Some Myths about Informal Trade in Developing Countries
By definition, informal trade is difficult to measure because even if everyone has seen it, there is no evidence of it in official statistics. Thus, estimates are often difficult to arrive at and quite costly because they require the collection of data from several sources (customs data, data from border surveys, local economic and social statistics, interviews with actors and stakeholders in the sectors concerned).
However, such efforts appear to be bearing fruit: as information and data production improves, a number of assertions based on rumors or even beliefs are contradicted by actual figures. It is especially interesting to note that the phenomena and characteristics of informal trade are the same, whether in central Asia, Sub-Saharan Africa, or North Africa.
Some Myths about Informal Trade in Developing Countries
The Nigerien city of Gaya is booming. Sitting on the banks of the Niger River not far from the borders of Benin and Nigeria, Gaya has grown from a quiet village to a hopping new hub. Its population is five times what it was just a few decades ago. So what has Gaya on the go?
To some extent, it's a trade story. Price differences across its nearby borders, helped by a ban on imports of second-hand clothes in Nigeria, and an avoidance of tax collection by customs officials have all been important factors in explaining the boom of trade in the region. Yet, combining these with an analysis of the development of transnational networks gives a more complete picture.
This is where Social Network Analysis sheds new light on the story of Gaya, by looking at these interactions to help improve our understanding of the dynamics involved.
Kone Gninlnagnon is a young entrepreneur who dreams of exporting rice from Côte d’Ivoire to the world.
But he knows the quality of the rice must be improved and tested in the domestic market first. Thus, a new business idea was born: helping to make homegrown rice more competitive. “We cannot win the loyalty of consumers with bad quality rice,” he says. His project, “Riz Ivoire,” would promote the rice that comes from the heart of Côte d’Ivoire and help deliver high-quality rice to Ivorian dining tables. He also wants to encourage other Ivorian youth to invest in “rizculture.”
Now Gninlnagnon is one step closer to achieving his dream. His project won third place in the Start-up Competition at ICI 2014, the Fourth Côte d‘Ivoire National Investment Forum that took place in the city of Abidjan in January. While the three-day event focused on investment opportunities in the country’s key sectors like agriculture, industry, and infrastructure, the spotlight of the closing ceremony fell on entrepreneurship and the youth of Côte d’Ivoire, as they are the drivers of future growth and innovation in the post-conflict country. Côte d’Ivoire aims to be an emerging market economy by 2020. In 2013, the country’s growth rate was 8.7%.
I’m a big believer in setting highly ambitious targets in order to galvanize communities and countries to take action on serious issues. When I was at the World Health Organization in 2003, we set a target called “3 x 5” – committing to treat 3 million people with HIV/AIDS in the developing world by 2005.
At the time, just a few hundred thousand people in the developing world had access to the life-saving treatment. When we announced the target, the global health community was still arguing about whether HIV treatment in poor countries was possible. Some called it an impossible dream that would give people false hope.
I responded that no one ever said treating 3 million people would be easy. But we needed a measurable and time-limited target to change fundamentally the way we thought about the challenges of HIV in developing countries. The target helped change the way we worked – we had fewer arguments about if we should do it, and focused on how to get it done.
This is a surfer’s dream: catching a great wave, far from the shore, and riding it for long beautiful moments as it stretches further and further gathering momentum until the very end, when it breaks right at the beach. This is how my generation, born in the 1970s (when the Beach Boys released their iconic Surf’s Up album), should feel, as we are riding on a “global demographic wave” which keeps extending further and further.
As we celebrate World Malaria Day this year and rally behind its theme, “Invest in the Future, Defeat Malaria,” countries and the global community are celebrating major accomplishments since 2000. Malaria death rates have been reduced by half among young children, and more than 3.3 million lives have been saved. The malaria map is shrinking: Four countries were recently certified as malaria-free (Armenia, Morocco, Turkmenistan and a United Arab Emirates), and 26 more are moving toward eliminating the disease.
Mohammad, a three-year-old boy, lives in Yirimadjo, a community in Mali. A few weeks ago he woke up feeling ill with a high fever. That same morning, Kumba, a community health worker with the nongovernmental organization Muso, visited his family’s home during her daily door-to-door active case-finding visits. On discovering that the child had a fever, she administered a rapid diagnostic test for malaria, and he tested positive.
Whatever your views of migration, a consensus ought to be possible on one thing: if migrants do send money home, as much as possible of the hard-earned dollars that they send should actually get there, to be spent on putting feeding the kids, putting them through school or even having a bit of fun (that’s allowed too).
But according to some excellent new research by the ODI, one in eight dollars remitted to Africa is creamed off by intermediaries – a much higher level than for other regions. They launched the report at a meeting in London last week, and the high preponderance of Africans at the launch bore witness to the anger this level of rent-seeking arouses.
and what are we learning from emerging efforts in this area?
At an event last month at the World Bank, my colleagues Sukhdeep Brar and Gaurav Relhan shared some lessons from a few recent and on-going education activities in Uganda, providing some potentially quite useful insights for those seeking answers this question. The full video for this event, as well as the PowerPoint file presented, is available online. For those of you who are pressed for time, or are just not sure if clicking those links is worth the effort, here is a quick synopsis of what was shared and discussed.
A puzzle: Sanitation is one of the most productive investments a government can make. There is now rigorous empirical evidence that improved sanitation systems reduce the incidence of diarrhea among children. Diarrhea, in turn, harms children’s nutritional status (by affecting their ability to retain nutrients). And inadequate nutrition (stunting, etc.) affects children’s cognitive skills, lifetime health and earnings. In short, the benefits of sanitation investment are huge. Cost-benefit analyses show rates of return of 17-55 percent, or benefit/cost ratios between 2 and 8.
But if the benefits are so high (relative to costs), why aren’t we seeing massive investments in sanitation? Why are there 470 million people in East Asia, 600 million in Africa and a billion people in South Asia lacking access to sanitation? Why are there more cellphones than toilets in Africa?
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