GovInn’s Director Chris Nshimbi co-authored together with Lily Sommer the article ‘The African Continental Free Trade Area: An Opportunity for Informal Cross-Border Trade‘ in Bridges Africa.
Informal cross-border trade (ICBT) can play a key role towards the attainment of the continent’s structural transformation and poverty reduction objectives contained in the African Union’s Agenda 2063. The informal economy employs the majority of Africans. A large share of people engaged in the informal economy operate as informal cross-border traders. ICBT contributes about 30-40 percent of total intra-regional trade in the Southern African Development Community (SADC) region and 40 percent in the Common Market for Eastern and Southern Africa (COMESA) region.
In the absence of sufficient formal economic opportunities, ICBT is crucial to addressing vital issues of income generation, job creation, and food security, particularly for Africa’s most vulnerable people, such as women and youth, who usually constitute the majority of informal cross-border traders. In West and Central Africa, women represent nearly 60 percent of informal traders. In Southern Africa, they represent about 70 percent of them. ICBT, which has proven to be more responsive to food crises and shocks when compared to formal trade, is largely practiced by the officially unemployed and micro, small, and medium-sized enterprises (MSMEs), and is therefore also important for strategies of inclusion.
What may come as a surprise is that ICBT also offers significant opportunities in terms of economic diversification, value addition, and the development of competitive cross-border value chains. This is because the scope of ICBT is wide and extends beyond basic agricultural products, such as maize and raw milk, to also include manufactured goods (e.g. processed foods, clothes, electronics and car spares) and services (e.g. bicycle and car repairs, hairdressing, and artisanal work).