impacts of the COVID-19 Pandemic on small-scale cross-border traders

The outbreak of COVID-19 Pandemic early last year came with a number of restrictions, including cross-border movement. During the initial restrictions and measures taken by countries in the Northern Corridor region and beyond, only big consignments were allowed for cross-border trade, compelling some Member States to encourage the small-scale cross-border traders to aggregate their goods under groups mainly transporting the goods across the border by hiring motorized tricycles.

According to a jointly published report by the UN Economic Commission for Africa (UNECA), TradeMark East Africa (TMEA) and the African Economic Research Consortium (AERC) dubbed “Waving or Drowning? The Impact of COVID-19 Pandemic on east African Trade”, though by global standards, the East Africa Community economies were proven to be relatively resilient, “cross-border traders’ livelihoods-mostly women- were severely affected”.

COVID-19 Pandemic not only affects negatively the livelihoods of most informal cross-border traders but also the communities that depend on such trade/Internet Photo.

The said report revealed the hard-hitting impact of COVID-19 on cross-border women traders ranges from the “loss of income and increased financial stress to the reversal of gains in women’s economic empowerment”.

Cross-border trade is an essential source of income for cross-border communities, especially women and smallholder farmers. Many of these communities depend on the proceeds from the informal cross-border trade to purchase essentials to survive. The restriction of movement due to border closures resulted in significant revenue loss as they could not access the cross-border markets to purchase or sell their stocks.

Most informal cross-border traders are typically unbanked and rely on informal loan sharks for bulk stock purchases. They 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 quickly escalated into a spiral of debt.

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, raised the gender-based domestic violence rate in some communities.

Trade between neighbouring countries conducted by vulnerable, small and often unregistered traders who move merchandise between markets close to the border forms a significant part of intra-regional trade.

As an illustration, before the Pandemic struck, more than 40 thousand small scale traders would cross the Petite-Barrière border crossing between Rwanda and D.R. 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 the D.R. Congo’s North-Kivu Province. To ensure informal cross-border trade continued, officials from the two countries agreed to encourage traders to operate in cooperatives to reduce the number of people who would have to cross the border daily. Unfortunately, several complaints emerged on the proposed cooperative model that excluded small scale traders, mostly women, because goods traded must be worth between USD 300 and USD 1000. Before the Pandemic, traders from D.R. Congo could purchase enough goods in Rwanda with a capital of just USD 100.

In Uganda, informal cross-border trade declined precipitously from an estimated USD 44 million in the first quarter of 2020 to just USD 1 million by April 2020. Even the reopening of Uganda’s borders in September 2020 did not revive informal cross border trade signalling the Pandemic’s impact was profound.

A concerted effort by Governments, Regional Economic Communities and Development Partners is highly needed to ensure continued support for informal cross-border traders and smooth flow of trade between neighbouring countries.