Effect of Sub-Saharan African trade corridors on vulnerable groups
Trade is at the core of economic growth and structural transformation. Growth in trade has become a focus of development policy in Sub-Saharan Africa, with significant progress made in recent years, for example through building infrastructure and trade-related policies. Hard infrastructure has improved, including road and railway networks linking landlocked regions to ports and airports, in parallel with harmonising and simplifying soft infrastructure such as customs and excise procedures and duties. There has also been the establishment of free trade zones, including the East African Community.
In East Africa, improvements included the establishment of transcontinental trade corridors to international ports at Mombasa and Dar es Salam and of ‘one-stop border posts’ (OSBP) allowing customs preclearance and rapid inspections of traded goods, giving significant reductions in the cost and time of transportation and of border crossings. These initiatives were mainly directed at large-scale trade, but less is known about small-scale cross-border trade. In particular, it is not known if such policy changes affect poor households (often dependent on informal trade and highly vulnerable to economic shocks) in the vicinity of the OSBP. This issue is the focus of this case study.
The case study examines the economic and non-economic (such as conducting community and family relationships and accessing health care and education) value of the border for small traders and informal workers. It examines a specific example of policy – an OSBP on the Kenya-Uganda border – and how the policy changes have affected these groups. The case study’s goal relates to consideration of the need for policy that specifically addresses issues relevant to vulnerable poor households.
The key findings are that economic livelihoods have not been negatively affected for the majority of informal traders and workers – and may, in fact, have been enhanced. Other aspects of the value of border crossings, in relation to access to health care, finance and education, are largely unchanged. However, there are two major exceptions. First, bribery of officials is a significant problem at the OSBP. Informal traders are routinely forced to pay petty bribes, decreasing their already low incomes and making the conduct of their businesses more difficult. The study indicates that the OSBP has not affected levels of corruption at the border, which continues at a high level. Second, the poorest of the poor are vulnerable to the policy changes. These are most commonly day labourers or casual workers without any forms of capital or self-employment who are dependent on manual work at the border such as portage and transportation of goods and people. As the new forms of trade are reducing this type of manual work, they are vulnerable to losing their livelihoods. Special consideration should be given to policy initiatives for these groups. In addition, there should be consideration of broadening policy to include community relations in areas surrounding the OSBP.
We also note areas for further research. In particular, this study does not allow conclusions on the long-term or indirect effects of the OSBP. These issues – including important ones such as the effects on employment and earning opportunities and on commodity prices – would benefit from a more extended and longitudinal research programme.
Tyson, J.E. Effect of Sub-Saharan African trade corridors on vulnerable groups. ODI, London, UK (2015) 47 pp.