- The Government of Sierra Leone has little information on informal cross-border trade, despite it being a common practice in the country.
- This study was requested by the Head of the Trade Promotion Authority. It surveyed border traders to understand the dynamics of informal cross-border trade, and how the government should put in place appropriate policies.
- The researchers recommend that the Government should lift the ban on exports of agricultural produce and encourage competition between its Mano River Union neighbours – Liberia and Guinea.
Informal cross-border trade (ICBT) is increasingly coming into the purview of Sierra Leone and its neighbours (Liberia and Guinea) in the Manu River Union (MRU). While ICBT may provide short-term solutions to poor households, in the long run, its prevalence challenges the long-term economic development of African countries. ICBT can lower the efficiency of measures put in place to ensure health, safety, and environmental protection. Agricultural commodities which are often traded informally, for example, escape sanitary controls meant to ensure adequate food safety at home and avoid proliferation of diseases across borders. Also, informal trade erodes government revenues, and such practices lead to unreliable external trade statistics which might hinder the formulation of appropriate trade and macroeconomic policies
Despite the large role ICBT is thought to play in the MRU economies, few efforts have been made to systematically understand its local dynamics – for example, what population groups engage in ICBT and where along the borders ICBT may be concentrated.
The researchers examined a number of dynamics affecting border trade including:
- The distance between markets, i.e., both foreign and local markets to the border crossing point.
- The location, as far as possible, of roads and tracks on the foreign country’s side of the border that can be used by motor vehicles to reach the border.
- The ease with which the border can be crossed.
- The location of roads and tracks on the nation-side of the border which can be used to market goods from the border area to the population centres.
- The time, type of good, and extent of informal trade along various crossing points.
The key reasons for informal trade in Sierra Leone were identified by traders as tax rates being too high and formal trade areas being too far from business areas. A ban on palm oil and rice also increased demand for these products, leading to an increase in cross-border trade. Traders identified a number of challenges to cross-border trade including: multiple and arbitrary charges, loss of goods, too many checkpoints along the roads where traders pay informal taxes and bribes, imprisonment and detention, ambushes and robbers, and sexual harassment.
The study recommends the Government of Sierra Leone lift the ban on the exportation of agricultural products and encourage competition among countries. Additionally, the report recommends the need for a broader study that combines quantitative and ethnographic assessment of ICBT in all three MRU countries. Results have been shared with the Director of Export Promotion and the Ministry of Finance.