CHIPATA, Zambia, November, 14, 2013 – Despite its benefits, conducting cross-border transactions remains expensive for small traders in Malawi and Zambia, costing them 62 percent more in border costs than large formal traders. While there are systems in place to facilitate cross-border trade such as the current Simplified Trade Regime (STR) which eases several customs processes, there are a host of registration and other requirements that remain in place which increase traders’ costs.
Small traders from the two countries held a joint workshop to discuss a concrete action plan for trade policy reform for promoting trade and creating jobs in both countries, facilitated by the World Bank in collaboration with the the Ministry of Commerce, Trade and Industry of Zambia, and the Ministry of Industry and Trade of Malawi. Border costs they face would more than double, should they attempt to transition to the formal market.
“Time has come to simplify trade between our informal traders to improve their livelihoods,” said Mrs. Yvonne Chileshe, Zambia’s Acting Permanent Secretary for Commerce, Trade and Industry.
The World Bank’s Country Director for Zambia, Malawi and Zimbabwe Ms. Kundhavi Kadiresan concurs that informal trade is crucial both for the economies and individuals: “Informal Traders are a major feature of the Malawi and Zambian economic and social landscapes. A significant amount of cross-border trade between Zambia, Malawi, and their neighbors is taking place through informal channels. Such trade plays an important role in promoting welfare and poverty reduction, and trading of the goods and services.”
The World Bank is pioneering efforts to engage in cross-border action between Zambia and Malawi to tackle key issues such as informal trade and non-tariff barriers that will support economic development.
“We need to have a concrete action plan for trade policy reform and strengthen implementation capacity in government as well so that decisions being taken at meetings such as these come to fruition,” said Malawi’s Alex Gomani, Principal Secretary (2) for Trade and Industry. The debate between local traders and policy makers, who attended the event in Chipata, gave clear priorities for policy action.
The World Bank says it can contribute to efforts to alleviate constraints faced by small traders by among other ways raising the profile of these issues—supporting informal traders, facilitating trade in agriculture and reducing non-tariff barriers. “This would enable governments in Africa and the private sector work together to boost regional trade opportunities and deliver better returns for traders and producers and competitive prices for the products that consumers need,” says Paul Brenton, Africa Trade Practice Leader at the World Bank.
The interventions made at the workshop by local traders and business leaders suggested reforming the STR, supported the proposed Traders charter, and outlined the challenges and risks traders face when crossing the border. These suggestions will be included in the forthcoming World Bank Diagnostics Trade Integration Studies (DTIS) that will be presented to the Governments of Malawi and Zambia.