goods are not always moved through the trade channels classified as formal with some consignments bought in the informal markets. This all shows that SADC as a region could be overlooking an important component of the regional economy which has the capacity to grow the intra-regional trade and contribute to the socio-economic development of the region. The issue now is the recognition of the CBT as formal trade. This can be addressed by the acceptance by both regional and national trade policymakers that there has been an oversight on this trade in respect of aligning the regional and national trade policies. The existing regional and national trade policies have immensely contributed to the classification of CBT as an informal trade as a result of the mismatch between largely imported regulatory and administrative framework, the type and capacities of businesses in the Small, micro, and medium enterprises, the weaknesses in the enforcement of laws and regulations in the lens of administrative bureaucracy, laxity, and corruption.

CBT has to be recognized for its important role in society by providing jobs and reducing unemployment and underdevelopment. CBT also boosts entrepreneurial skills and activities in women and the youth thereby assisting in poverty alleviation. According to Little (2007), research studies have proven that women are very instrumental in socioeconomic development and hence a crucial role in poverty alleviation through this trade.  There is a need for removing the labeling of CBT as informal for the SADC region to benefit from this trade

 

Dr. Levious Chiukira is an international trade and customs consultant reachable on  lchiukira@gmail.com