Experts say measuring informal cross-border trade key to monitoring intra-African trade

Addis Ababa, June 6, 2023 (FBC) – Timely data collection on informal cross-border trade is critical to informing intra-African trade on the back of the implementation of the African Continental Free Trade, experts say.

Despite its importance to the livelihoods of millions of Africans, informal trade is not well understood on the continent. As a result, the African Union Commission (AUC) with support from the Economic Commission for Africa (ECA) and the Afreximbank established a Task Force on developing a harmonized methodology for Informal Cross-Border Trade Data Collection.

Opening a two-day hybrid meeting to review and validate the Continental Methodology for Informal Cross-Border Trade Data Collection in Africa, Stephen Karingi, the Director of Regional Integration and Trade at the ECA said informal cross-border trade is a key feature of Africa’s trade landscape.

Research by ECA estimates ICBT to be equivalent to between 7 and 16 percent of all formal intra-African trade flows and between 30 and 72 percent of formal trade between neighbouring countries.

“Despite its significant contribution to the economy, ICBT remains largely undocumented,” Mr. Karingi said, noting that current efforts to collect data on ICBT within the continent, were largely fragmented and unsystematic. For example, definitions and methodologies used by the various countries and organizations often differ leading to challenges in comparability of available data, as well as integration into the formal trade statistics.

“True to the saying that: what is not defined cannot be measured. What is not measured, cannot be improved”, said Mr. Karingi, emphasizing that the dearth of reliable and regular data on ICBT has contributed to minimal recognition of its important role in policy frameworks.

“Accurate trade statistics are an important input into national accounts and balance of payments statistics and can also help improve econometric forecasting models for key macroeconomic variables,” said Mr. Karingi.

It is learned that the continental methodology for ICBT data collection was validated by experts from Regional Economic Communities, National Statistics Offices from twenty-nine AU member states, financial institutions, cross-border traders associations and academia.