FAO roots for formalization of cross-border trade
Written by: George Kalisa
Tuesday, May 23rd, 2017, 18:07
Effective market information systems, increased access to financial opportunities and trade fairs are recipes for the formalization of informal trade, which currently contributes about 42 per cent to gross national income (GNI) in Sub-Saharan Africa, Attaher Maiga, FAO Country Representative to Rwanda said on Tuesday in the Capital, Kigali.
Maiga said that storage, weighing and refrigeration of agricultural produce were the main incentives on the journey to formalization of small scale trade that make business registration and tax adherence more friendly.
“Widening access to credit, establishing trade fairs and developing effective market information systems have been put forward as potential solutions to incentivize trade formalization amongst small-scale traders. Basic services such storage and weighing of goods and refrigeration of agricultural goods are proposed as part of measures to ensure that traders are encouraged to formalize trading activities such as undertaking business registration and adhere to tax collection,” noted Maiga.
The FAO Chief was addressing a two-day joint validation workshop organized by the Food and Agriculture Organization of the United Nations (FAO) in conjunction with Consumer Unity and Trust Society (CUTS) International. It aimed at sharing best practicesand lessons from Uganda, Zambia, Zambia, Tanzania, Ghana, India, German, Kenya, Rwandaand Italy on how to formalize informal cross-border trade (ICBT) with focus on marginalized groups such as women.
Maiga attributed the emergence and shriving of informal trade in the developing world to economic liberalization and collapse of the public sector in the wake of structural Adjustment Programmes (SAPs).
“Its growth is strongly associated with the advent of liberalization and the collapse of the public sector in response to the implementation of Structural Adjustment Programmes (SAPs). In fact, informality within African economies proceeds the adjustment era, featuring as a core feature in the transition from the colonial period and the evolution of Africa’s tax economy,” observed Maiga.
Alice Twizeye, the Director of External Trade at the Rwandan Ministry of Trade, Industry and East African Community Affairs (MINEACOM) said her government’s concern on how key players in this sub-sector would contribute to economic growth dates back in 2010.
“In 2010 fruitful conversation on how to assess the informal cross-border trade in relation to its contribution to export trade and economic development started in Rwanda,” said Twizeye.
Twizeye who represented the minister decried the challenges in the women predominated sub-sector, which ranged from the economic activities being perceived as illegal, harassment, corruption to dire lack of infrastructures like market places.
She said such circumstances have propelled the Rwandan government to construct markets in 12 districts that border Uganda, DR Congo, Tanzania and Burundi with some still in plan due to financial constraints.
“Mobilizing funds and development partners has been a challenge but we’ve completed two markets. She said the Rusizi market was one of those completed with construction underway at Bulera, Karongi and Nyaruguru.
Participants were agreed on the urgency to provide security and protection to cross-border traders as well as bringing them together under cooperatives. They said such initiatives will be helpful in ensuring that the apparently marginalized traders find easy access to finance alongside improving their contribution to the nation’s GDPs.