COMESA Cross Border Initiative

Introduction

Small scale cross-border trade (SSCBT) plays a very important role in generating jobs and ensuring food security in many African and in particular COMESA economies. Small scale cross-border trade can be defined as a form of trade that this unrecorded in official statistics and is carried out by small businesses across borders of neighboring countries. SSCBT characteristically involves bypassing border posts, concealment of goods, under-declaration, wrong classification, under-invoicing and other similar concealment methods. In addition to seeking to evade taxes or fees imposed by governments, traders also try to avoid administrative formalities in areas such as health, agriculture, security and immigration, which are perceived as costly, complex and time consuming. However, properly harnessed, this trade has the ability to have positive macro-economic and social implications. It also has the potential to play a critical role in poverty alleviation efforts by African governments.

It is recognized that intra COMESA commerce has a significant small-scale trade component. Uganda and Rwanda small scale cross border trade was worth US$549 million and US$103 million respectively in 2017. Anecdotal evidence of flows at other borders such as Kasumbalesa on the Zambia-DRC border shows high traffic volumes of people and goods that qualify for small scale definition. Clearly and given the nature of borders in the COMESA region, this trade could run in billions if taken in totality among Member states. Understanding this trade has implications on regional food security and poverty given that food items are constantly moving from regions of surplus to deficit and remote areas.

Currently there are two COMESA programs on SSCBT. The first is the Great Lakes Project which focuses on Uganda, Rwanda and DRC. Since Uganda and Rwanda have existing SSCBT data collection efforts, the intervention is building the capacity of DRC in this area. The data under this initiative focuses on the following borders; Mahagi/Goli (DRC – Mahagi, Uganda – Goli), Kasindi/Mpondwe (DRC – Kasindi, Uganda – Mpondwe), Bunagana/Bunagana (DRC- Bunagana, Uganda – Bunagana), Goma/Rubavu (DRC – Goma (PB), Rwanda – Rubavu) and Bukavu/RUSIZI-1 (DRC – Bukavu, Rwanda- Rusizi-1).

The second program is the COMESA Cross Border Trade (CBT) Initiative which aims at increasing small- scale cross-border trade flows in the COMESA/Tripartite region (COMESA, 2018a). The specific objective of the programme is to facilitate small-scale cross border trade flows between targeted countries through effective policy and government reforms, institutional capacity building, improved border infrastructure and better data collection and monitoring. The program will initially focus on the following border posts; Mwami/Mchinji between Zambia and Malawi; Kasumbalesa between Zambia and DRC; Chirundu between Zambia and Zimbabwe; Tunduma/Nakonde between Zambia and Tanzania and Moyale between Kenya and Ethiopia.

Scope

The scope of the new COMESA led SSCBT statistical data collection will involve both merchandise trade and services trade. This will be augmented by data from the existing surveys being done by Uganda and Rwanda. These two countries’ data collection is largely guided by the EAC Manual (EAC, 2014). It is envisaged that by end of 2019 nine countries will be engaged in some SSCBT data collection.

Methodology

The methodology will follow aspects of recommendations related to formal trade such as on issues related to the general trade system and valuation methods.

The new surveys will adopt a combination of full one-month collection and/or two consecutive weeks collection (from which a monthly estimate will be obtained). The COMESA SSCBT Manual guides the overall data collection process under the CBT Initiative (COMESA, 2018b).

The COMESA minimum data requirements will include variables that capture not only merchandise trade but also services trade that is incidental to small scale cross border trade. Table 1 below shows the minimum data requirements.

1The Tripartite region is a conglomeration of COMESA, SADC and EAC countries.


Table 1: COMESA Minimum SSCBT Data Requirements
1. Date
2. Form/Serial Number
3. Enumerator
4. Border Post
5. Sex of Trader
6. Product (Name/Code)
7. Quantity
8. Unit (Code)
9. Value
10. Origin
11. Destination
12. Mode of Transport
13. Transport Nationality
14. Nationality/Residence of Trader
15. Transport Costs
16. Accommodation Costs
17. Storage Costs

The program will support data collection on SSCBT statistics and capacity building on tablet-based data collection tools.

Compilation Issues

In order to facilitate and speed up their dissemination, COMESA Secretariat has provided technical assistance in integrating the SSCBT datasets in Uganda and Rwanda into the EUROTRACE system that is used for formal trade. This ensures completeness of the formal and informal trade and also ensures comparability among reporting countries. The SSCBT data will be based on the harmonized system classification. These efforts will be extended to the other countries under the new CBT Initiative. The COMESA data portal, COMSTAT(http://comstat.comesa.int/), will be the premier vehicle for dissemination of SSCBT statistics.

Data Sources

Our data sources will be the national statistical offices of Rwanda, Uganda, Zambia, Malawi, Kenya, Ethiopia, Zimbabwe and the DRC.

Current Challenges

The program is in its initial stage of setting up and consolidating SSCBT collection. However, from already existing SSCBT data collection efforts in Rwanda and Uganda, a key challenge is lack of harmonization on the minimum data variables. Uganda SSCBT data does not capture the gender of traders. Neither Rwanda nor Uganda capture any potential services trade among cross border traders.

Key Conclusions and Way Forward

  • There is need to harmonize of current collection to include all COMESA minimum data variables. This will be done on a gradual basis.
  • Once the SSCBT data collection process has gained traction, it is envisaged to expand to other country borders under the CBT Initiative.
  • There will be need to ensure cost effective collection under the new CBT Initiative so as to ensure sustainability and incorporation into existing country statistical activities.

References

Common Market for Eastern and Southern Africa (2018), COMESA Regional Small-Scale Cross Border Trade Data Collection Manual, COMESA, Lusaka.

Common Market for Eastern and Southern Africa (2018), Description of Action on the Small-Scale Cross Border Trade Initiative, COMESA, Lusaka.

East African Community (2014), EAC Informal Cross Border Trade Survey Manual, EAC, Arusha.