Report highlights cross-border trade hurdles
By Taonga Sabola:
A report by the United Nations Conference on Trade and Development (Unctad) has highlighted challenges cross-border traders operating in Malawi, Tanzania and Zambia face in their day-to-day operations.
The report, ‘Borderline: Women in Informal Cross-border Trade in Malawi, the United Republic of Tanzania and Zambia’, shows that traders, especially women, are faced with problems such as lack of trade facilitation, inadequate border infrastructure, corruption and insecurity as well as immigration requirements.
The report says, while the border processes are shorter and less expensive in Malawi than the average in sub-Saharan Africa, in Tanzania and Zambia they are extremely lengthy and costly.
It says such costs and delays create further disincentives for informal small-scale traders to report their transactions and choose formal trading channels.
Malawi ranks on position 117 on trading across borders on the 2018 World Bank Doing Business report while Zambia is on position 150 and Tanzania on 182.
“Delays at the border result in several negative consequences for traders. They affect trading operations and diminish profits by impeding reaching potential markets or stores during opening hours, and/or by creating extra costs for overnight stays.
“For perishable goods, delays may imply that they are not fit for consumption any longer. Women face even heavier burdens due to their primary responsibilities in the household. Delays at the border force them to leave behind their family obligations for periods longer than expected. Therefore, they might be ready to pay bribes to cut delays or they may end up choosing closer but less profitable destinations,” reads the report.
It adds that inadequate infrastructure networks and border infrastructure – including inadequate public and private transportation systems, proper warehousing facilities, functional and sufficiently staffed border institutions and agencies—heavily impact cross-border traders, especially women.
It says border and market infrastructure is generally insufficient in Malawi.
“At the Mwami/Mchinji and Songwe/Kasumulu borders, for instance, no storage space is available for traders, and key facilities such as toilets and inspection rooms, which carry particular importance for women, are either not present or in poor condition. Both borders close at 6pm, which severely limits crossing and selling opportunities for traders, while virtually no public transportation is available after sunset.
“Traders at Mchinji typically sell on the streets, their closest market being in Chipata. In Songwe, some market stalls are found on the Tanzanian side of the border, yet local traders frequently lament the poor infrastructure and limited access to markets as being the main challenges to their businesses,” Unctad says.
According to Unctad’s field observations at selected border posts, female cross-border traders are more vulnerable to verbal and physical harassment than male traders, and they reportedly spend longer hours clearing their goods at the border due to prolonged inspections.
There port adds corruption may involve immigration officers, revenue authority officials, police, and other public service officers at the border.
Unctad says corrupt law enforcement officers often take advantage of local traders’ lack of knowledge of customs procedures.
“Tanzanian women traders reported that a few officials charge un-receipted taxes on goods below $2,000, which in principle should benefit from the STR. Other cases of bribes were reported in relation to the misinterpretation of the rules of origin or for faster clearing of goods (Afrika and Ajumbo 2012).
“Reasons for bribing also include the inability of traders to pay the correct amount of official taxes and fees. Corruption is considered normal to the point that women traders treat it as part of daily life (Thubelihe 2013; Barreau-Tran 2011),” reads the report.
Unctad says Zambia and Malawi informally trade with each other in large quantities.
They estimate that informal trade is US$2.9 million per month as compared to US$1.7 million in formal trade.
About 20,000 to 30,000 small-scale traders cross that border on a monthly basis, 10,000 to 15,000 of whom pass through informal routes.
Industry and Trade Minister, Francis Kasaila, was not immediately available for a comment on the report findings.