2021 provided an opportunity to gain an enriching ‘frog-eye’ view of Informal Cross Border Trade (ICBT) challenges across border communities in Africa. From those adjoining the River Niger and the Nile, to those in the fringes of Lake Tangayika and the Zambezi, development practitioners from the Africa Borderlands Centre (ABC) acquired a primary account of how the COVID-19 pandemic increased losses to traders and exacerbated poverty and dependency. We also saw how the traders adapted to changes imposed by the pandemic to remain in profitable business.

In Livingstone and Victoria Falls, we heard directly of how the pandemic reduced trade volume, caused the collapse of hundreds of businesses, triggered an almost 50% dip in locally generated revenue, increased transaction cost for small businesses and weakened social protection. The Cross Border Traders Association (CBTA), responsible for trade facilitation activities in the Zambia-Zimbabwe border, had its membership reduced from 17,000 before the pandemic in 2020, to about 7,000 in 2021 due to economic hardship occasioned by border closure. The about 10,000 businesses affected by the pandemic were owned by females, who are also sole providers for their families.

In the Agrarian Warawar region of South Sudan, a Joint Border Peace Committee (JBPC) has traditionally provided innovative ways for business continuity in the face of the closure of the Sudan-South Sudan border, which precedes but has now been worsened by the pandemic. However, climate change impact and extreme poverty have made life difficult for traders and other players in the agriculture value chain. Traders told us that several local savings groups have collapsed due to a lack of capital. Still, the few ones in business continue to charge between 40% and 50% interest on credits, which is discouraging for small businesses. In addition, loan tenor ranges from three to four months, putting many traders in perpetual debt.

Border communities in Burkina Faso, Mali and Niger recounted experiences with losses, sometimes as much as 80%, of agriculture and dairy goods produced due to depleting purchasing powers of target markets and worsening security situations across the borders. They also recounted terrorist attacks on hundreds of informal traders in transit across the borders, who are usually considered soft targets. Terrorists have also allegedly attacked markets, communications infrastructure and logistics of traders, thus resulting in forced mobility of trading communities to the ‘centre of the periphery’ and reduced cross-border trading activities. Market Management Committees (MMCs), usually made up of key business, religious and traditional rulers, have courageously provided a rallying point for innovative polled funding, joint procurement and logistics facilitation for those traders that still have the tenacity to remain in business.

The border communities of Aflao and Hillacondji in Ghana, Benin and Togo contrast those in the Sahel and Sudan/South Sudan only in terms of opportunities for inclusive growth. However, the poverty landscape remains similar. We observed deep-seated pre-COVID 19 behavioural patterns whereby informal traders could not maximize the opportunities presented by burgeoning economic activities on the Lagos-Abidjan corridor to participate in a specific value chain. The aftermath of border closure is that most ICB traders were forced out of business. Nevertheless, support from cooperative groups is helping to organize players across the Kente, coconut oil, cassava and perishable vegetables value chain.

With the COVID 19 induced border closure, market potentials have been stunted. In the Tanzania-Burundi borderland of Nyanza-Lac, lack of capital and informal taxation have combined to disguise the potentials of the local oil palm value chain. Mixed Committees on both sides of the borders have acted as a stabilizing force to reduce vulnerabilities to which traders have been exposed, mainly through the management of land disputes. 

Beyond the challenges, the ABC team observed the following common patterns that may emerge as opportunities for improving inclusive growth for ICB traders. First, all the border communities encountered are believers in the viability of the economies of their marginal communities despite current challenges. They are not giving up on themselves and have continued to invest their limited resources in improving their livelihoods. Second, all the communities have got positive deviants- persons and groups with uncommon behaviours- who have played critical roles in confronting COVID 19 induced deprivations and losses with the modest result that can be expanded further. The CBTA, JPBC, MMCs and Cross-Border Mixed Commissions have created value in mitigating risks, mobilizing resources, and networking with governments and other enablers to keep informal trade afloat.

Third, these positive deviants have developed financially viable businesses with clearly defined business plans, social and environmental benefits for specific commodities. Fourth, ICB traders actively collaborate with self-help/cooperative groups for resource mobilization, business development, polled funding, savings and investments. These groups, known variously as the SACCOS in Burundi, Sousous in West Africa and Sanduk in the Sudans, have built relationships with traders for several years and are deeply ingrained in the socio-cultural lives of traders. They have been parts of the modest success stories of businesses that have withstood the vagaries of COVID 19 pandemic. They could emerge as rallying points to improve inclusive growth in the borderlands.

Fifth, all the borderland traders encountered prefer a partnership engagement model. They would like donors and governments to collaborate to invest in the access to finance for Informal Cross-Border (ICB) traders, Micro Small and Medium Enterprises (MSMEs) linked to the cross-border trade value chain, climate-resilient market infrastructure, and improved social cohesion. They want more soft loans with lower interest rates, longer repayment tenor, and a peaceful environment conducive to growth. They want the combination of local intelligence and digital capabilities, which could create economic assets with measurable social and financial returns.

Most importantly, like several others in Africa, the borderlands where the ABC colleagues were immersed in 2021 are part of the 17 central trade corridors on the continent, with enormous but latent potentials to create values. They are major transit points, and at times, major production points, for livestock and agriculture products, various mineral resources, locally-made textiles, household goods, raw materials for industries, and enormous opportunities for the service industry to explore.

The core objective of such funding is to ensure that the borderland communities are not left behind in achieving some of the critical goals of Agenda 2030. The most critical ones in the borderlands are ending poverty and hunger, gender equality, affordable and clean energy, industry, innovation and infrastructure, climate action, peace, justice and strong institutions. The foregoing, therefore, presents enormous opportunities for private sector-led social impact investing.

What might be the best-fit approach to impact funding in a marginal business context characterized by relative deprivation and frustration? In recognition that these borderlands are unlikely places for the private sector to do business due to infrastructural challenges and poverty, which disguises their true potentials, the Africa Borderlands Centre is piloting signature initiatives. The pilots are focused on the provision of seed funding for improving access to finance for ICBT and MSMEs logistics management. They also include digitization, small infrastructure development, and promotion of social cohesion to demonstrate that the communities are investible. In the scale-up phase, a practical approach that utilizes grants, soft loans, de-risking mechanisms and so on may be jointly explored. Now is the time to start planning for this future.

In closing, as the 4^th wave of COVID 19 infections decrease in early 2022, expansion of treatment and improved vaccination would likely lead to the reopening of economies. ECOWAS leaders, for instance, have agreed to reopen all closed land borders in earnest. New supply chain pressures would likely lead to improved economic recovery for countries. Cross border trade activities will also blossom. Supporting struggling communities and businesses in the borderlands will make the impending development more equitable, inclusive, and sustainable. 

Kehinde Bolaji

Programme Manager/ Knowledge & Innovation Adviser

Africa Borderlands Centre, Nairobi, Kenya