Supporting Small-Scale Cross-Border Traders Across Africa
Small-scale cross-border trade – often referred to as informal cross-border trade – is a pervasive phenomenon in Africa. As such, it holds fundamental social and economic development implications. Across the continent, countless small-scale traders cross borders daily to sell goods or services in a neighbouring country. Although estimates vary, this type of trade represents around half of total intra-African trade, according to the FAO. The authors of a policy brief published by the African Development Bank further estimated that such trading activities contribute to the income of about 43 percent of Africans, thereby revealing their economic significance.
Small-scale cross-border trade has tremendous potential from a sustainable development perspective, although the informal nature poses a number of challenges. The commerce can help tackle poverty reduction by generating substantial revenue for border communities, and its potential development benefits go much further. Various experts have underlined that it can also significantly contribute to improve food security, promote economic diversification, and even strengthen peace and stability by creating and sustaining social and economic ties across borders. Another key aspect is the strong gender dimension of such trade, as the majority of small-scale cross border traders are women, meaning that it can also be a crucial factor for women’s economic empowerment.
Unfortunately, policymakers on the continent have long ignored the role of small-scale cross-border trade as a vehicle for positive change, a lack of interest that is all the more unfortunate given the severity of constraints that small-scale traders face in conducting their activities. However, policies and approaches are slowly changing as over the last decade a few countries, regional economic communities, and development partners have been implementing dedicated measures and programmes in this neglected yet important policy area. What initiatives have various stakeholders taken to facilitate small-scale cross-border trade and promote its formalisation? What are the concrete challenges that African small-scale traders face, and why should they be supported to overcome these difficulties? How can efforts to leverage the development potential of such trade be most effective? This issue delves into these questions.
The lead article, written by Paul Brenton and Carmine Soprano, insists on the importance of maximising the development dividends that small-scale cross-border trade can offer, outlining some of the ways in which this can be done. In the second piece, Lily Sommer and Chris Nshimbi reflect on how the African Continental Free Trade Area could be used to help overcome the challenges related to small-scale trading activities. Emma Marie Bugingo, for her part, focuses on how supporting small-scale traders can contribute to women’s economic empowerment. The issue also features an article in which Taku Fundira looks at the simplified trade regimes implemented in eastern and southern Africa, and offers insights based on these experiences. The final piece looks at the trends and dynamics of cross-border trade in West Africa from a more general – and historical – perspective.
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Photo credit: Jan Hoffmann