East African Community Project seeks to develop cross-border markets

Tuesday June 28, 2011

The East African Community (EAC) is planning to formulate a project to support development of local markets across borders, a top official said last week. “The project is among others aimed at reducing the informal cross-border trade through which member states lose billions of dollars, with Uganda losing over $1.5b annually,” said the EAC head of corporate communications and public affairs, Richard Owora.

He said statistics from the Uganda Bureau of Statistics (UBOS) indicated that the volume of unofficial trade rose from $300m in 2007 to over $1.5b in 2009, representing a 300% growth rate.

Informal trade refers to unrecorded trade of goods and services passing through borders to neighbouring markets.

Uganda’s unofficial trade is high with Sudan followed by the DR Congo, Kenya, Rwanda and Tanzania. Victor Ogalo, the consumer unity and trust society programme officer at the Nairobi Resource Centre, noted that most of the informal cross-border trade was in staple food commodities. “However, traders attribute this continued engagement to physical and technical barriers in formal trade,” Ogalo said in a research paper on informal cross-border trade in East Africa. Owora revealed that Kenya’s volume of trade with neighbours had also grown steadily since the region started implementing a custom union in 2005.

“Trade ministry data indicates that Kenya’s export into the region grew from sh53b in 2006 to sh90.5b in 2009,” he said. “This reported trade level, however, does not include products worth billions of shillings that are exchanged across national borders informally,” he added.

The New Vision Newspaper