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ICBT in Africa: Why and How
(based on joint work with A. Bouët)
Markets, Trade and Institutions Division
Informal African trade: The hidden world of food flows | December 3, 2020
What is ICBT?
No universal definition, depends on the institution (UNCTAD, AfDB, OECD…)
Is the term for trade or for traders?
o For UNCTAD (2019), « Informal cross-border trade is trade between neighboring countries conducted by
vulnerable, small, unregistered traders. Typically, it is proximity trade involving the move of produce
between markets close to the border. The informality refers to the status of the trader (unregistered), not
necessarily to the trade itself (captured or unrecorded by the official customs system) »
For Afrika and Ajumbo (2012) and AfdB, ICBT is “Trade in processed or non-processed merchandise which
may be legal imports or exports on one side of the border and illicit on the other side and vice-versa, on
account of not having been subjected to statutory border formalities such as customs clearance. »
OECD (Lesser and Moisé-Leeman, 2009) definition is interesting:
Informal unregistered traders or firms operating entirely outside the formal economy
Formal (registered) firms fully evading trade-related regulations and duties by, for instance,
avoiding official border crossing points (definition B).
Formal (registered) firms partially evading trade-related regulations and duties by resorting
to illegal practices, such as under-invoicing or declassifying (definition C).
Here focus on ICBT of ag products
Why do we observe ICBT?
Poverty (Ama et al. 2014; Charalambides and Parker, 2016)
High import tariffs and export taxes (Bouët, Cosnard & Laborde, 2017; Kim, 2010)
Prohibitions/bans or quotas (Bouët, Laborde and Traore, 2019)
Complex regulations and standards, particularly SPS measures (Bouquet, 2003)
Inefficiency of custom procedures (Bensassi, Jarreau, & Mitaritonna, 2016)
Historical and cultural determinants? Little et al. (2010) and Tegegne et al. (1999)
How do we measure ICBT?
oUse mirror flows (BACI…)
oEconometric approaches (gravity modeling)
oSystem of national accounts
oLimitations: bad declarations from both sides (mirror flows) and
measurement errors in production and consumption for SNAs
oBased on surveys
oNeed good coverage in space and time to avoid missing border points,
means of transportation and extrapolation issues (seasonality…)
No continent-wide initiative, only local or regional ones (CILSS,
Ghana Niger Nigeria Togo
Benin exports (selected partners) in 2010
Source: INSTAT (ECNE, 2010)
Ratio Uganda’s informal exports over total exports by destination –
ICBT and COVID-19
Many countries have closed their land borders
Limited movement of people
But shipment of goods were allowed (trucking traffic)
oMain beneficiaries: large operators
oSome small scale traders aggregated their produce
Curfews and sanitary controls cause costly delays,
oparticularly for fresh foods
oLimited night travels to benefit from cooler tempetarture
Point of entry border closures and restrictions
Source: IOM Displacement Tracking Index, migration.iom.int. Accessed November 23, 2020.
0 200 400 600 800 1000 1200
2020 2019 2018 2017 2016 2015
The contrasted effects of COVID-19
0 100 200 300 400
2020 2019 2018 2017 2016 2015
Formal (right) and informal (left) trade at Isebania (Kenya-Tanzania border) –
Volume - Weekly average over the January/August of each year (Metric Tons)
CBT flows in West Africa
2017 2018 2019 2020
Exports of Maize from Coted'Ivoire to Burkina Faso Exports of Maize from Coted'Ivoire to Senegal Exports of Fish from Ghana to Togo
Total over January/August of each year, US$ millions
ICBT is prominent in Africa
oSource of income for poor households, particularly for women
oContribution to food security
Monitoring is paramount
oFor national accounts and policy planning (BoPs, FBS, impact of trade
oMalabo commitments : need a good baseline and monitoring process
oComplementarity between actions is needed
Lowering trade barriers, improving the efficiency of customs procedures, and
trade facilitation would help reduce the cost of ICBT (STRs).
More information is needed to assess the impact of COVID-19