Hurdles to trade? South Africa’s immigration policy and informal sector cross-border traders in the SADC
Stand at any of South Africa’s border posts and watch who is crossing the border to neighbouring states. Women with heads and arms laden, bakkies and cars overloaded with goods, mini-bus taxis pulling trailers, and lorries—big and small filled to the brim. Trains and buses pull in with full baggage racks. Many of these vehicles are carrying informal sector cross-border traders, people who are better described as small entrepreneurs involved in importing and exporting, or trading, across one or more of the borders in the region. They are carrying goods ranging from fruit and vegetables to mattresses, stereos, duvets and other household goods. Travelling into South Africa, vehicles and hands are often empty—but not always. Refrigerated trucks and bakkies carry fish and shellfish. Other cars, buses, trains and pedestrians carry handicrafts and curios, wire, crochet work, traditional dresses, capulanas, coal and vegetables.
This paper explores the activities of these entrepreneurial traders and places them in the context of a number of South African policy initiatives. In particular it looks at impact of South Africa’s current and proposed immigration legislation on informal sector cross-border trade. National and regional economic policy initiatives, particularly the SADC Free Trade Protocol, suggest that South Africa (along with other countries in the region) sees regional trade as part of the solution to the region’s economic problems and a tool to promote regional integration and development as well as to alleviate poverty. Yet, it seems that trade policies have paid little attention to the activities of small entrepreneurs who are involved in what is called informal cross-border trade and who are also part of the movement of goods and capital through the region. Attempts to enact the SADC Facilitation of Movement of People Protocol have been less successful than its trade counterpart.
Similarly South Africa’s immigration policy does not appear to have kept pace with initiatives to free the movement of trade and capital in the region. Neither current legislation, nor the Immigration Bill, contain provisions which facilitate (let alone encourage) the businesses of these entrepreneurs to trade across South Africa’s borders. Instead, provisions in both cases put obstacles in the way of these traders. Again, the activities of small entrepreneurs involved in cross-border trade appear to have been overshadowed by attempts to support the activities of big business and capital.
The term informal sector cross-border trade is used to describe the activities of small entrepreneurs who are involved in buying and selling across the national borders. In the South African context they include2:
This kind of cross-border trade is usually called informal as:
- traders who travel to South Africa for short periods (1-4 days) to buy goods (usually from formal sector retail and wholesale outlets and farms) to take back to their home country to sell. These goods are sold in markets, on the street, and to formal sector retail outlets and to individuals. This category of trader appears to be the most numerous and can be called “shoppers”;
- traders who travel to South Africa for longer periods (1week to 2 months) who carry goods to sell in informal and retail markets. The profits are then invested in buying goods which are then taken back to their home countries for sale in informal and formal sector markets;
- traders who travel across three or more countries including South Africa, buying and selling as they go;
- a seemingly small category of traders who only bring goods from their home country to sell in South Africa without taking goods out for sale in their home country; and
- South Africans who take goods to sell in other Southern African countries in markets, on the street and to formal sector retail outlets.
However as this paper suggests, the characterization of this trade as informal may be a misnomer as:
- it involves (relatively) small entrepreneurs;
- traders do not access preferential tariff agreements;
- traders may buy, or more often sell, in informal sector markets; and
- traders do not always pass through formal import and export channels and may be involved in smuggling of part or all of their goods;
Although still limited, increasing attention is being paid by policy makers to this sector. But, despite the prominence and seeming importance of these activities to regional trade, economic development, poverty alleviation, the organisation of regional markets and regional integration it remains a significantly under-acknowledged and under-researched area of South African, regional and continental trade activity. The lack of attention paid by policy-makers to the activities of informal sector cross-border traders reflects, in part, the limited amount of information about their activities as well as who they are. However, recent research, suggests that informal sector cross-border trade comprises a significant proportion of regional cross-border trade (Ackello-Oguto, 1996; Minde & Nakhumwa, 1997; Macamo, 1998). These studies suggest:
- it obscures the multiple linkages between the formal and informal sectors in buying and selling;
- the process encompasses a wide range of entrepreneurial activity ranging from small survivalist activities associated with the informal sector to relatively large amounts of goods across a wide range;
- most traders pass through formal border control mechanisms—even if all of their goods do not;
- it suggests levels of illegality and non-regulation that are not always present; and
- it implies marginality which hides the relatively significant role these entrepreneurs play in regional trade.
Other studies have focused on the traders themselves, their activities, and the role of trade in their lives and entrepreneurial development (Brand et al., 1995; Muzvidziwa, 1998; Peberdy & Crush, 1998; Archivo do Patrimonio Cultural (ARPAC), 1999; Peberdy, 1999, 2000a, 2000b, 2000c; Peberdy and Rogerson, 2000)3. These studies emphasise the demographics of cross-border traders, and their activities. They suggest:
- volumes of trade are large;
- volumes of informal sector trade may exceed formal sector cross-border trade between certain countries;
- the trade bears a direct relationship to food security in these countries (positively and negatively depending on the circumstances);
- it comprises a significant part of small, micro and medium enterprise activity in countries in the region;
- it may have a significant impact on formal and informal retail markets; and
- it plays a significant role in regional trade relationships.
The paper starts with a brief overview of SACU (and therefore South Africa’s) trade with the rest of the region and of relevant trade and economic policy initiatives undertaken by South Africa. It then moves on to outline some key aspects of informal sector cross-border trade by identifying what is known about the demographics of people involved in informal sector cross-border trade. It then identifies some key features of the type and volume of trade and its relationship to the formal and informal sectors and the immigration and customs regulatory regimes. It then discusses the potential impact of this trade on poverty alleviation. The paper concludes by identifying how the current and proposed South African immigration regime places obstacles (or non-tariff barriers) in the way of the cross-border trading activities of small entrepreneurs. It concludes by making recommendations for changes in the Immigration Bill.
- that informal sector cross-border trade in the region is an important income earning opportunity for small entrepreneurs;
- women comprise a significant proportion of people active in this trade and the trade provides specific empowerment opportunities (and problems) for women;
- it contributes to the development of informal and formal sector retail markets;
- it provides employment opportunities to traders and their employees;
- for those with access to some capital it provides a significant opportunity for poverty alleviation.
- In South Africa a more geographically expansive import and export trade is carried out by small and medium entrepreneurs from West and Central Africa who are resident in South Africa (Rogerson, 1997a, 1997b; Simone, 1998a; 1998b; Peberdy & Crush, 1998; Peberdy, 2000a; Peberdy and Rogerson, 2000). Much of this trade appears to be in handicrafts and curios and possibly grey goods (clothes, textiles, shoes etc.) from East Asia. The majority of these traders are men. It has close ties to West and Central African transnational networks of trade and will not be addressed in this paper.
- For other mentions of informal sector cross-border trade by small entrepreneurs in SADC, particularly the DRC, see MacGaffey & Mukohya, 1991; MaMavambu Ye Beda, 1991; Emizet, 1998; McGregor, 1998).