WITH Namibia being a net importer of goods and services, small-scale cross-border trade can play a fundamental role in contributing to poverty reduction and for this reason, it is imperative for responsible authorities to increase their recognition of this and prime implementing initiatives to support small-scale traders.
Indeed, income derived from small-scale trading activities may well be key to reduce poverty if more support is granted, yet at the same time, it is acknowledgeable that its impact on long-term developmental outcomes needs to be investigated further.
Traders make little profit from small-scale trade, with most of the revenue covering basic household needs such as food and schooling; as a result, re-investment in their businesses is difficult.
Nevertheless, revenues from cross-border trade are often the main source of income for the households of cross-border traders. For example, a survey of more than 600 traders in the DRC and Rwanda found that cross-border trading activities provide the main source of family income for three out of four traders. The survey found that for measures such as quality of dwelling, access to electricity, type of cooking fuel used, and ownership of durable goods, the households of cross-border traders are as well off as the average urban household that is used as a comparator. Hence, trading activities are critical in allowing households in border areas to attain the level of welfare that is achieved by the typical household elsewhere in the country.
However, further analysis is required on how trading activities contribute to long-term developmental outcomes. Anecdotal evidence suggests that by contributing to household income, trading activities can help to empower women within households. This in turn can enhance their role in household decision making, resulting in increased expenditures on (higher quality and more varied) food, and hence lower child malnutrition rates, and increased attendance at school. These in turn contribute to higher productivity of future generations.
Small-scale traders want to expand their business, but face enormous challenges in doing so. In addition to the problems and costs they incur in crossing borders that were mentioned above, small-scale cross-border traders are constrained by lack of access to capital, limited knowledge of business procedures, and limitations on the distance they can travel from the border, both regulatory and logistical, for example in terms of access to appropriate transport. Few traders have bank accounts and collateral to secure even small loans is very difficult to leverage. The majority of traders want to enhance their limited business skills.
Without doubt, these challenges are particularly acute for women traders. They face greater barriers in obtaining finance, and programs to support capacity building.
Conclusively, on-going trade facilitation interventions need to cater for the needs of small-scale traders, especially women. Government and development partners are currently making concerted efforts to facilitate trade, increase productivity in export-oriented sectors, and improve competitiveness. However, these need to be better targeted to ensure that small-scale cross-border traders are reached by these interventions and that it is not just large traders who benefit.
Confidente. Lifting the Lid. Copyright © 2015