Official trade statistics often capture formal trade and leave out informal trade, leading to underestimation of intra-African trade, intra-Regional Economic Community (REC) trade and African trade in general. Understanding the scale of informal trade will be instrumental in accurately monitoring intra-African trade, particularly in the context of the AfCFTA.
“Since the majority of the informal cross-border traders are women, Informal Cross Border Trade (ICBT) data is key in understanding the different dynamics at play that could inform the development and implementation of gender sensitive trade policies and processes” said Stephen Karingi, Director of the Regional Integration and Trade Division of ECA speaking at the virtual launch of the Phase II ECA and Afreximbank project.
Based on ECA study, ICBT is estimated to be between 7 and 16 percent of the formal intra-African trade flows and between 30 and 72 percent of formal trade between neighbouring countries. These are significant figures and have important implications for the value, composition and sophistication of intra-African trade.
Brian Mureverwi, trade advisor at the African Union Economic Development, Trade, Industry & Mining department, emphasised the need to come up with a concrete methodology that captures ICBT data in order to come up with evidence-based policies. He further added that once the data are captured, it will feed into the African Trade Observatory portal where policy makers will be able to access the information in the comfort of their offices.
On his part, Anthony Coleman, Principal Research Economist at the Afreximbank, noted that for the bank, it is important to understand what are the products dominating the ICBT, the volume of trade, the corridors which are the busiest in order for the institution to shape its intervention in addressing constraints in informal cross border trade in the continent.
Building on the Pilot Phase of the project, the three-year project financed by Afreximbank will entail the development of a continental methodology for ICBT data collection in Africa.
Existing ICBT data collection methodologies such as the methodology utilized in the Pilot and Phase II ICBT data collection projects in the ECOWAS region that builds on the ECO-ICBT methodology, and the Uganda Bureau of Statistics (UBOS) methodology for ICBT data collection which forms the basis of the harmonized methodology for ICBT data collection in the Eastern and Southern African regions will serve as important inputs to the continental methodology.
The inception meeting culminated with the establishment of a Task Force that will develop the Continental Methodology for ICBT Data Collection. Meetings of the taskforce will be convened by the African Union Commission (AUC) with technical support of ECA and AFREXIMBANK.
In 2019, ECA and AFREXIMBANK, in collaboration with the Economic Community of West African States (ECOWAS), launched a joint one-year pilot project (Phase I) to collect data on Informal Cross Border Trade (ICBT) along the Abidjan-Lagos Corridor within the ECOWAS region. The aim of this project was to identify the scale, magnitude and characteristics of ICBT in order to more effectively reflect issues around it in policy frameworks since official statistics typically capture only formal trade. The African Union Commission and the East African Grain Council partnered in the implementation of this pilot project.
One of the key recommendations from this pilot project was the imperative for a continental methodology for ICBT data collection in Africa due to the fact that: i) there is no universally agreed definition for ICBT and ii) there are significant differences in the methodologies adopted to track ICBT which makes comparability of ICBT data sets difficult
Insights from the pilot project that was successfully concluded in 2020 are captured in the following studies: