Regional borders remain closed for most informal cross-border traders, thereby impacting negatively on the livelihoods of communities that depend on such trade, a new report published Wednesday, February 17, states.

The report by the United Nations Economic Commission for Africa (ECA) and TradeMark East Africa (TMEA) calls for "urgent policy action from the EAC Partner States" in addressing the challenges facing informal cross-border traders.

"The pandemic has had a severe negative impact on communities that are heavily dependent on informal cross-border trade, exacerbating, particularly, the challenges faced by women traders," reads the report.

One of the main measures taken by EAC countries to stem the virus’s spread was curtailing of cross-border movements. Only truck drivers delivering essential items move across the region.

Consequently, it is noted, cross-border traders’ livelihoods – mostly women – were severely affected.

Peter Mathuki, CEO of the East African Business Council (EABC), told The New Times that lockdowns affected women cross border traders especially those who trade under the Simplified Trade Regime (STR).

The STR is an arrangement implemented by countries to formalize and improve the performance of informal cross border traders and enable them to benefit from regional preferential treatment when importing or exporting goods within the region.

"Most of these women trade by means of motorcycles, bicycles, and even on foot. These means of transportation aren't allowed to cross the borders," Mathuki said.

Among others, he pointed to a challenge of inadequate capital to kick start their businesses due to losses as a result of no trade during the pandemic.

The report notes that Rwanda’s informal cross-border trade is dominated by local agricultural produce and livestock, with DR Congo being the leading trading partner.

Before the pandemic struck, it is noted, more than 40,000 small scale traders would cross the Petite-Barriere border crossing between Rwanda and DR Congo in a day and continued to use the simplified declaration and preferential tariff.

"The closure of borders by both countries affected the border communities’ livelihoods causing fears of food insecurities in D.R. Congo’s North Kivu," reads the report.

To ensure informal cross-border trade continued, it is noted, the two countries encouraged traders to operate in cooperatives to reduce the number of people who cross the border daily.

"Unfortunately, several complaints emerged on the proposed cooperative model – it excluded small scale traders, mostly women, because of a requirement that goods traded must be worth between $300 and $1000."

Before the pandemic, the report states, traders from DR Congo could purchase enough goods in Rwanda with a capital of just $100.

Reversal of gains in women’s economic empowerment

Loss of income, increased financial stress and the reversal of gains in women’s economic empowerment are listed as the key Covid-19 induced challenges faced by informal cross border traders.

Regarding the reversal of gains in women’s economic empowerment, it is noted that the informal cross border trade offers women an independent income source, which can further their empowerment in traditionally male-driven households and communities.

"Removing this income source, coupled with increased confinement at home, risks raising gender-based domestic violence rate," the report states.

Furthermore, it is noted that cross-border trade is an essential source of income for cross-border communities, especially women and smallholder farmers, many of who depend on the proceeds from the informal cross-border trade "to purchase essentials to survive."

Increased financial stress comes about because most informal cross-border traders are typically unbanked and rely on informal loan sharks for bulk stock purchases.

According to the report, such people tend to borrow money early in the morning to acquire merchandise and payback in the evening of the same day once they have sold their goods.

Losses from unsold stock due to Covid-19 movement restrictions, it is noted, quickly escalated into a spiral of debt.

In conclusion, the report notes, from a trade perspective, the region is still not out of the woods and, countries are urged to, as a must, "continue with a coordinated approach" to addressing the pandemic’s challenges.