Informal Cross-border Trade Research Articles

ANALYSIS OF THE GEOGRAPHICAL FACTORS INFLUENCING CHOICE OF INFORMAL FISH TRADE ROUTE AND DESTINATION BY FISH TRADERS BETWEEN MALAWI AND NEIGHBORING COUNTRIES

Choice of trade route and destination by cross border traders is an important decision in today’s increasingly cross border trade of products including fish. The current study examined the geographical factors influencing choice of informal trade route and destination by fish traders. Both qualitative and quantitative approaches were adopted for the study. These included semi-structured questionnaires through personal interviews and key informant interviews with fish border inspectors. Data was analyzed through various techniques for trader’s choice and destination. Specifically, principal component analysis and spearman correlation, and Huff’s gravity model were used to identify significant factors influencing choice of trade route and destination, and market attractiveness, respectively. Fish traders bypass official border posts using informal routes connecting the main route before and after the border post. Despite attempts and awareness about formal trade, stringent regulations forced fish traders to use informal trade routes. However, investigations into choice of trade routes and destination found that route distance, presence of alternative destination, mode of transport, demand of the fish product, and personal safety and risks were the factors influencing choice of both trade route and destination by informal fish traders. This geographic analysis provides a basis for addressing challenges in informal cross border trade in Malawi. It is recommended that strategic efforts and investments should be made in the development of transportation infrastructure, such as roads and railways to improve connectivity between secondary routes and one stop border post. The government should also intensify awareness initiatives on COMESA simplified trade regime (STR) to encourage informal traders to transition to the formal sector through use of formal routes.

Business and Politics of Eastern Africa

This article underscores a history of economic relations between Kenya and Uganda from 1962 to 2024. This is due to the fact that Uganda, Tanzania, Rwanda, Sudan, Zaire, Somalia, Burundi, and Ethiopia are the most important business partners for Kenyan exports. The article reviews various literatures and a major gap has been identified. Theoretically, it adopts a bureaucratic theory, as was propounded by Max Weber in 1921. Methodologically, the article embraces a historical research design, as it helps in evaluating and relating the past occurrences in order to establish the causes, effects or trends of those occurrences with the aim of utilising the data to understand and explain the past, present and future anticipated events. In its findings, four eras of Kenya presidents are discussed. These includes: Jomo Kenyatta era, Daniel Arap Moi era, Mwai Kibaki era and finally Uhuru Kenyatta era. Based on the aforementioned eras, the article found out that; first the promise of democracy, a good life, and freedom was punctuated throughout the pronouncements that marked the formative years of the Kenyatta state. Secondly, this article discovered that, in 1990, when Moi was in power, the rhetoric of the KANU party suggested that African traditions were particularly well-suited to a one-party democracy environment. One of the traditions that were mentioned was the practice of making decisions through consensus rather than through competition. Lastly, during Kibaki era, Informal trade thrived due to bureaucratic hurdles and corruption at border points between Uganda and Kenya. In Conclusion, the rise of informal cross-border trade, particularly during times of political instability, has significantly influenced economic interactions between the two countries.

The Impact of Informal Cross-Border Trade on Kenya-Uganda Foreign Relations

This paper generally discusses the intricate dynamics of Informal Cross-Border Trade (ICBT) and its profound impact on Kenya-Uganda foreign relations. It is observed in this study that, Kenya and Uganda share a similar history, geography and a distinct cultural background, key to their social and economic relations. It is further noted that Kenya plays a significant role in Uganda's history and vice versa, sometimes influencing each other. Both countries are significant trading partners, but mostly informally, which has expanded in the post-independence period. This is attributed to their shared history, culture, and geography. Since the pre-colonial period, communities in the geographical area that came to be defined as the border between the two countries engaged in informal trade. The paper holds that, Informal Cross Border Trade along the Kenya-Uganda border has shaped the foreign relations between the two countries. The study applied territoriality theory to interpret the impact of ICBT on Kenya-Uganda foreign relations. The theory holds that, each sovereign state has authority to manage resources within its borders. The study used both primary and secondary sources. This study demonstrates that ICBT, positively influences Kenya-Uganda foreign relations. It also expands knowledge on the impact of ICBT on foreign relations.

‘Normalizing Informality’ in Local–Transnational Spaces: Contraband, Conflict and Street Trade in Eastern Ethiopia

Informality arguably remains the main source of employment and income for most participants in the cities of the Global South. It is rampant in cities along national borders and transport routes. This paper discusses the ‘normality of informality’, exploring the nexus between contraband, conflict and informal cross-border trade in a local–transnational space, drawing from Dire Dawa in eastern Ethiopia. Data were collected through key informants and in-depth interviews in 2015/2016 and 2019. This study also benefitted from secondary sources. Since its establishment in 1902, the city has become a major hub of commerce, industry, transportation, and cross-border trade. Combining the literature on the informal economy and cross-border trade and drawing on evidence from eastern Ethiopia, this study explores how trade is deeply embedded in local–transnational interactions through partnerships between state and non-state actors. This study argues that informal cross-border trade is a societal mode of provisioning with extensive livelihood opportunities that survive even through periods of conflict and repression. Thus, reducing the vulnerability of participants in informal cross-border trade could be a more effective policy target than eradicating them.

‘(Re)ordering’ North Waziristan, Pakistan: Post-Conflict Transition, Borderland Dynamics and Spatial Identities

ABSTRACT North Waziristan is emerging from an episode of terrorism that lasted for decades. Critically examining the dynamics of borderlands, this paper explicates the intersection of informal cross-border trade with the local economy and livelihoods. These socio-economic patterns created by ungoverned geographies, and porous uncontrolled borders foster a dependence on the informal economy, which is largely responsible for financing and perpetuating the instability. The paper signposts that effective border management and ongoing security reconstruction have contributed to rejuvenating the local economy and providing the necessary impetus for post-conflict economic development, keeping widespread unrest and militancy on hold.

Contested Spaces of Exchange: Informal Cross-Border Trade on the India–Bangladesh Border

The India–Bangladesh border is the world’s fifth longest land border, a focus of political tension in an area with vibrant informal economies. Cross-border communities share culture and language and informal cross-border trade (ICBT) is well-established. This article explores ICBT on the Indian side of the border, examining its actors, power relations and spatial dimensions, and the vulnerabilities of those involved. Debates on the social and cultural roots of ICBT, and the vulnerability of small-scale entrepreneurs to a complicit state, and powerful middlemen in lucrative sectors of ICBT, inform the analysis. The trade is theorized through the lens of jugaad, the Indian term for ‘making do’ and ‘instinctive creativity’. The research draws on case studies of three cross-border sectors, everyday trade in small household goods, the politically sensitive cattle trade, and cross-border medical/healthcare services. The mechanisms of jugaad are seen to some degree in all three case studies, but heavy state regulation gives advantage to controlling middlemen and state officials. Finally, we argue that ICBT is a critical component of the wider political economy in the border regions of West Bengal, and that the forgotten sector of ICBT could, if supported by light-touch regulation, have important poverty-reduction potential in enabling livelihoods for marginalized border communities.

Contribution of COMESA in the Fight Against Poverty in Zambia Through Trade Facilitation

Background: This study was undertaken due to high levels of poverty in the Common Market for Eastern and Southern Africa (COMESA) Member States. The study endeavored to explore the Contribution of COMESA in the fight against poverty in Zambia through trade facilitation. The study employed qualitative approach with an exploratory research design and critical case sampling to choose 13 key respondents to explore the contribution of COMESA in the fight against poverty in Zambia through trade facilitation. Primary data was analysed from 13 key respondents selected purposively using an interview guide to support secondary data. Data was analysed using thematic and content analysis. According to the World Bank (2017), trade facilitation contains provisions for expediting the movement, release, clearance of goods, goods in-transit, simplification, standardisation and harmonisation of procedures and associated information flows required to move goods from the seller to the buyer for payment. Zambia implemented COMESA’s simplified trade regime (COMESA-STR) for small cross- border traders. The Simplified Trade Regime (STR) basically aimed to formalise informal cross-border trade (ICBT) by putting in place instruments and mechanisms tailored to the trading requirements of small-scale traders that were decentralised to border areas where informal trade was rampant with the view to facilitate ease of access by small traders. The Simplified Trade Regime (STR) made possible for the small-scale cross-border traders to benefit from the COMESA’s preferential trading arrangement with the reduction of tariffs on selected goods. The concept One Stop Border Posts (OSBPs) was also implemented in Zambia and other related trade facilitation measures to support businesses.

Informal Cross-Border Trade in Africa: Operations, Policy, and Opportunities

Informal cross-border trade (ICBT) refers to the illegal activities of cross-border commerce conducted by unregistered small-scale traders. We seek to develop insights to understand the ICBT value chain and offer policy recommendations to successfully integrate it into the formal economy. Using a game-theoretic model, we analyze the operations and key market dynamics of ICBT. We analyze the policy implications of three representative UN directives: enhancing marginalized traders’ access to formal channels, reducing export tax rates for formal traders, and introducing an alternative simplified trade regime (STR) for informal traders. All three policies result in an increase in government proceeds when the inherent profitability of the formal or STR channels is sufficiently high. Furthermore, social welfare increases when the policies effectively balance wholesale price competition within the formal and informal channels. We apply our model to a case study based on Uganda’s agricultural exports over an 11-year horizon. The access enhancement policy is most effective in increasing government proceeds but least effective in improving the welfare of other participants. The tax reduction policy enhances traders’ profitability but sacrifices the welfare of farmers and government proceeds substantially. Finally, the STR acknowledgement policy results in the largest increase in profitability of marginalized traders and farmers but comes at the cost of government proceeds. This paper was accepted by Jay Swaminathan, operations management. Funding: This work was supported by the Institute of Management Research, College of Business Administration, Seoul National University. Supplemental Material: The data and online appendix are available at https://doi.org/10.1287/mnsc.2022.02479 .

The African Continental Free Trade Area and informal cross border trade: implications on socio-economic development in Africa

ABSTRACTThe setting up by the African Union of the African Continental Free Trade Area (AfCFTA), which should govern matters relating to, inter alia, trade in goods and services, investment, trade facilitation, intellectual property rights, and competition policy is a step in the right direction. However, this paper argues that the limited inclusion of informal economy actors such as informal cross border traders (ICBTs) appears to undermine the potential of the AfCFTA as the architecture for inclusive socio-economic development in Africa. The paper advances the need for African countries to craft policies which are sensitive to and respond to the circumstances of ordinary people on the ground and not a wholesale application of policies such as neoclassical integration theory, the outcome of which deserts ordinary people. Such policies must be transcendental to the extent of being informed by views from the ground, which does not appear to be the case with the AfCFTA on the score of ICBTs.

Challenges of Informal Cross-Border Trade Facilitation in Tanzania: Lessons from Kigoma Border

ABSTRACT This study investigates the challenges of an informal cross-border trade (ICBT) facilitation initiative in Tanzania. Specifically, it identifies the regulatory framework governing cross-border trade (CBT), and investigates the challenges of facilitating ICBT. It is based on in-depth interviews with 51 officials from 10 trade-regulating agencies and 47 cross-border traders in Kigoma, Tanzania. The findings reveal that ICBT is largely attributed to the stringent regulatory requirements and high costs of trading via formal routes. Although different trade facilitation measures have been taken, several challenges of CBT facilitation were identified, namely: limited awareness of the existing initiatives; inadequate border facilities; lack of a mechanism to escalate traders’ challenges to the relevant agencies; limited resources; ineffective coordination; hesitation of traders to utilise trade facilitation initiatives; and informality of traders in the neighbouring countries. While we support the rational exit and dual economy views that traders operate informally to avoid the cost of formalisation, we show that trade facilitation measures adopted in the context of the World Trade Organisation (WTO) do not offer traders sufficient incentives to formalise. Accordingly, we suggest a trade regime consisting of simplified documentation and reduced trade costs to effectively accommodate ICBT in the international trading system.

Unleashing the development potential of Africa’s women through African Continental Free Trade Agreement (AfCFTA)

ABSTRACT This paper aims to analyse the African Continental Free Trade Agreement (AfCFTA) and its potential to unleash the development of women in Africa. The envisaged benefits of the AfCFTA include increased trade diversification, regional integration, enhanced human security, increased foreign direct investment and technological advancement. Despite optimism about the prospects of the agreement as a local innovation spearheaded by the African Union, pessimists raise questions about the extent of stakeholder engagement. The agreement must be gender-responsive to enhance outcomes for women cross-border traders. The paper concludes that the lack of gender sensitivity confirms the need to address the specific needs of African women, especially those involved in informal cross-border trade. Hence, for AfCFTA, the policy focus should be on ensuring the formalisation of women who participate in informal trade, thus helping increase access to markets, information and growth opportunities.

Strategies for Survival in an Informal Economy: Illegalities of Zimbabwean Informal Cross Border Traders at Ports of Entries in Southern Africa.

Informal Cross Border Trade (ICBT) is mostly conducted by poor, vulnerable, small and unregistered traders who end up practising illegal activities in order to earn a livelihood and for the business to thrive. They often do not have official export/import license or permit within a defined threshold and this creates many impediments at international borders which oblige them to engage in illegal and corrupt behaviours. There is little comprehensive research about the illegalities of informal cross border traders and whether these illegalities improve the operation of ICBT or it ruins the business. This research examines the illegalities practised by informal cross border traders (ICBTs) in Zimbabwe to understand their nature, geographical spread, benefits and risks. A qualitative approach was used whereby in-depth interviews were undertaken with 30 informal cross border traders using snowball sampling. Traders who imported from Mozambique, Botswana, South Africa and Zambia were selected to participate in the study in order to document various illegalities performed at diverse national borders. Results revealed that traders engage in many illegal activities both at the national borders and in transit when confronted by Zimbabwe Revenue Authority officials and other security state organs. It was revealed that many traders use illegal ports of entry when importing their goods and that they rarely declare their goods at official border posts. The research recommends the government to proffer conditions that are manageable for the small scale traders to be registered so that illegal activities and corruption in the country can be lessened and also for the government to obtain meaningful tax from this sector.

Capturing the invisible: Methodological approach in understanding informal cross border fish trade

The lack of sufficient information about the magnitude of the informal cross-border fish trade (ICBFT) leads to underestimating the fisheries sector’s importance to the national economy. Among other factors, this insufficiency is attributed to inconsistent methodologies applied to measure the ICBFT. This article presents a methodological approach drawn from 15 months of field experience in two border posts and one fishing village in mainland Tanzania to fill this gap. The proposed methodological approach integrates the insights of the grounded theory and social network analysis to form Networked Grounded methodological approach. The approach examined the ICBFT social network characteristics, identified an entry point for collecting accurate ICBFT data, and quantified the ICBFT weight and values of marine small pelagic fishery locally known as marine dagaa fishery. Findings indicate that the marine dagaa ICBFT social network involves 12 actors who nurture social network ties, translated into financial, emotional, and information social support, which is crucial for ICBFT operations. Overall, middlemen and porters were the key actors holding a significant role in facilitating ICBFT, attributed to being best networked to influential actors and as informers within the ICBFT network. Moreover, about 972 m. tons valued at US$ 1.8 million of informal marine dagaa were quantified, which was 843.2 m. tons higher than official statistics during the same period. These findings make a valuable contribution to the methodological approach that enables understanding of ICBFT, hence, informing management efforts and policy options, for effective management of the ICBFT and generate positive economic outcomes.

The vacuity of informal cross-border trade facilitation strategies in the SADC region

In the Southern African Development Community (SADC) region, there is the discourse that trade facilitation programmes have opened borders for actors like informal cross-border traders. Examples used in this narrative include the African Continental Free Trade Area. This article takes a different view and asserts that these state-driven initiatives were limited because regionalism as SADC institutional project was not in sync with the everyday regionalization processes. Such processes demonstrate the fluidity and multidimensionality of regional integration, which transcend state-centric paradigms and this invokes an alternative explanatory framework and understanding of the bottom-up process of regional integration in an African setting.

Dynamics between Regional Integration and Informal Cross Border Trade and Its Applicability: The Case of Cameroon and Equatorial Guinea

Collective self-reliance, inward-looking regionalism, and delinking from the dominant relationships that prevailed in the international economic system in the form of regional economic integration and cooperation were the solution identified by the Pan-African leaders as a potential strategy for restructuring the fragmented African region into a more coherent and viable economic space. This article interrogates the applicability and understanding of Regional Integration within the ECCAS Region while determining the influence Informal Cross Border Trade has had on economic integration in this sub region. The study uses economic integration theories to analyze the implementation of regional economic integration and its effectiveness. The article applies a qualitative research method with a cross sectional design to study a multilevel issue involved in regional integration. It aimed to explain and predict phenomena based on empirical data obtained through interviews using close structured and unstructured interview guide. The study revealed that despite efforts to institutionalize regional integration in the ECCAS region, structural challenges remain a significant impediment to intra-regional trade. Informal cross-border traders consolidate what has come to be regarded as the “invisible” integration of Africa’s economies through their involvement in a range of goods and services, resulting in transnational networks, culture and kinship. These can only be effective if African countries adopt a self-reliant and inward-looking economic integration strategy.

Challenges Facing Informal Cross-Border Women Traders and Potential Management Opportunities in Busia and Isebania Borders-Kenya

Informal cross-border trade (ICBT) is an integral part and unrecognized component of Africa’s economy which has persisted despite the effort to graft it into a formal economy globally. An important observation is that women are the dominant players in all ICBT activities, accounting for more than 60%. This study endeavors to examine the challenges facing informal cross-border women traders(ICBWTs) and the potential management opportunities in Busia and Isebania Borders Kenya. They adopted a mixed research method and a cross-sectional design. Data was collected through interview schedules, questionnaires, and observation which were analyzed quantitatively through descriptive statistics while qualitative data were analyzed and presented thematically. The study found that the challenges were; inadequate capital, harassment by border officials, corruption, insecurity, high transportation cost, sexual and gender-based violence, self-seeking states, and confiscation of goods. This study recommends that states within the EAC should strive toward embracing women-friendly formalization approaches to reduce informal cross-border trader activities which have risks to women.

Impact of Informal Cross Border Trade on Livelihoods: A Case of Rubavu District

Informal Cross-Border Trade (ICBT) constitutes a major form of informal activity in most developing countries and plays a significant role in changing the livelihood of people and alleviating poverty. Nevertheless, the sector has not been accommodated within the city and national policies, it provides employment opportunities as a means of income generation for the urban poor, especially for those who migrate from the rural areas. It also provides to consumers convenient and accessible retail options and forms a vital part of the social and economic life of a city. The study entitled “Impact of Informal Cross Border Trade on Livelihoods; a case of Rubavu District” was guided the following specific objectives: to analyze the informal cross-border trade at Rubavu border between Rwanda and the Democratic Republic of Congo; to assess the prominence of livelihoods of informal traders in Rubavu District; to find out the relationship between informal cross border trade and the level of livelihood of informal traders in Rubavu District. The study used descriptive and correlational research design. The sample size of the study was 188 informal traders. A questionnaire was used to collect data and finally the study used descriptive statistics and inferential statistics as method of data analysis. The findings revealed that 71.8% of respondents strongly agreed that rules and regulations on border play a major role in determining the growth of ICBT. 72.3% of respondents strongly agreed that there is high cost of registering small business. 62.2% of respondents strongly agreed that tax laws of Rwanda are well defined. About the trade of commodities, 52.7% of respondents strongly agreed that they buy and sell agriculture products from Rwanda to DRC. About market and marketing, 84% of respondents strongly agreed that the informal cross border product marketing is the way of refusing the Government taxes. 87.2% of respondents strongly agreed that their source of income saving increased over the last three years (after joining ICBT). The findings indicated that there is high positive significant linear relationship between taxation policy and livelihood improvement in Rubavu District at r = 0.723 ** ; p-value =0.000 < 0.01. The findings indicated that there is moderate positive significant linear relationship between trade commodities and livelihood improvement in Rubavu District at r = 0.635 ** ; p-value =0.001 < 0.01. Based on the findings, the study concluded that there is positive effect on ICBT towards livelihoods of informal cross border traders in Rubavu District where the variation in livelihoods of its beneficiaries was related to changes in policy and legal framework, taxation policy, trade commodities and marketing strategies. The research recommended that Rwandan government should educate the business community about different tax rates, mode of payment because some informal traders do not know those rates and the mode of assessment. Key concepts: Informal cross border trade, livelihood, improvement. DOI: 10.7176/EJBM/14-22-08 Publication date: November 30 th 2022

Informal Cross-Border Trade: Malaysia-Indonesia Borders The Conceptualisation From ‘Authority-Defined’ To "Everyday-Defined"

For these border studies, understanding borderlanders provides a new narrative about boundaries. The history of a nation-state of a collective nature, the alignment of power, economic segmentation, and integration of culture, ethnicity, and identity, religion, the behavior of marginal communities, as well as modern socio-political segregation are variables that can be raised in various disciplines. In this study, we offer a qualitative method with an ethnographic perspective, as many anthropologists do, but with a constructivist approach. We call it the conceptualization of "Authority-Defined" to "Everyday-Defined." The diversity of narratives and connotations in unraveling boundaries gives the perspective of contextual interpretation in different positions. Surely, understanding boundaries should also be seen in such a detailed context that the actors of border studies, i.e., society, are observed through the lens of meaning boundaries in their everyday lives. These differences lead to findings that are rich in dynamic and varied border backgrounds. This discussion focused on on-the-ground findings about informal cross-border trade, specifically at the Malaysia-Indonesia border. A trading system built by local communities is certainly different from the trade system in non-border areas and even in the country's capital area.

Informal Cross-Border Trade: Malaysia-Indonesia Borders The Conceptualisation From ‘Authority-Defined’ To "Everyday-Defined"

For these border studies, understanding borderlanders provides a new narrative about boundaries. The history of a nation-state of a collective nature, the alignment of power, economic segmentation, and integration of culture, ethnicity, and identity, religion, the behavior of marginal communities, as well as modern socio-political segregation are variables that can be raised in various disciplines. In this study, we offer a qualitative method with an ethnographic perspective, as many anthropologists do, but with a constructivist approach. We call it the conceptualization of "Authority-Defined" to "Everyday-Defined." The diversity of narratives and connotations in unraveling boundaries gives the perspective of contextual interpretation in different positions. Surely, understanding boundaries should also be seen in such a detailed context that the actors of border studies, i.e., society, are observed through the lens of meaning boundaries in their everyday lives. These differences lead to findings that are rich in dynamic and varied border backgrounds. This discussion focused on on-the-ground findings about informal cross-border trade, specifically at the Malaysia-Indonesia border. A trading system built by local communities is certainly different from the trade system in non-border areas and even in the country's capital area.

Illuminating informal cross-border trade in processed small pelagic fish in West Africa

Trade in processed small pelagic fish and informal cross-border trade (ICBT) are linked to livelihood activities in West Africa. Although these fish products are being traded informally in West Africa, research on this topic is limited. This study builds on a multi-partner supported ‘FishTrade’ initiative in Africa to illuminate the volume and value of informal fish trade across the Ghana–Togo–Benin (GTB) borders, and the socio-demographic determinants supporting participation and profitability in this trade. We used a structured survey and focus group interviews to obtain data from women fish traders, who handle the entire fish trade in three major Ghanaian markets where ICBT activities are concentrated. Our results showed ICBT across these borders constitutes significant economic and livelihood potential, estimated at about 6000 MT in volume and US$14 million in market value per annum. Furthermore, socio-demographic factors, such as fish traders’ years of experience and membership in an unofficial market cooperative, positively influence participation and profitability, but access to market information negatively affects participation. However, geographical distance, large household size and access to micro-finance negatively affect ICBT profitability. Our findings illuminate that consumers’ purchasing power, fish taste and preference, ICBT’s economic opportunities and a shared heritage and connection significantly influence this form of trading along the GTB borders. We conclude that ICBT in these small pelagic processed fish represents untapped potential for local livelihood and highlight the need for further research on this topic.