By Regina Laub, Florence Tartanac and Cristina Scarpocchi
There are strong regional and continental level efforts towards formalizing trade within Africa. Despite these efforts, it is very common to see women crossing the borders with their heads and backs laden and arms overloaded with goods for sale. These traders are carrying goods that include industrial and agricultural commodities, they are engaged in what is known as “Informal Cross Border Trade (ICBT)”.
Many of the traders that are involved in ICBT are self-employed women. Very often their engagement in in informal trade gives them an entry point in selling their local produce. They would not be able to enter the formal sector due to various reasons, including difficulties in getting access to traveling documents or trading licenses, long waiting times at borders, overcharging by customs officials, and lack of knowledge of official procedures. Moreover, due to the nature of this trade and the lack of an adequate legal framework, the informal women traders traders are often faced with challenges such as corruption, where officials solicit bribes in order to smuggle goods, sexual abuse and confiscation of goods.
The objective of this paper is to highlight the potential women small traders can have in poverty reduction in many African countries and the need for policy makers at national and regional level to take into account their specific role and economic contribution and include measures to address the challenges they face in their day-to-day life in the negotiation of trade policies and regulations. This note is based on the experience and lessons learned from the work carried out at field and policy level to support women informal traders in the Great Lakes region, and specifically in Rwanda, within the framework of the Cross-border Trade Support Initiative led – since 2013 – by FAO, UN Women and other development partners.
70% of informal cross border traders are women in the SADC region (East Africa Community 2006).In some African countries informal regional trade flows represent up to 90 percent of official flows (Hall 2013; UN Economic Commission for Africa).The contribution of women informal traders to national GDP amounts to 64 percent of value added in trade in Benin, 46 percent in Mali and 41 percent in Chad (Charmes 2000, quoted in ILO 2004).Trade is the most important source of employment among self-employed women of Sub-Saharan Africa providing 60% of non-agricultural self-employment (ILO 2004).
Informal cross-border trade and its economic importance
ICBT refers to imports and exports of legitimately produced goods and services. The traded good or service does not pass formally through custom controls and therefore escapes the regulatory framework for taxation and other procedures set by the government. This form of trade is unrecorded and does not appear in official national statistics of the trading countries. It is complex and context-specific.
ICBT provides a significant contribution to national economies: In Africa, it is estimated that it represents 43 percent of official gross domestic product (GDP), this percentage is almost equivalent to the formal sector.
In Sub-Saharan Africa, ICBT features prominently among women’s individual strategies for self-employment, poverty reduction and wealth creation. Overall, trade provides 60 percent of non-agricultural self-employment to women in sub-Saharan Africa. For example, most of women’s small scale business between Rwanda and Burundi is informal. The types of goods these women trade include agricultural products mainly vegetables, such as tomatoes, peppers, cabbage, traditional vegetable varieties, carrots, peas, cucumber, maize, sorghum, beans, rice and maize flour and cassava.
Why women are involved in informal trade?
Traditionally women cross-border traders were engaged in selling unprocessed and processed food. Originally confined to jobs such as food selling and shop-assistants in businesses at border crossings, they are now involved in cross-border trading of a wide range of goods and services, creating informal distribution networks and credit systems that sustain the livelihoods of their families. The revenue generated by trade is mostly spent on households to cover basic needs such as food and schooling. Women in particular play an important role in this trade, as they make up the majority of the traders and rely on it as their primary means of subsistence.
Cross-border trading has resulted in new trans-national networks supported by common languages, culture and kinship (Women Watch) . Informal cross-border trade is an important coping mechanism for these women to reduce poverty and promote economic income for their families.
These women have for a long time remained the least protected by trade agreements and immigration laws. They are limited in their economic ventures and trading opportunities for reasons that include inflexible and unfriendly trading conditions and procedures, unsafe borders, inadequate business skills and market information (East African Community 2006).
Challenges faced by the women traders
Women traders face specific difficulties: they have the lowest levels of start-up capital, they generally trade goods which generate the lowest levels of profit, and they face harassment at the border, as well as a negative social perception of their activities.
Furthermore, their commercial activities do not free them from their family responsibilities. Usually they return home late in the evening from their work and then must complete their household chores.
Overall, women traders face very specific challenges; here are some of the most common:
- Lack of knowledge of trade regulations, procedures and their rights: Based on the low level of literacy among women traders, they face problems in reading custom forms and understanding the procedures. Even if there are some systems and structures in place that support their small scale transactions, e.g. in the SADC region (STP SADC Trade Protocol) or the Simplified Trade regime in the COMESA, women traders lack information about policies promoting small scale trade and they usually pay a high number of undue ‘informal’ taxes. It is common practice of custom officials to take advantage of the women’s ignorance and exploit them in various ways.
- Vulnerability during travels and at the borders: In general women need more time to cross the borders than men. They are often held back by custom officials, asking the women traders for personal favors. Many women report cases of sexual harassment and violence such as rape, imprisonment and confiscation of goods. At border areas there is no provision of infrastructure to support women specifically, e.g. storage facilities, accommodation, illuminated border areas, hygiene facilities and transport corridors for women traders would give women traders much more safety in their work.
- Lack of adequate services: Women traders face limited market information. Since most traders operate outside formal business circles, market information on prices, demand and supply, also information on policies, regulations, agreements and protocols for the facilitation of cross-border trade is difficult to obtain. Most women traders face limited access to financial resources. Their transactions are mainly cash based or bartered, they lack working capital and tangible business assets and therefore it is difficult for them to get financing for their business or banking services tailored to their needs.
- Invisibility of women traders and missing evidence: Despite their substantive economic contribution, small scale trade women are invisible in trade statistics, policies and regulations and in the GDP of their countries. There is only scarce and reliable data about the ICBT because of this lack of recognition. The vicious cycle of invisibility, informality and violation of rules and regulations will only be interrupted when more data become available and when governments, border police officers and agencies involved in trade recognize that women cross border traders create wealth, contribute to poverty reduction, employment creation and regional integration in a considerable way.
The Cross-border Trade Support Initiative in Rwanda
In 2013, FAO started to support women working as informal cross-border traders through a number of initiatives, mainly focusing on Rwanda, in partnership with UN Women, the East African Farmer Federation and Trade Mark, among others. The work is focused on four main areas:
- Supporting selected informal women trader associations to register and thus have a legal status to enhance their voice in the decision making process at policy level, as well as to access information and training opportunitites;
- Training Customs officials in updated regulations and implementation of existing trade protocols, agreements, etc.
- Translating into local language regulations and protocols on export requirements and procedures, simplified trade regimes; tax-exemption and reduced rates of tax for the more exported agricultural produce and disseminate it thorugh flyers, posters and brochures at border posts;
- Supporting policy advocacy at the level of regional economic communities and member states to: Implement harmonized trade-policy mechanisms, including those on small-scale and informal trade (i.e. simplified trade regimes); Increase recognition of the economic contribution of women in food value chain – both at informal and formal level; Develop a legal framework to regulate the organizational structure of women small-scale traders and support them with specific incentives; Develop adequate infrastructures and services, like the ‘One-stop information points’ at the borders.
Indeed, the initiative presentes several challenges and complexities, both in terms of the actors involved and the multi-level apporaches to be adopted and harmonized. So far, in addition to the concrete support provided to small-scale informal and formal women traders, the initiative has shown a strong advocacy impact, especially in bringing to the attention of experts and policy makers the potential small-scale trade has for poverty alleviation with a strong gender impact.
FAO is relying on its comparative advantages to act as a neutral broker and support regional institutions in harmonizing their trade policies with their gender policies, simplifying and popularizing regional protocols and agreements from a gender perspective, advocating for gender sensitive border control procedures and taxation systems, and systematizing collection and analysis of gender disaggregated data on informal cross border trade. The main challenge faced is to draw out from invisibility the thousands of women and men who are getting their livelihood crossing borders every day.
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