Market and Trade Policy for Staple Foods in Eastern and Southern Africa
Edited by Alexander Sarris and Jamie Morrison
Chapter 7: Unofficial Cross-border Trade in Eastern Africa
7. Unofficial cross-border trade in Eastern Africa Peter D. Little INTRODUCTION 1 Informal or unofficial cross-border trade (CBT)1 is an increasingly important phenomenon in Eastern Africa, but one that remains surrounded by controversy and ignorance. For some observers it represents a normal market response to cumbersome, time-consuming export regulations and regional price distortions, which should be encouraged as a means to increase intra-regional trade (and ‘regionalization’), meet local demand that is not being met by national production and markets, and ensure regional food security. These same supporters often argue that many transborder markets pre-date colonial and post-colonial state boundaries and, thus, reflect long-standing indigenous patterns that make more sense than formal trade channels (see Meagher, 1997). For others, CBT reflects a potential loss of foreign exchange, an illegal activity, and a source of unfair competition for official traders and food producers. The contra position argues for increased regulations and taxes, policing, and/ or forcing CBT into formal market channels. As Meagher’s work shows (1997, 2003), it was assumed by some policy makers that structural adjustment policies of the 1980s and 1990s would have channelled most informal trade into formal market channels, which has not been the case in large parts of Africa (see also Peberdy, 2000; Little, 2001).2 In fact, for many parts of Africa the overall effect of structural adjustment has resulted in ‘a significant expansion of transborder trade’ (Meagher, 2003: 57)’, especially by large numbers of unemployed youth, women, and others, including ex-formal sector employees...
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