Formalising Informal Trade – Good for African Women?

Human Wrongs Watch

ROME, May 26 2017 (IPS) – Women constitute the largest share of informal traders in Africa–about 70 per cent in Southern Africa and more than half in other parts of this vast continent made up of 54 states, home to over 1,200 billion people.

Informal cross-border trading, in which transactions are not compliant with local tax and other rules, accounts for a large share – between 20 and a hefty 70 per cent– of employment in sub-Saharan Africa, says a new United Nations specialised report.

Africa’s vast but informal cross-border trade can contribute to improving livelihoods and increasing regional integration across the continent, according to the new report Formalization of informal trade in Africa.

Putting it on a regular footing can lift sustainable prosperity and markedly improve prospects for women, adds the UN Food and Agricultural Organization (FAO) report, which was released on 25 May coinciding with Africa Day.

“It is about harnessing rather than suppressing informal trade, it says, adding that which around half of all intra-African cross-border trade is classified as informal, indicating its large if officially invisible role.“

Simplifying the requirements for a business license, offering incentives to tax payers, and tackling official corruption are among the recommendations aimed to cut informal trade among African countries and boost economic prosperity, particularly for women, the study recommends.

Proactive policies that recognise such activity, tapping its potential with the aim of steering it towards proper regulatory status, are to be preferred over heavy-handed approaches to eradicate or seek rents from entrepreneurs, according to the UN specialised agency.

“Informal cross-border trade, often agricultural, is the result of poor access to government offices, a lack of administrative skills and improper understanding of import and custom-tax laws.

One of the main groups that would be affected by formalization is women, who constitute the largest share of informal traders – about 70 per cent in Southern Africa and more than half in other parts, says the report.

“Facilitating formalization is the only viable policy option for Africa’s transformation agenda to realize its objectives,” said Suffyan Koroma, FAO senior economist and lead author of the report.

The new report was presented at a conference in Kigali, Rwanda, which held as part of on-going FAO-supported work in the country, along with UN Women and other development partners, aimed at enabling women to benefit more from agri-food chains, a project geared to allowing women small traders access useful information as well as start-up capital.