Informal trade surges at small unmonitored border posts

TRADE in merchandise valued below N$1 000 is gaining momentum at Namibia’s ungazetted borders, recording N$19,9 million in 2019 compared to N$15,3 million in 2016.

Interestingly, informal trading has also achieved a trade surplus of N$13,4 million, as the formal trade struggles with deficit, as the country exports more in small values but large volumes.

This is according to the Namibia Statistics Agency’s (NSA) fourth (from 2014) Informal Cross Border Trade Survey (ICBTS) conducted last year.

The survey/data represent a one-month observation of September 2019.

Exports made up the largest share of total trade at 83,7% (N$16,7m) compared to imports, which accounted for a relatively low share of 16,3% (N$3,2m).

“Subsequently, Namibia recorded a favourable informal trade balance amounting to N$13,4 million,” said NSA.

Regarding informal exports, the largest share of exports went through the Wenela Border Post

(48%) at Katima Mulilo followed by Oshikango, which accounted for 45,6% of the exported merchandise.

On the other hand, most of the imports recorded passed through the Oshikango Border Post (51,1%), while 19,4% and 12,1% passed through Calai and Wenela, respectively.

The survey was conducted at six border posts, three of them achieving trade surplus, mostly the northern and far-eastern borders, while the Calai and the two southern border posts, Noordoewer and Ariamsvlei, facilitated more informal imports than exports.

According to NSA, informal cross-border trade records merchandise trade transactions between residents and non-residents across the economic boundaries of two or more countries that are not recorded by the customs authorities as their values are below the N$1 000 threshold required by customs.

However, the agency said when aggregated, the small transactions become significant due to the frequency of trading activities.

“If properly harnessed, ICBT has the potential to support Namibia’s ongoing efforts of poverty alleviation,” stated NSA.

The report explained that informal cross-border trade is an important component of a country’s informal sector, as it has spill-over effects on countries involved, particularly in the border towns.

The report’s assessment shows that informal cross-border trade has positive macroeconomic and social effects such as food security and income creation for the rural populations, who would otherwise be excluded from mainstream trade.

The statistics show that males were more involved in cross-border trading, realising N$12,3m, which represents 61,6% of the total trade value, higher than 52,85% in 2016.

The total value of informal cross-border trade by female traders was N$7,6m or 38,4% of the total trade value, down from 47,2% in 2016.

Furthermore, informal exports were dominated by male traders while females dominated the import side, the report revealed. Males accounted for 66,7% of the value of all goods exported while females only accounted for 33,3%.

On the contrary, females bought more from outside, accounting for 64,7% of total imports compared to the males’ 35,3%.

According to the informal trade statistics, over 51% of exports were destined for Angola, making that country Namibia’s largest export market in 2019, amounting to N$8,5m.

Zambia maintained her second position on the export list, absorbing 48,1% of Namibia’s total informal exports, up from its 2016 level of 24,6%.

Informal exports to Zambia grew significantly, rising by 199% to N$8 million compared to N$2,7m in 2016.

Contrary to popular belief and formal trade statistics that favour South Africa, in the informal sector, Angola continues to be the leading source of imports for Namibia even last year.

Imports from Angola amounted to N$2,4 million, indicating a contraction of 36,2% from N$3,8m recorded in 2016.

South Africa was lagging far behind with informal traders importing only N$421 000 worth of goods last year September, a decline of 19,6% from N$523 000 recorded in 2016.

NSA indicated that in 2019, of the N$16,7m exported goods, over 42% was distributed to only five commodities, among them cooking oil, prepared food, detergents and other chemical products, fuel and vegetables.