Informal Cross-border trade

////Informal Cross-border trade

Informal Cross-border trade

Cross border buses at RoadPort.

ZIMSEC O Level Geography Notes: Trade: Informal Cross-border trade

  • COMESA defines informal cross-border trade (ICBT) as a form of trade that is unrecorded in official statistics, and is carried out by small businesses in the region.
  • Informal cross border traders are vendors who travel to neighbouring countries to sell local products and in return bring back goods for resale.
  • Examples of the local products they sell are craft ware, clothing and food stuff.
  • This kind of trade is mostly dominated by women.
  • The largest flow of goods is between Zimbabwe and South Africa.
  • Vendors also make periodic visits to Tanzania, Mozambique Botswana, Zambia and Namibia.

Advantages of informal cross-border trade include:

  • Supply of goods which are in short supply on the domestic market.
  • Prices are rarely fixed and so negotiation is possible.
  • Little capital is required.
  • Creation of jobs in the form of self-employment.
  • A viable way of earning a living.
  • Goods are relatively cheaper for example, second hand clothing.
  • Trading is flexible. Vendors can operate at home or from pavements of informal cross-border trade.

Disadvantages of informal cross-border trade include:

  • The quality of goods is not guaranteed.
  • Exploitation of child labour.
  • Operations are often illegal.
  • Encourages sale of stolen goods.
  • Loss of government revenue as most of the goods are smuggled into the country.
  • Sale of foreign currency on the black market creates a shortages of foreign currency in the banks.
  • There are no records of the actual volume of trade and therefore its benefits are difficult to quantify.
  • Little benefit to the economy as vendors do not pay income tax.
  • Irregular working hours and uncertain income and wage.
  • Disruption of family life as the parents are always on the go.
  • No government assistance.

To access more topics go to the O Level Geography Notes page

By |2017-02-26T10:05:48+00:00February 26th, 2017|Notes, O Level Geography, Ordinary Level Notes|Comments Off on Informal Cross-border trade

About the Author:

She holds a Bachelor of Science Honors in Applied Biology and Biochemistry from National University of Science and Technology, a Certificate in Good Clinical Practices from National Institute on Drug Abuse Clinical Trials Network, a Certificate in Leadership from Deloitte and Certificate in Chemistry Laboratory Experiments from Helsinki Metropolian University of Applied Sciences, Finland.
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