Small-scale cross-border trade plays an important role in supporting communities in the Great Lakes region of Africa. This trade provides essential foodstuffs for communities and an income for some 45,000 traders and their families. Yet it faces considerable barriers.
Our new report, Walking in the dark, looks at some of the challenges faced by small-scale traders operating at the borders of the Democratic Republic of Congo (DRC), Burundi and Rwanda.
It found that traders at the DRC and Burundi borders are subject to a system of confusing and unpredictable informal taxation, often contravening national laws. This is made worse by traders’ lack of understanding of tax rates, regulations and the role of different agencies present at the borders, resulting in mistreatment of traders.
Women, who comprise 74 percent of all traders, face further problems. They report discrimination and harassment, from both border officials and their counterparts from neighbouring countries. The difficulties between traders reflect not only a climate of commercial competition but also the history of regional violence, with its consequent prejudices and stereotypes. Women face further negative perceptions of their work in local communities.
Traders also face difficulties in expanding their businesses. This is often due to lack of access to capital and poor infrastructure. Traders make little profit from small-scale trade, with most of the revenue covering basic household needs such as food and schooling, so re-investment in their businesses is difficult. Only a minority of traders are members of associations or cooperatives, and these are generally weak.
Our report recommends that governments do more to promote and formalise small-scale trade in the Great Lakes region, and recognise and protect the role of women within it. The existing system of unfair and informal taxation should be replaced by a simplified and progressive taxation which recognises the importance of small-scale trade to local communities and doesn’t hinder economic opportunity.
Traders and public officials should be encouraged to meet and discuss regulations – and whether they are being met – in order to establish greater mutual trust. While regional economic agreements should take into account the challenges faced by small-scale traders and the importance of this trade as a means of economic survival.
Small-scale traders also require greater access to finances to help them develop their businesses and encourage economic growth in the region, for example by establishing savings and credit schemes.
Strengthening the business environment of small-scale cross-border traders in this way, especially increasing the economic opportunities of women, would greatly support peace and security in the region, long beset by violent conflict and lack of economic opportunity.