Herbert Tshitangai (45), from Lilongwe, Malawi, crosses the border into South Africa every month to buy duvets, electric appliances, vehicle spare parts and stationery. This is the only way he can support his family.
Tshitangai has been involved in informal cross-border trade for more than five years. As with many such traders, Tshitangai battles with inflated border taxes and hostile officials to earn his meagre living.
”My problem is the high tax that is imposed on our goods. Most of the time you pay a quarter of the money that you make,” he says. ”If you do not want to pay tax, you can bribe the officials, but still it is not better.”
In the Southern African Development Community about 45% of the population lives in extreme poverty. For many poor people in the region informal trade is the only way to sustain themselves and their families.
Governments in the region, however, ignore this parallel economy, hampering their citizens’ attempts to survive, say experts.
”The reason we pay so much tax is because the government does not recognise informal trading. We must have informal trading legalised. There should be clear tax on commodities — when you are being charged now, it depends on whom you meet at the border. That is our challenge,” says Tshitangai.
Help might be at hand. This month the 14 SADC member states, in the form of their governments, civil society representatives and the private sector, will gather for the SADC International Conference on Poverty and Development. The intention is to address two inseparable issues — the eradication of poverty and the promotion of development — through regional integration.
The conference will cover a range of issues, but cross-border informal trade will be crucial. A closer examination of this largely ignored sector, argue experts, will go a long way to making it easier for the poor to improve their lives and the region to improve development.
Research by the Economic Justice Network (EJN), an NGO set up by the Fellowship of Christian Councils in Southern Africa, shows that governments do not recognise this burgeoning economy and hinder their most vulnerable citizens’ efforts to make a living.
”There is no conducive policy environment for [informal traders] to engage in trade,” says Francis Ng’ambi, manager of programmes at EJN.
”Because they are not recognised, this gives the impression that they are criminals, that they operate outside the law.”
In reality, says Ng’ambi, the majority of cross-border informal traders are single women, most of whom are the sole breadwinners for their families. The attitude of governments towards them has been very negative and negative perceptions also leave traders, particularly women, vulnerable to abuse by customs and immigrations officials. This can take the form of anything from undue body searches to financial coercion.
The research, conducted in Malawi, Mozambique, Swaziland and Zambia, confirmed that it is mostly poor people who engage in cross-border trade, which either provides their only income or supplements meagre wages.
Ng’ambi points out that in Zimbabwe a mere 20% of the population is formally employed, leaving 80% surviving on informal trade.
Increasingly, however, men are also becoming engaged in cross-border trade, particularly if they are unemployed, says Ng’ambi. As educational opportunities become fewer and more expensive, young people with no skills or training are also turning to this sector. The EJN believes that as SADC economies become more exposed to global competition, jobs in the formal sector will begin to disappear and more people will be forced to turn to this parallel economy to live.
Already, says Ng’ambi, the opening of local markets has seen foreigners from as far afield as China enter the informal trading sector.
