A case for small-scale cross-border trade as a tool for East African Integration.

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Charles Achieng. 

The treaty for the establishment of the East African Community generated institutions and structures that have not only enhanced and energized regional economic growth and integration but also brought tangible and realistic gains to the small-scale, also known as informal cross-border traders.

In a 2014 report, Bank of Uganda defined small-scale/informal cross-border trade as transactions carried out between residents and non-residents across the economic boundaries of two or more countries that are not recorded by Customs Authorities.

Cooperation in trade liberalization and development have seen the establishment of Trade Regimes, Customs Union and Common Market protocols whose components have impacted positively and tremendously on socio-economic transformation and sustainable economic growth of the region.

With the region subscribing to COMESA-EAC-SADC Tripartite Free Trade Area, cross-border traders have the opportunity to a market access of over 600 million people from the 24-member states that have committed to this agreement. This is both incredible and commendable.

A United Nations (UN) report done in 2015 and published in May 2017 puts Kenya’s unemployment rate at 39.1 per cent among the population of working age, with Uganda claiming over 20 per cent.  A substantial number of this continues to be absorbed in smallholder cross-border trade, with a good percentage plying trade between Kenya and Uganda through the Busia One Stop Border Post (OSBP). Busia OSBP has the highest number of informal cross-border traders in the East African Community.

The actualization and realization of enhanced economic and social relations through intra-trade while widening and deepening cooperation among EAC partner states in political, social and economic field would have been served on a silver platter with recognition and appreciation of the role played by small holder cross-border traders – who move small volumes of goods several times and by many players across the border but always informally through unofficial and porous points.

Comesa initiated structuring of small scale informal cross-border traders with an objective of providing facilitation services and relevant trade information to traders crossing the border. Being a key component of trade support initiative, Comesa established Trade Information Desks (TIDs) in some of the OSBPs operating on Simplified Trade Regime (STR) without sustainable measures. OSBP committees in Busia have managed to facilitate the Trade Information Desks (TID) and Cross Border Trade Associations(CBTAs), and have officers who render services to small cross-border traders almost 24 hrs.

Trade Information Desks and Cross Border Trade Associations.

Trade support services provided by Busia Trade Information Desks and Cross-Border Traders Associations have seen 9,674 small scale traders transform and use STR-enabled structures, moving some 5,523 women small scale cross-border traders into formal trade.

This has been achieved by disseminating relevant trade support information and providing trade support services such as customs and border procedures; common traded goods (import duty free); women rights in trade; non-tariff barriers; market linkages; formalizing trade groups; guiding traders in filling customs and immigration documents and recording and reporting incidences of illegal and/or unfair treatment of traders, such cases of corruption, harassments and any forms on non-tariff barriers. The other interventions include providing information on accommodation, transport and any essential services; providing administrative services to CBTAs and small traders in terms of access to internet and e-trade services, printing, photocopying, emailing; obtaining market prices for commonly traded products; preparing monthly and quarterly reports for use by cross-border trade associations, EAC, Comesa and governments and many more cross border trade support services.

Sustainable provision of these important and crucial trade support services could be ensured by acknowledging and embracing the roles played by small scale cross-border trade, enhancing facilitation and empowerment of Trade Information Desks and Cross Border Traders’ Associations.

Busia OSBP Trade Information Desks (Kenya &Uganda) are managed by four volunteer Officers, some since the Year 2011.

 

2014 Uganda Informal Cross Border Trade Report by Bank of Uganda.

Uganda’s Informal Exports.

DR Congo was the leading informal exports destination during 2014, with exports from Uganda estimated at $139.5 million representing a 33.6 percent share of total informal exports receipts. South Sudan followed with $119.5 million (28.8 percent) which was lower than $130.8 million (31.1 percent) registered in 2013. Exports to Kenya amounted to $92.9 million (22.4 percent) compared to $69.7 million (16.5 percent) recorded in 2013. Rwanda and Tanzania followed in that order representing 5.9 percent and 5.6 percent of informal exports in 2014 respectively.

Informal exports to most of the neighbouring countries decreased significantly during 2014 except for Kenya and DR Congo which recorded growth of 33.3 percent and 3.3 percent in 2014. Tanzania recorded consecutive and significant declines of 9.9 percent and 45.9 percent in 2013 and 2014 respectively. Similarly, informal exports to Rwanda declined by 11.9 percent, while those to South Sudan and Burundi declined by 8.7 percent and 1.2 percent respectively.

Uganda’s Informal Imports.

Kenya continued to be the leading source of Uganda’s informal imports during 2014 with informal imports worth $30.8 million, accounting for 46.7 percent of total informal imports in 2014. This was higher than the estimated value of $26.5 million recorded in 2013. DR Congo ranked second, with imports amounting to $21.3 million (32.4 percent of the total) compared to $17.7 million (33.0 percent of the total) recorded in 2013. The other remaining countries Tanzania, Rwanda and South Sudan had a combined import bill of $13.7 million (20.9 percent of the total) during 2014, compared to $9.4 million (17.6 percent of the total) recorded in 2013. It should be noted that Uganda’s informal imports from Rwanda and South Sudan declined in 2014. However, in the same year, the informal imports from DR Congo, Kenya and Tanzania increased significantly.

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The writer is the chairman, Busia, Kenya Cross Border Traders Association.

busiakcbta@gmail.com