Borderland Biashara: Mapping the cross border, national and regional trade in the East African informal economy
The informal economy of East Africa must be addressed strategically for the sustainable impact of trade related growth initiatives in the region to take root and flourish. Recognized for its size, reach and importance to livelihoods, it is still nonentheless considered terra incognita by both institutional and market researchers as well as business analysts.
Trade Mark East Africa (TMEA) was established with the aim of growing sustainable, inclusive prosperity in East Africa through trade. They believe that this will require significant investments in working to expand, and potentially formalise, informal trade. We were requested to deliver insights to support the design of their second phase of operations, viz.
To better understand the particular issues affecting informal trade in key borders within the EAC Region, South Sudan and the Democratic Republic of Congo (DRC)
To also understand how TMEA could position itself to develop structured programmes aimed at growing and formalising informal trade in tandem with their objective of inclusive, sustainable prosperity through increased trade.
In light of Trade Mark East Africa’s mandate in the East African region and their goals for the near future, the borderland economy was selected as the starting point. Economic activity intensifies near the borders, clustering around key nodes on trading routes in the region. Businesses sprout up to take advantage of the constant flow of traffic. People are attracted by the opportunities offered by the hustle and bustle unlike the sleepier pace in most market towns further upcountry.
We approached the borderland as an ecosystem in its own right, distinct from the more agriculture dominated economy across rural East Africa, with greater emphasis on trade and services. The vast majority of this activity falls within the informal sector, as is the case with the bulk of the region’s economy. Considering it an ecosystem allowed us to take a holistic view of the entire operating environment of the borderland economy.
Our second decision was to step back from the labels of informal economy and informal trade with all their contradictory definitions, categorization and implications of illegality to consider only what is colloquially known as biashara. The kiSwahili word biashara can mean business, commerce, trade, the business enterprise itself as well as barter. This choice included a far greater range of activities being conducted at the border than just the conventional meaning of the English word “trade”.
At the same time, it excluded tax evasion by formal firms, smuggling, and other illicit activities at the border, since these are not considered biashara per se. They are commonly referred to as magendo, meaning contraband.
Our hypothesis at inception was that the economic activity of the borderland ecosystem, while distinct from the surrounding region, linked back to the hinterlands through relationships and social networks, informal trade flows, and value transactions. That there was a complex web of value exchange, underwritten by trust, at the last mile of trade (biashara) which, if we were able to discover and map the key nodes, we could identify touchpoints for interventions which would offer the maximum return for resources invested.
Our belief was that there were actors in the informal trade ecosystem whose reach and impact on their communities and local economies were relatively greater than that of others in the informal trading ecosystem. An analogy would be “influencers” in social media. This was the starting point for our exploratory user research to map and understand the Borderland Biashara Ecosystem.
Further, to identify the opportunities to design interventions which offer the optimal impact we needed to understand not only the relationship between the borderland and its surrounding region but also the way the biashara links to the formal economy. This background framing was done through a rigorous review of the literature on informal trade in the region, and state of art thinking on the informal sector of the economy.
It is against this backdrop that this report will include a summary of findings from the literature, an introduction to the methodology and its adaptation for robustly mapping the borderland opportunities, as well as the synthesis of our discoveries using the principles of human centered design ethnography to identify end user needs and opportunity spaces for innovative services, products, and programmes aimed at enabling social and economic development through trade.