ZIMSEC O Level Geography Notes: Trade: Informal Cross-border trade
- 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
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