Assessing the economic benefits of transit trade: The case of Tanzania

The aim of this study is to assess the economic benefits of transit trade (the trade arising from the passage of goods through one country or region to another) to a transit country, using the case study of Tanzania. Transit trade is vital in facilitating economic transformation and regional trade, while contributing to the growth of employment, incomes, tax revenues, and directly to improving the balance of payments through export of services. Growth of transit trade enhances growth of business across the various sub-sectors of the logistics industry, and generates pressure for the country to improve its trade facilitation, such that the increased efficiency benefits the wider economy. To the surrounding society, transit trade offers multiple benefits. For instance, proximity to transit infrastructure provides transport services and access to markets that are key to unlocking the economic potential of those areas, while accelerating the growth of townships, which coerces local government to provide adequate public services.

This project will support three main research activities:

1. Collate existing data from secondary and industry sources for illustrating the profile and economic benefits of transit trade -- including from the Tanzania Revenue Authority (TRA), IMF, Bank of Tanzania, Dar port/Tanzania Port Authority (TPA), Central Corridor Transit Transport Facilitation Agency, and enterprise data from transit industry and sector associations on their performance and contribution to the economy in terms of tax revenue, employment, income, and technology/innovation for private sector development.
2. Analytical work to estimate the broader impact of transit trade on the economy using the Computable General Equilibrium (CGE) and Global Trade Analysis Project (GTAP) model.
3. Finally, the project will assess the spatial benefits of transit trade. The pilot survey will be administered on a sample of two locations along the central corridor (one transit location around Shinyanga, and another at the Rusumo border); and two locations along the Dar corridor (one transit location around Iringa, and another at the Tunduma border).  The research in the transit points will collect primary data to assess the extent to which transit trade activities have brought economic benefits to the local communities along the transit route/border; and the risk or challenges associated with them. Furthermore, the data will be disaggregated by gender to allow assessment of how these benefits and challenges have impacted women.

Using semi-structured questionnaires, from these points the study will collect information on the (potential) employment impact; business opportunities; the impact of increased access to services, including social, financial, transport, and public services; and risks and challenges brought on by the growth of transit trade and mitigation measures in place.

The above information will be collected from three categories of respondents: (i) individual household enterprises (including small scale informal traders), (ii) established enterprises (hotels, restaurants, petrol stations, bureau de change etc.); and (iii) local community leaders (to gain permit for the survey and to collect community level information.