Lorna Okitoyi has been a cross-border trader based in Malaba, western Kenya for over 10 years. The 46-year-old mother-of-two sells food staples and kitchen utensils that she buys in the Ugandan capital of Kampala (where they are cheaper) and sells at various markets in Kenya.
She says her business has grown steadily since she stopped smuggling goods four years ago and went legit as a registered trader. Could the new African Continental Free Trade Area agreement (AfCFTA), which is due to take effect in July 2020, improve the livelihoods of informal and small-scale women cross-border traders like Lorna? By creating a single continental market for goods and services, free movement of people and investment, it is hoped that the AfCFTA will boost intra-Africa trade (which currently accounts for just 16.6 per cent of total continental trade compared with 68.1 per cent in Europe), thus stimulating inclusive and integrated growth.
As a result of limited options, cross-border trade in east Africa, particularly of staple foods, is mainly done by women. Most operate informally with goods exceeding no more than US$1000 in value, and yet they face countless hurdles, ranging from inflexible and unfavourable trading conditions to a lack of access to information, capital and markets.
According to the 2019 report Opportunities for Women Entrepreneurs in the Context of the African Continental Free Trade Area (AfCFTA), access to a larger market for the goods and services of Africa’s female cross-border traders could lead to a reduction in tariffs and trading costs, access to cheaper raw materials and goods, and increased revenue gains. As a result, AfCFTA could prove to be an important lever for the economic empowerment of African women. In addition, better integration of intra- and inter-regional trade could help eliminate food insecurity and make east Africa “a major player on global food markets,” according to USAID.
But for now, despite the risks of being caught and fined by the authorities, and even facing harassment and violence from border and customs officials, many women make their living trading illicitly across the region’s borders. “Every year I learnt new tricks and became smarter and smarter. This was all meant to help me avoid paying taxes and take home more money to my family,” Lorna tells Equal Times. According to Kenyan researchers, food commodities are the most smuggled product between the Kenya-Uganda border, and informal women traders turn to smuggling because the profit margins are already so small. Add issues like a lack of access to finance, a lack of information on cross-border markets and currency fluctuations, and many women feel that they have no choice but to smuggle goods in order to feed their families – despite being well-aware of the risks.
“At the Malaba border we had two ways of smuggling goods from Uganda to Kenya: either through the forest or by the river,” says Lorna. Until five years ago, Lorna says she used to pay bebas (carriers) to smuggle her goods from Uganda into Kenya across the River Malaba for the price of US$1 per trip. However, one day after heavy rains, the river flooded; the woman who was carrying Lorna’s smuggled maize drowned as Lorna watched on, horrified. “It took several days for the woman’s dead body to be retrieved. I had lost my stock on several occasions and was even caught by officials in the past, but this was the worst thing I had ever experienced,” she remembers, haunted by memory. “This was my turning point. I will never forgive myself and I don’t think I will ever forget.”
Lorna says that following the tragedy, she joined the Malaba Women Cross Border Traders’ Association where she learnt about the procedures and processes of clearing goods at the border – something that was easier and cheaper than she realised. Since then, Lorna has become secretary of the association, which has trained 2,000 women on everything from how to run their businesses for maximum profit, to how to access finance as well as information on cross-border trade regulations. “I have since expanded my business by opening a smelting factory where I make the aluminium household items like cooking pots which I sell in Kenya. This has turned out to be my biggest business; right now, I am making four times what I used to before,” she says proudly.
New opportunities, with government and private sector commitment
According to Gloria Atuheirwe, director of women and trade at TradeMark East Africa (TMEA) a not-for-profit trade organisation based in Nairobi, women cross-border traders have a significant role to play in the economic growth of the region. However, because so many of them work undocumented, their economic contributions go unrecorded; as a result, they largely remain invisible to policymakers. But TMEA is working with informal women’s organisations to help change that. “We now have training and advocacy programmes which sensitise them through their trade associations on the procedures of clearing their goods at the border, standards and the importance of going through the designated border points.”
Atuheirwe says that there are still challenges, such as access to up-to-date information. For example, if Uganda were to suddenly ban the importation of eggs or milk from Kenya, most informal traders wouldn’t find out on time which could result in them having their goods confiscated, or even getting fined or arrested, thus leading to a detrimental loss of income.
TMEA has created physical centres at various border points in the region to help the women traders with the basic administration of cross-border trading and to help those who need help understanding the paperwork as some of the traders are illiterate. Atuheirwe says her organisation is in the process of creating more of these centres as the region move towards the bigger AfCFTA market. “To facilitate a smooth flow of information, organisations will need to invest in mobile SMS platforms to ensure the provision of real-time information straight to the traders’ phones,” she says.
Under the AfCFTA, Atuheirwe says that the opportunities for women traders (access to a much bigger market and larger trading networks thus allowing for significant business expansion) outweigh the drawbacks (poor infrastructure, persistent gender-based violence and harassment, and corruption).
“Women just need the opportunity and the rest will fall in place with time, as long as governments and the private sector are committed,” she says. However, issues like logistics costs, production costs for value addition and internet/call charges should be addressed first to ensure that most women traders can make the most of the possibilities that AfCFTA aims to provide.
Betty Maina, Kenya’s cabinet secretary for trade and industrialisation, is also optimistic about the positive economic impact AfCFTA. “AfCFTA is likely to reduce tariffs, boost economic growth and increase collaboration amongst African countries,” she told Equal Times, which will help the continent meet both the objectives of the UN Sustainable Development Goals in 2030 and the African Union’s Agenda 2063 for the economic, social and political regeneration of the continent.
Professor Wanyama Masinde, director of the Institute for Regional Integration and Development (IRID) at the Catholic University of Eastern Africa in Nairobi and an independent expert on regional integration, says the AfCFTA provides the first opportunity for continent-wide free trade, an important step as Africa moves towards the African Economic Community (which includes the stated aim of the creation of free trade areas, customs unions, a single market, a central bank and a common currency) in 2034. “African countries do not trade with each other for other multiple reasons such as colonial ties, but with the introduction of AfCFTA, trading within Africa will be cheaper,” he says.
No AfCFTA before true regional economic integration
Khamati Mugalla, executive secretary of the East Africa Trade Union Confederation (EATUC) says that African countries should focus on strengthening the enforcement and full implementation of the Regional Economic Communities (RECs) – of which there are eight, such as the East African Community (EAC), the Economic Community of West African States (ECOWAS) and the Arab Maghreb Union (AMU) – in addition to customs unions and free trade areas, if women are to truly benefit from AfCFTA.
“If, for example, the EAC fully implements the Single Custom Territory, then we shall have six countries that are ahead of schedule in terms of achieving AfCFTA,” she explains. “The bottlenecks are between neighbouring countries. However much we preach about the AfCFTA, if those informal cross-border women cannot get their goods from Dar es Salaam in Tanzania to Lusaka in Zambia then there is no real cross-border trade.”
Most importantly, for cross-border traders to truly benefit from regional and continental trade integration, Mugalla says there needs to be free movement of people, too.
However, very few countries have ratified the African Union Protocol on Free Movement of Persons, Right of Residence and Right of Establishment, and as a result, the RECs have not be able to fully accommodate the free movement of people between Africa’s countries and regions.
Stephen Karingi, director of regional integration, infrastructure and trade at the United Nations’ Economic Commission on Africa (UNECA) tells Equal Times that the remaining items for the discussion for Phase 2 of the AfCFTA negotiations include competition, provisions for investment, intellectual property and e-commerce. So far, the protocols on goods, services and dispute settlement have been completed and their annexes are ready for signing. “The second phase of negotiations on the remaining clauses of will begin soon,” says Karingi. “But before implementation, countries should carry out a broad review of their macroeconomic policies focusing on fiscal policy and whether it will be fit for purpose. This will not only help us to adapt to and make the most of AfCFTA, but more broadly, to achieve Agenda 2063 and the SDGs,” he says.