Informal Cross-border trade

Cross border buses at RoadPort.

• COMESA defines informal cross-border trade (ICBT) as a form of trade that is unrecorded in official statistics, and is carried out by small businesses in the region.
• Informal cross border traders are vendors who travel to neighbouring countries to sell local products and in return bring back goods for resale.
• Examples of the local products they sell are craft ware, clothing and food stuff.
• This kind of trade is mostly dominated by women.
• The largest flow of goods is between Zimbabwe and South Africa.
• Vendors also make periodic visits to Tanzania, Mozambique Botswana, Zambia and Namibia.

Advantages of informal cross-border trade include:

• Supply of goods which are in short supply on the domestic market.
• Prices are rarely fixed and so negotiation is possible.
• Little capital is required.
• Creation of jobs in the form of self-employment.
• A viable way of earning a living.
• Goods are relatively cheaper for example, second hand clothing.
• Trading is flexible. Vendors can operate at home or from pavements of informal cross-border trade.

Disadvantages of informal cross-border trade include:

• The quality of goods is not guaranteed.
• Exploitation of child labour.
• Operations are often illegal.
• Encourages sale of stolen goods.
• Loss of government revenue as most of the goods are smuggled into the country.
• Sale of foreign currency on the black market creates a shortages of foreign currency in the banks.
• There are no records of the actual volume of trade and therefore its benefits are difficult to quantify.
• Little benefit to the economy as vendors do not pay income tax.
• Irregular working hours and uncertain income and wage.
• Disruption of family life as the parents are always on the go.
• No government assistance.

To access more topics go to the O Level Geography Notes page