One stop border posts herald new dawn for East Africa small scale women traders
Behind the constant push and shove as thousands of traders elbow each other while competing with trucks to get their goods cleared at the Kenyan-Ugandan border town of Busia, is a flourishing informal cross border trade that has hitherto remained ignored but now a source of livelihood for millions and a gold mine for both the Kenya and Uganda governments.
It stems from the booming trade between the two East African nations where Uganda remains the largest trading partner for Kenya with Kenya exporting 11.8 per cent of all its products to Uganda.
Uganda’s exports to Kenya on the other hand stands at 17 percent according to the UN COMTRADE database on international trade.
But while Kenya has managed to gazette more than 35 entry and exit points, majority in and out Uganda, only recently has it made bold steps to tap into informal traders in a harmonized inter country trade while protecting women who have traditionally borne the brunt of this informal trading due to their big numbers.
In the five East African community countries, informal cross border trade averages 60 per cent of all businesses with women accounting for 80 per cent of this informal trade. “The issue of informality in businesses in East Africa cannot be separated from women. It is therefore very important to understand where women are coming from in terms of this trade, what has informed where they have come from and what they need in order to streamline their trade and ensure they trade more and conveniently,” said Gloria Atuheirwe the Programme Officer in charge of Women and Trade at TradeMark East Africa.
The institution has been at the driving seat of enhancing trade between East African partner states and with the rest of the world with targeted focus on access to physical markets and enhanced trade environment.
But to get the women into the formal way of doing business beyond their country borders, which include paying taxes and following the set custom procedures has been taxing in itself.
Traditionally thousands of the traders, afraid they would be forced to pay more at the borders would use alternative ungazzeted and sometimes dangerous routes, christened Panya routes, Swahili for rat routes, due to their small size, to get their products to destination. They would use forests and rivers.
Agnes Opus is one such trader. Since 2005 she has dedicated her entire life to buying and selling maize and millet between Kenya and Uganda as a way of providing for her four children following the death of her husband who was then the sole breadwinner of the family.
But it has been a tumultuous journey for the 50 year old who was involved in the cat and mouse games with custom officials and police in the formative months of her trade as she evaded tax.
Having been introduced to the business by a colleague, she would be taught the ropes including how passing through the formal Busia border was dangerous due to harassment by police and even paying exorbitant taxes that would leave her with nothing.
Like many other female traders, she was shown the routes she could follow without being caught. At times she would cross the river using a makeshift raft and would hire the services of fishermen to help her cross.
All this time she would cross while carrying sacks of cereals. The journey was also long and laborious. A trip to Kenya would take up to four days compared to a day using the formal routes. “Of course there was the fear of the raft capsizing but we had to endure because we felt it was cheaper. Other times we would hire wheelbarrows and pay young men to ferry us through forests until we got to Kenya and vice versa. But it was short lived,” Agnes recalled.
Her first encounter with police officers and custom officials was nasty. They chased her, took her bags of millet and even all the money she had left. They roughed her up and warned her against her dubious trade. “Some of the women I was with in this trade had it rough especially if they did not have money. Some would be sexually assaulted and others would agree to sex with the officials as a form of bribe,” she said.
When an opportunity presented itself through the Busia Women Cross Border Traders Association she decided to join. She has never looked back.
The association, comprising of an estimated 3,000 women traders in the Kenyan and Ugandan sides, has assisted Agnes formally register herself, acquire a trader’s identity card that makes it easier for her to cross the Busia border without being subjected to too many custom procedures and equipped her to trade from a point of information.
“I am now able to check market prices in real time and specifically find out where the demand is ripe. I have also managed to save with the cooperative which allows me to access credit when I am struggling with the business,” Agnes who is now the Secretary General of the association at the Uganda side and the regional treasurer of the East African Traders Association added.
She has also built a cordial relationship with the customs officials she once dreaded to meet and has been instrumental in transforming hundreds of women from using the informal routes and getting them to join the traders association.
On a weekly basis she makes two trips to Kenya where demand for maize and millet is ever rising and is able to make up to Ksh7, 000, €57, for every market trip. Such proceeds have assisted her pay school fees for her four children, two who are now in university.
“Because of accepting to move my goods through the formal routes I have managed to keep my family intact. I earn more, save on time and have reduced numerous expenses like hiring people to cross to Kenya illegally,” she said.
Edna Mudibo, a Kenyan trader who has been in the business of selling cereals and adding value to groundnuts by making peanut butter since 2012 has had her fair share of woes while trying to avoid paying duty. “I lost count of how many times my goods had been confiscated by the police who nabbed me for using those dubious routes. I would lose all my savings because I used to move with almost all my cash to go and trade. I didn’t have a bank account or anywhere to keep my money. The thing is even after paying hefty bribes to avoid being arrested, we still feared going through the official border points. The custom officials were mean and the amount of money we used to pay there was exorbitant,” she recalled.
Their experiences are corroborated by a 2007 survey by UN Women that indicated that out of the 60 per cent women informal traders then, 26 per cent were raped as they tried to move their produce across the trade routes predominantly by law enforcers.
A World Bank report of 2013 on the other hand showed that up to 80 per cent of traders in the Great Lake region paid bribes. The region constitutes countries around a series of lakes in East Africa including Uganda, Kenya, Burundi, Rwanda, Tanzania and Congo.
But with the coming into force of the East African Community custom union and Common market Protocol that opened up borders in member states to free movement of people ,goods and services in 2012, traders operating goods worth less than Ksh2000, €16, or whose goods are primarily produced in the East African Community member states are exempted from custom duty. “It might appear like little money but considering we have majority of informal traders in their thousands crossing the Busia border on a daily basis trading in small produce, it would only make sense to incentivize them,” said Gloria.
Although there is no actual data on the number of informal traders who cross the Busia border each day, they are averaged to be in their thousands, with about 47 per cent of them trading in cereals including maize, beans and millet while 30 per cent are involved in fresh produce.
The fact that a bulk of them trade in cereals has been a major boost to the two East African countries where agriculture contributes 25 per cent to the national economy with 75 per cent of the population drawing a livelihood from the sector.
Millions of people have been able to access cheap agricultural produce that are either in short supply or expensively priced in their respective countries therefore boosting food security. While most of the goods, especially cereals and sugar are cheaper in Uganda, Kenya is primed for its huge consumer demand and a robust purchasing power for these products therefore creating a ready market. “I buy a 90 kilo bag of maize at Ksh1,975, €16, in Uganda and sell it in Kenya at Ksh4, 000, €33.
The demand is still high which is why I manage to make up to €80 in profit on a single trip to Uganda. It has also allowed me to employ more people because I realized I couldn’t do this on my own as the business expanded,” said Edna.
Now as a result of heightened campaigns on the importance of the informal traders crossing through the designated border routes and forming associations that allow them easily access market information, and open savings accounts, women traders are now able to easily access more funding and collateral to grow their businesses.
It has also made it easier for them to formalize their operations through getting certificates of origins, and the tax personal identification numbers for ease of clearance at the border post.
I followed Agnes to the border to witness her experience. Upon arrival she exchanged greetings and shared a light moment with the police officer manning the entrance to the customs desk.
To simplify the checks, the custom department has set up a desk for small scale traders that is operated by three officials. Agnes tells me that on a busy day, they even double the officers.
Producing her East African traders’ card, and another document indicating the goods she was exporting to Uganda, she was warmly welcomed by a middle aged woman at the counter, who went through the documents as another staff from the back office, offered Agnes a glass of water. After approximately five minutes, Agnes documents are stamped and approved and she is ushered to the Ugandan side with a smile from another soldier manning the customs exit gate.
“Time is money for us as traders because competition is high and customers expect us to deliver goods within the agreed time. That is why traditionally we were apprehensive about passing through the customs because it would take too much time and by the time we were done, it was already too late. This new system has completely changed that and even made business for us more profitable since we are exempted from tax and our customers are confident knowing that the goods have been inspected at the border,” she tells me as she hurriedly enters a minivan that she has hired to assist her transport her mangoes, capsicum and oranges to Jinja Uganda, some 116 kilometres.
Now, at least 8,000 informal cross border traders in the four major border points of East Africa, Busia, Malaba, Namanga and Taveta have moved from using ungazetted routes to mainstream border posts majority being from the Kenyan side according to data from TradeMark East Africa. This, providing lessons to countries struggling to tap into such traders with a view to formalizing them, with associations and cooperatives being a key catalyst.
An association that has returned roaring success in this regard is Busia Women Cross Border Traders Association that has brought together more than 3,000 informal women traders in both Kenya and Uganda, a bulk of them trading in cereals, fresh produce and fish.
The women are able to get prices of commodities through their phones, available markets between the two countries and networking. Their association also runs a saving scheme that allows members to borrow or use it as collateral when seeking credit. “It has been a herculean task trying to move goods through the border especially for us smallholder traders because of the long queues and the tedious border processes. That is why we preferred to use illegal routes to get our goods across. I tried that for over six years. But it was too expensive for me. Sometimes I would chance on police doing patrols at the ungazetted routes who would blackmail me to either give them my goods, money or they would arrest me. When I thought about my family and children, I had no choice but to comply with their demands,” said Risper Naliaka a member of the Women Traders Association who adds that the new simplified process allows her to make numerous trips in a week, five compared to two that she did before, which has now seen her expand her business and educated her children without the worry of lacking school fees.
Three of her eldest children are in university studying Medicine, Teaching and Law. “Before the one-stop-border posts were introduced, we thought that passing through the immigration desk was a preserve of big businesses like trucks that would snake their way through our villages headed to the border. We now feel part and parcel of the trade between the two countries and helping grow trade in East Africa in our small ways,” she added.
The Eastern African Sub-regional Support Initiative for the Advancement of Women, EASSI, a body that has been working with the women traders has particularly been instrumental in thawing the frosty relations between custom officials and the traders.
Through dialogue meetings the two groups meet and iron out any misunderstandings that arise from their interactions. “They have been quite a helpful platform. Women get the courage to lay bare to the custom officials issues like how they take time in clearing them making them miss the buses to the next market, or how there still exist some pockets of bribery and harassment at the border.
Custom officials on the other hand get to explain to the traders which specific areas they should queue in to get faster services. Women have as a result of understanding the custom procedures reduced time, increased earnings and most importantly built a cordial relation with the officials they once feared and loathed,” said Annet Auma, the Busia Border EASSI project assistant.
As a result, Busia has been voted as a model border post in improving the relations between custom officials and the traders according to TradeMark East Africa.
The cooperative, EASSI and Busia county government in Kenya have also been working in assisting traders acquire the necessary identification documents including traders’ ID costing Ksh150, €1.23, that captures their names and what they sell which makes it easier for them to get clearance at the border point.
The demand for the cards has been overwhelming according to the county government of Busia with up to 200 processed on an average week as more traders become curious about the new model. “These businesses are not illegal. As long as they are legally produced goods passing ungazetted routes, we have a duty to ensure we move them into full registration so that they can be spared the torture of those undocumented routes and they can also earn decently. We like to call this the first and most fundamental stage of formalization. The fact that with that piece of identification they can actually be reached by information whether by government or other institutions and they can benefit by standardizing their day to day operations through customs makes all the difference even in terms of us coming up with policies that favour them,” said Richard Wanzala from the County Government of Busia.
Richard says that the new registrations are now inspiring the county to encourage traders to adopt other services like low cost insurance at a time when insurance penetration in Kenya stands at a dismal 4 per cent attributed to lack of awareness especially among the low segment of the economy.
“We want to see a situation where the traders both from Kenya and Uganda also embrace key services like low cost insurance not just for their goods but also health because majority of them are breadwinners and in the event of illnesses are forced to close their businesses as medical expenses take a toll on their earnings,” Richard added.
But while it has been a relatively smooth experience in getting the traders to embrace formality, taxation at one country, even when goods have already been declared exempt from the other country still remains a draw back. Availability of too many undocumented officials at the border who still trick traders and ask for bribes is also discouraging some traders to embrace the posts.
Plans are however in the offing to now have a formal Cross Border Trade Charter that spells among others that all border officials must have some identification like a badge, and no male official can conduct a body search on a female trader. The idea is to promote the highest level of accountability and transparency and has received a thumbs up from heads of states in the East African Community.
Gloria argues that the informal economy can never go away since the needs of the traders are vast and the sector is dynamic allowing people to respond to opportunities that arise every day. “It is very fluid and evolves all too often. We are happy to see countries paying attention to the sector through introducing policies and measures like the common market protocol that recognizes these traders. Our studies have shown that on average one informal trader involved in the cross border business supports about seven dependents so you can imagine what this means even in terms of policy. Moving forward we look for a time when informal traders will confidently and fully get recognition for the pivotal role they are playing in driving inter regional trade,” Gloria said.