Cross-Border Livestock Trade and Food Security in the Horn of Africa: An
Overview

Peter D. Little, University of Kentucky and BASIS-CRSP

Tegegne Teka, OSSREA

Alemayehu Azeze, OSSREA

A research report of the Broadening Access to Markets and Input
Systems-Collaborative Research Support Program (BASIS-CRSP) and OSSREA
Project on Cross-Border Trade and Food Security in the Horn of Africa.
Funding for the study was provided by USAID/REDSO and the Office of
Sustainable Development, Africa Bureau, USAID.

September 2001

Cross-Border Livestock Trade and Food Security in the Horn of Africa: An
Overview

BACKGROUND

Cross-border trade and regional collaboration currently is high on the
agendas of the different governments and regional organizations in the
Horn of Africa. High-level bilateral and regional delegation talks have
been started and the area's main regional authority, IGAD
(Inter-Governmental Authority on Development), has been supportive.
While the opportunities for collaboration are significant, the
challenges are equally impressive. These include insecurity and
political uncertainty, poor infrastructure and communications, and
incompatible currency and trade policies. The reality, however, is that
significant levels of cross-border trade already exists in the region
conducted outside of formal channels and government negotiations. For
the pastoralists who dominate the area's border regions, market
alternatives to unofficial cross-border trade are minimal at present. In
the Horn of Africa the pastoral nomadic groups of the borderlands are
weakly integrated with most areas of their countries and official
channels hardly provide adequate outlets for the sale of their livestock
and livestock products. The weak link also constrains the supply of food
crops from surplus grain areas to the deficit border zones; unofficial
cross-border trade has been filling the gap in this demand. In short,
cross-border trading is now a major economic activity in the area and
this trade is conducted without official policies and support.

For the most part governments appreciate only the undesirable
consequences of cross-border trade, so their normal response emphasizes
control measures to curb the commerce. However, the unofficial cross
border trade in the borderlands of the Horn of Africa plays vital roles
for people in the borderlands and beyond. These include, among others,
promoting regional integration for market creation and expansion,
maintaining peace and stability in the area, and enhancing food
security. Cross-border trade in the Horn of Africa has always assumed
considerable importance in the economies and societies of the region,
even when governments have attempted to discourage it. Incentives for
cross-border trade result from geographic, ethnic as well as production
and consumption characteristics that favor certain regions for
particular key commodities. Throughout the region social relations based
on clan affiliation, kinship, and friendship shape the existence of
cross-border trade in the Horn of Africa, and is facilitated in many
areas by the presence of similar ethnographic groups on both sides of
the border. These trade patterns are reinforced by unattractive, highly
regulated domestic prices that are lower than parallel market prices in
neighboring countries' markets. Thus, despite vigilant controls by the
governments in the Horn region to redirect commerce in the borderlands
to official channels, substantial unofficial exchange takes place in the
border areas.

This overview paper summarizes the results of a comparative research
program on Cross-Border Trade and Food Security in the Horn of Africa, a
joint collaborative effort between the US-based Broadening Access and
Strengthening Input Market Systems Collaborative Research Support
Program (BASIS-CRSP) and the Organization for Social Science Research in
Eastern and Southern Africa (OSSREA). The project was initiated in 1998
and is an interdisciplinary activity that involves US and African social
scientists. The full details on the research are contained in the
project's different reports (Little 2000, Teka et al 1999; and Teka and
Azeze 2001). While considerable anecdotal observations and descriptions
of cross-border trade in the region exist (see Gessesse 1996), this
project is the first systematic effort of its kind to document the
extent and nature of cross-border trade in the Horn of Africa.[^1] The
research focuses on four different border sites: (1) southern Ethiopia
borderlands with northern Kenya and southwestern Somalia, (2)
northeastern Kenya and southern Somalia border area, (3) Ethiopia and
Djibouti borderlands, and (4) eastern Ethiopia border zone with
Somaliland. While the information only covers these four border sites,
the results have general applicability to other border areas in the
Horn. Ethiopia assumed a central role in the study, because it shares
borders with virtually all the countries in the Horn.

International boundaries throughout the Horn of Africa have important
economic and ecological characteristics that generally distinguish the
region from other parts of Africa. Most of the borders are characterized
by arid and semi-arid environments and livestock-based economies and
trade in livestock and livestock products assume considerable
importance. The study's commodity focus, therefore, primarily is on
livestock and secondarily on selected grains (e.g., maize and sorghum).
As a commodity, livestock has features that make it amenable to
cross-border trade even in situations of widespread insecurity. It is a
mobile and high-value commodity that can be transported overland rather
than on roads, and can easily be moved across borders. As noted earlier,
it also is a commodity chain that at present really has no alternative
to unofficial channels, since holding and veterinary certification
facilities, transport infrastructure, and other necessary inputs for
international animal trade are not in place to allow for official
cross-border exports. In the case of the Ethiopia/Djibouti borderlands,
greater attention was given to official trade channels and to products
other than livestock---for example, coffee and chat and consumer
goods---because this border serves as Ethiopia's main official import
and export route and covers a range of different commodities. With the
loss of the use of the Assab port in Eritrea due to the conflict between
Ethiopia and Eritrea, much of Ethiopia's trade has been channeled
through the Djibouti port. This action has made trans-border trade in
that area very large and diverse, especially when compared to the other
border sites. Unlike the study's other three border sites, livestock and
its products (hides and skins) only rank third in importance as an
agricultural commodity in the Ethiopia and Djibouti cross-border trade.

The following questions motivated the comparative research program:

\(1\) what is the current extent of cross-border trade in the four
sites;

\(2\) what role (if any) does cross-border trade play in enhancing food
security and regional comparative advantage in the border sites;

\(3\) what are the informal and formal financial arrangements for
cross-border trade (especially in livestock) and in what ways does
cross-border trade generate capital for other activities;

\(4\) how do different actors (traders, middlemen, sellers) in the
marketing chain manage risks associated with imperfect information,
limited credit, unstable market and political conditions, and high and
volatile transport costs; in what ways do social/non-economic variables
(informal social networks, ethnicity, and other variables) help actors
cope with uncertainty and risk;

\(5\) what are the major policy and other constraints inhibiting
cross-border trade in the region?

To address these questions, the remainder of the report is divided into
three sections: (1) Methods and Data; (2) Summary of Key Research
Findings; and (3) Policy Implications. The paper is meant only to
summarize the main aspects of the study and readers are directed to the
project's research reports for greater detail and analyses. The report
hopes to invoke debate about the benefits and costs of cross-border
trade, what---if anything---should be done about cross-border trade, and
what the roles of different actors and agencies should be.

**METHODS AND DATA**

Research on cross-border trade in livestock and grain in the Horn of
Africa raise particularly thorny methodological issues. Most of the key
cross-border markets are located in dry regions, far from major urban
centers, dominated by mobile pastoral production systems, and, in most
cases, poorly served by transport and other infrastructure. These all
add to the costs of standard survey approaches and require
methodological innovations, such as key actor interviews, ethnography,
and rapid appraisal techniques. In addition, on-going conflicts and
random border closures in the region increase risks and uncertainties
for merchants, producers, and researchers alike, and these events
impacted the project. For example, in 1999 the Kenya/Somalia border was
closed by the Kenya government for more than four months and conflicts
in the region made data collection there very difficult. This closure
did not halt livestock trade but it did slow it down, as well as
increase transaction costs and risks for traders.

The lack of comparable data sets between and within countries for
analysis also raise questions about existing data sets and their utility
for the study. We initially hoped to conduct market integration analyses
across different border sets but found that data were constraining.
Different organizations often gather market data for different purposes;
use different market units for classifying livestock; and in some cases
utilize vastly different currency conversion rates. These limitations
meant that market integration analyses were limited to individual border
sites and were not conducted comparatively.

Data collection at each of the four sites was driven by a common set of
data requirements that include (see Annex 1):

\(a\) What is known about cross-border trade in the specified border
zone; and what are the general levels of trade (including migration of
labor) in the zone for grain and livestock? What has been the general
trend for the past 10 years?

\(b\) What sources of data (e.g., on-going studies, government records
from Customs Offices, etc.) exist that could be used in a study of
cross-border trade in the specific border zone?

\(c\) What are the infrastructure, policy, and other constraints that
inhibit cross-border trade in the region?

\(d\) Who are the major actors in cross-border trade in the region:
large-scale traders, small-scale traders, transporters, private firms,
parastatal/government agencies; how are they organized and what are the
major sources of risk they confront? How are the major actors
distinguished by origin/location of residence, ethnicity, and other
social variables?

As noted earlier, there were some differences in the four different
research sites. The eastern Ethiopia borderlands with Djibouti and
Somaliland showed considerably more complexity and diversity than the
other study sites in both official and unofficial trade. The direction
of trade there is structured in such a way that agricultural items are
exported from Ethiopia in return for used and new manufactured imports
from third countries. Because of such differences, data collection at
this site was slightly different than in the other sites, and fewer
livestock traders were interviewed while more use of official customs
records was made. In all of the border sites slight changes to a general
trader questionnaire had to be accommodated to account for local
differences.

Because traders assume such a critical role in the cross-border trade,
research design emphasized both structured and unstructured interviews
with samples of traders. This strategy was taken rather than monitor
particular marketplaces since much of the livestock trade at the lower
levels bypass market centers. Trader samples were constructed for each
site and stratified by scale of enterprise; location of activities; type
of trade; and so on, and they provide the bulk of the project's
information. In total more than 250 traders were administered a
structured questionnaire at the four sites, representing a range and
scale of different market activities in and near the border and at the
main terminal markets of the trade. For example, in looking at
Somalia/Kenya livestock trade it was important to conduct trader
interviews at the main the Nairobi and Mombassa markets. Moreover,
because of the volume and complexity of the Ethiopia/Djibouti border
site, it was necessary to define a very large border area that
encompassed production areas and markets at distances in excess of 150
km from the border.

In addition to trader surveys, additional information was obtained
through informal interviews with merchants and focused interviews with
key transporters, representatives of non-governmental organizations and
donor agencies, government officials, producers, veterinarians, and
other important actors in the border regions. Secondary data was
gathered from customs offices, ministry offices, development reports and
other unpublished materials. The linkages between cross-border trade and
production in key commodity (livestock and grain) production zones was
assessed through trader interviews and rapid rural appraisals of groups
of producers near selected borders. Because traders are greatly
concerned with the condition and prices of livestock and grain and
operate in market chains that often span several hundred kilometers,
they can relay important information about famine-prone and insecure
areas that may be difficult and risky to visit.

**SUMMARY OF MAJOR RESEARCH FINDINGS**

This section briefly summarizes the major findings of the comparative
research program. The full details of the study are contained in the
different research papers that are included in the bibliography to this
report.

**The Importance of Informal Finance Arrangements**

More than 95 percent of cross-border commerce is financed through the
trader's own resources or from funds obtained informally from kinsmen,
friends, and associates. Very few traders (less than 15 percent of the
total) have access to formal sources of finance. Without insurance,
written contracts, and official recognition, very few financial
institutions are willing to finance the activities of cross-border
trade. Availability of trader finance from the very few formal sector
banks branches in the area also is challenged in other aspects. One is
that because cross-border trade is not licensed, traders do not have the
legal bases required by formal financial institutions to enforce
contracts. Another is the limited distribution of financial institutions
in the area, which also constrains access regardless of the legal
aspects. The lack of finance is seen as constraining to the scale and
type of cross-border activity and probably results in some degree of
market exclusivity based on ethnicity, clan, and other social criteria.
With a need for finance, market information, and so on, traders rely on
members of their own ethnic groups and create pockets of ethnic-or
clan-based trading enterprises that can discourage others from entering
the business. Where \'trust\' relationships or social capital exists,
market transaction costs are reduced because informal credit and market
contracts are more easily extended without formal contracts or other
agreements (see Ensminger 1992:104-105).

Informal finance partly substitutes for the lack of capital market
access and as noted above trust-based relationships among livestock
traders facilitate access to informal credit. The common form of credit
available to livestock traders in the area is commodity credit with
implicit interest. In this case traders buy animals on credit from the
client and pay for them after the animals are sold. In this arrangement,
the opportunity cost of money is compensated and hence traders repay
their suppliers with some provision in return for the facility. Other
forms of credit are interest free cash loans from relatives and friends.
These loans provide more options to the trader but they are rarely
available.

In the case of the Somalia border areas informal finance minimizes the
risks associated with carrying large amounts of cash in an unstable
environment. While much of the current livestock trade is calculated in
Somali shillings (SoSh) and final payments are in SoSh, actual cash
transfers are minimal at the upper ends of the market. Credit in this
trade is mediated through informal money houses, wire transfers, and
middlemen, and assumes special importance in most forms of long-distance
trade, including livestock-based. Many of these facilities are based in
Nairobi and informal bankers will charge fees of 4-6 percent to 'wire'
transfer funds from Kenya to a location in Somalia.

Thus, cross-border trade often entails elaborate informal financial and
credit arrangements that, in turn, generate significant capital for
local investment. This is especially the case for cross-border trade in
livestock, which often is the major asset and store of capital in these
areas. Our observations also indicate that informal financial
arrangements associated with cross-border trade are far more complex
than originally envisioned. They entail issues of foreign exchange
arbitrage; informal \'letters of credit\' and wire transfers; use of
revenues from livestock trade to cross-finance a range of imports, food
and non-food; sophisticated market information and clientage
relationships; and a variety of different social mechanisms to reduce
transaction costs. We also were able to assess the important role of
cross-border financing (i.e., using revenues from livestock trade to
finance grain imports) and its general impact on food security in the
region. In each site it was possible to assess the important role of
cross-border financing (i.e., using revenues from livestock trade to
finance grain imports) and its general impact on food security in the
region (see discussion later in the report).

**The Use of Multiple Currencies**

Six legal tenders, namely the US dollar, Ethiopian Birr, the Kenyan
Shilling, the Somaliland shilling, and the Somali Shilling, are used in
the different border markets. Even in the case of the Somalia
borderlands local currencies are used even without a central bank or
treasury to support the money. Indeed, in eastern Ethiopia the Somali
shilling was the most preferred currency in the unofficial trade. One of
the reasons for the widespread reliance on the Somali shilling is that
some items imported from other countries in Asia are cheaper in Somalia
than in Kenya and Ethiopia. This explains why traders who sell in the
northeastern part of Kenyan markets, such as Mandera, exchange the
Kenyan Shilling, received from livestock sales, for the Somali Shilling.
Not all of the Somali Shillings are spent for this purpose, however.
Part of them are used to buy some items in Ethiopia, since this currency
is used in many areas of the Ethiopian Somali Region.

There exists considerable social and economic variation between
cross-border sites, depending on the nature of currency exchanges in the
area (i.e., in the Kenya/Somalia trade traders are likely to earn as
much from foreign exchange arbitrage as from commodity trade), the
volatility of the situation along the border (i.e., some traders avoid
carrying large sums of money but instead use networks of informal
banking and currency transfers), and other finance-related factors.
Transactions along the Ethiopia border areas, for example, are affected
by different forms and currencies. The relationship between the
Ethiopian Birr to the Djibouti Franc along the Ethiopia-Djibouti border
and its relationship with the Somali Shillings along the
Ethiopia-Somalia border is impacted by the merchandise trade balance in
the unofficial channel. When more items are smuggled out of Ethiopia,
the Ethiopian Birr tends to appreciate and vice versa vis-à-vis the
other currencies. Such exchange rate variations have implications for
resource transfers across different currency holders.

A final note about the financial aspects of cross-border trade. It is
curious that the frequency of barter trade in the border regions is so
low, especially in the case of the Somali borderlands where the currency
is not backed up by a government treasury and currency notes are in poor
condition. The practice of barter has been more common in Somaliland
where the currency was less stable during the mid-1990s. In southern
Somalia, however, the shilling has been relatively stable since 1995,
and has been used in most local exchanges. Yet the stability of the
currency is now threatened by a recent 'printing' of new Somali currency
notes by a faction leader, which has already resulted in an approximate
20 percent devaluation since the beginning of the 2001. Based on trader
interviews at other border sites, instances of barter often are found in
combination with cash. Out of the total number of traders interviewed in
the border markets of southern Ethiopia , only 23 percent of them told
us they received payments in foodstuffs as well as money.

**Social and Wealth Differentiation among Traders**

In each of the border sites, similar ethnic groups are found on both
sides of the border. This facilitates cross-border trade and channels
the trade through certain centers and merchants. For example, in the
northeastern Kenya/southern Somalia border Somali pastoralists are found
on both sides, but there are marked differences in clan composition that
influence the nature of cross-border trade (Little 1996a).

The boom in cross-border trade also encouraged a relatively large
percentage of traders (more than 50 percent of the total) to start their
businesses during the past 5-8 years. The growth in the cross-border
trade, coupled with the lack of viable alternative employment options in
the region, accounts for recent increases in the number of cattle
traders. Many traders are young (less than 40 years old), which implies
that difficulties and hardships in cross-border livestock trade are
considerable.

Another important socioeconomic characteristic of traders is their
engagement in multiple activities. Trader interviews in the border
markets indicated that almost all traders are engaged in activities
other than livestock trade. However, the activities identified are few
and mainly limited to farming and small-scale business. Activities
include animal husbandry, crop farming, grain trade, and retailing of
manufactured items and other items. Diversification by traders is
pursued because of the risks and seasonal nature of cross border trade.
The risk emanates from unpredictable drops in demand for livestock due
to bans by importers and governments, theft, drought, and animal
diseases. Another reason for diversification is that most traders do not
deal with a sufficient sales volume to allow for full time
specialization in commerce. In general, the livestock trade suffers from
several constraints that result in irregular income flows.
Diversification allows traders to smooth consumption over time and
compensate for seasonal short falls in income.

**Who Benefits?**

There is considerable differentiation among cross border traders, with
about 20 percent of traders accounting for more than 60 percent of
market transactions and 50 percent dealing with less than 15 percent of
the trade. The high standard deviation and range in volume of sales in
the trader samples support this pattern of inequity. For instance, in
the Kenya/southern Somalia sites where cattle trade dominates 50 percent
of traders sell less than 200 cattle per year and 35 percent sold less
than 100 cattle (Table 1). By contrast a small minority (13 percent in
1998) had annual sales in excess of 1,200 animals. A similar trend is
also observed in small stocks and camels where a few traders have annual
sales three to four times higher than other merchants.

**\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_**

**Table 1. Annual Sales of Cattle by Traders, Somalia/Kenya Border**

[Range of Annual Sales]{.underline} Percentage of Total:

[1996]{.underline} [1998]{.underline}

1 to 300 17 34

301 to 600 18 26

601 to 900 20 5

901 to 1200 28 22

1200+ [17]{.underline} [13]{.underline}

TOTAL 100 100

Average Sales (Mean): 943 855

Standard Deviation: 760 883

**Note**: Based on Little (2000); n=94 traders.

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

It is possible to calculate the costs and returns to traders at
different levels in the market chain, and to determine where revenues
are accrued. Table 2 uses the most common cross-border market route,
Afmadow-Liboi-Garissa-Nairobi, for the Somalia/Kenya trade and the most
common trade animal, quality cattle-2, to calculate trader margins. As
would be expected, the highest risks in the cattle trade involve the
initial purchase and transport of the animal. The table presupposes that
three different purchase transactions take place: (1) the purchase at
Afmadow, (2) the reselling at Garissa, and (3) the final sale at
Nairobi. It also assumes that two traders are involved. When two traders
(Trader 1 and 2 in Table 2) are involved in the market chain, then the
net return for the trader who buys directly from Somalia and sells at
Garissa is 15 percent. The return on investment is 16 percent for the
trader (Trader 2) who purchases at Garissa and then resells in
Nairobi---the high cost of transport between Garissa and Nairobi (about
12 percent of the purchase price) accounts for much of Trader 2's costs.
As Table 2 shows, however, if Trader 2 purchases an animal directly from
a middleman based in Somalia rather than at the Garissa market, which
some traders do, then the net return per animal can be as high as 31
percent. Once again, while the risks can be high in some years (1997 and
1999), the returns in the cross-border trade also are very high---well
above profits in other types of livestock and agricultural trade (see
Little 1996b; and Little and Dolan, 1994).

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

## 

## **Table 2. Trader Returns in the Somalia/Kenya Cross-Border Trade, 1998-1999**

Amount US\$ % Net Return

  --------------------------------------------- ----------- -------------
  ITEM                                          Per cattle  

  Initial Purchase Price, Afmadow               128.00      

  Transport cost (Afmadow-Garissa)              3.00        

  Hired Herd Labor                              1.60        

  Security/Transit Fees                         0.40        

  Water (50 days @ .08)                         4.00        

  Medicine/dips                                 1.82        

  Fodder (Garissa market) (dry sea. only)       0.60        

  Risk from loss (theft, drought, etc.) (6%)    7.68        

  Broker Fee (Afmadow)                          1.25        

  Broker Fee (Garissa)                          1.67        

  Council Tax (Kenya)                           1.33        

  Currency transaction/conversion fees          5.28        

  Trader 1 Costs                                156.63      

  Sale Price, Garissa                           176.00      

  TRADER 1 RETURN                                           15%

  Transport Cost (Garissa-Nairobi)              20.15       

  Movement Permit/Fees                          1.33        

  Hired Labor                                   0.33        

  Security                                      0.33        

  Water                                         1.00        

  Fodder (Garissa and Nairobi)                  0.60        

  Market/Municipal Tax---Nairobi                1.33        

  Broker Fee (Garissa)                          1.67        

  Broker Fee (Nairobi)                          2.50        

  Trader 2 Costs                                204.91      

  Sale Price, Nairobi                           233.00      

  TRADER 2/MIDDLEMAN RETURN                                 16%

  GROSS DIFFERENCE BETWEEN ORIGINAL PURCHASE    105 (82%)   
  AND FINAL PRICE                                           

  TRADER RETURN IF ONE TRADER ONLY AND                      31%
  PURCHASES FROM SOMALIA AND SELLS IN NAIROBI               
  --------------------------------------------- ----------- -------------

Source: Based on interviews with 84 traders.

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A similar calculation can be made from the data along the southern
Ethiopia borderlands, which again show that most benefits accrue to
traders at the upper end of the market chain. Table 3 shows that, half
of the value added for the livestock destined from southern Ethiopia to
the Nairobi market is retained by Kenyan traders at the upper end of the
market. Percentage shares of income by different agents are computed
according to trader\'s gross income and profit distribution by Ethiopian
and Kenyan livestock traders. The table shows that 84 and 87 percent of
the Moyale-Kenya price for cattle bought at markets in Negelle and
Dubluk, Ethiopia, respectively, accrue to Ethiopian small-scale traders.
The share decreases by 100 percent when the Nairobi price is considered.
The disparity increases even more when a profit comparison is made. The
net profits made by Ethiopian traders at Moyale is only about 12 percent
of the profits made by Kenyan and few other Ethiopian traders who sell
in Nairobi.

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**Table 3. Distribution of Gross Income and Profit from sale of first
quality cattle (bullock) as Percent of Gross Income and Profit from
Moyale and Nairobi.**

  -------------------------------- ------------------------- ------------
                                   As % of Moyale, Kenya     As % of
                                   price                     Nairobi
                                                             price

  Seller at Negelle (Eth) Gross    84                        44
  Income                                                     

  Seller at Dubluk (Eth) Gross     87                        45
  Income                                                     

  Negelle Bullock sold at Moyale   \-                        12
  Profit                                                     

  Dubluk Bullock sold at Moyale    \-                        9
  Profit                                                     
  -------------------------------- ------------------------- ------------

Source: Teka et al. 1999.

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If traders' returns in the cross-border trader can be relatively high,
then what benefits accrue to the herders themselves, those producers at
the end of the market chain who supply the commodity. After all, they
are the individuals who most directly confront the vagaries of climate
and insecurity and make the tough decisions about herd care and
movements. Since there is no production cost data to utilize, the best
means of calculating the extent to which herders have---or have
not---captured the benefits of increased cross-border trade is to look
at their shares of prices in the different markets and for different
types of animals. This measurement is crude and does not actually deal
with net returns, as the trader data in Table 2 do, but it provides a
general indicator of how much revenue the herder is receiving from
trade.

In terms of the herder's share of the final price (Nairobi sale price)
in the Somalia cross border trade, it is about 46 percent or less than
half of the final price in the market chain. Thus, benefits from the
growth in cross-border trade have been captured more by livestock
traders than herders, the latter who accrue most of the risks in
insuring a healthy animal is produced. Of the \$10+ million in cattle
trade generated at Garissa, Kenya, Somali herders are receiving no more
than 60 to 70 percent of that revenue. Yet, as indicated earlier,
without the growth in this commerce the prices that herders received for
their commodities would have been considerably lower than this.

Due to the generally positive relationship between producers' incomes
and wider and more efficient markets, pastoralists in the area clearly
benefit from cross-border trade. The trade enhances food security
through increased prices of livestock and availability of grain, and
hence enhances the income of pastoralists. However, the location of
herders at the bottom of the market chain means that they accrue fewer
benefits than traders.

**Gender Dimensions**

In terms of the gender dimension of the market, it is clear that women
have reaped very few direct benefits from the growing cross-border trade
in animals. Indirectly they probably have benefited from increased
purchases of foodstuffs from the sales of livestock, in cases where
members of their family are involved in the trade. Women are rarely
involved with the cattle trade and the kind of petty trade---for
example, milk\--that they control does not involve trans-border
exchanges. Even for related activities\--butcheries, transporters, and
brokers\--very few women participate in the cattle business. In fact,
while the data are not available it is likely that the increased trade
in livestock could actually compete with their own income-earning
activities, such as milk trading and production. If male herders are
selling animals, such as cows, to take advantage of cross-border
opportunities, then it is likely their market transactions are having a
negative impact on women's income activities.

However, where considerable petty trade exists, such as along the
Ethiopia/Djibouti border, benefits for women can be significant. Along
this border petty traders are generally poor women based in Dire Dawa,
Shinnile and Melka Jebdu, Ethiopia, who do not have any other
alternative source of living. These market places have been the major
unofficial trade sites and account for large numbers of women traders
who move small amounts of foods to Djibouti.

In sum, those large-scale male cattle traders based in Nairobi, who also
own transport, earn the highest returns in the market chain, and claim
that they earn as much from transporting animals as they do from selling
them. These wealthy individuals, who own trucks and who have the option
of buying animals directly from the border, are the major winners in
this trade. And they also are the ones who are most likely to retain and
invest their profits outside the border region.

**Non-Livestock Investments**

Cross-border trade in the border region spurs other commerce and
business activities as well. In the Kenya/Somalia borderlands the
revenues associated with the cross-border trade were invested in
businesses in Garissa. Based on available census figures for Garissa
town and its surrounding area (a population of 42,789 in 1995, Kenya
1995:18), the per capita value of cattle trade in Garissa is about \$240
in 1998 while it was \$275 in 1997. Not surprisingly the amount of
commercial activity in Garissa town has grown considerably since 1991,
due largely to the growth in cross-border trade and the exodus of
traders from Somalia. In the town the growth in small self-employed
businesses (i.e., trading enterprises) grew much faster than any other
economic sector in the district (ibid:49). From 1989 to 1996 urban
self-employed commercial operators and employees increased from 5,723 to
8,428 and the bulk of this growth was in Garissa town (op cit). Probably
an additional 30 to 40 of petty traders and hawkers are not captured in
these official figures. The genealogies of the town's businesses often
share a common heritage: owners frequently started in a
livestock-related business like trading, and then used the profits to
invest in other activities.

The movement of traders from southern Somalia to Garissa has facilitated
cross-border trade, because these merchants often maintained their
linkages to suppliers in Somalia. Not only cattle, but food aid
(especially cooking oil and wheat), pasta, and electronics from the
other side of the border found their way into Garissa's retail sector.
During the occasional border closures of the late 1990s, merchants made
it very clear to us that their businesses were strongly dependent on
trans-border trade with stateless Somalia.

**Market Structures and Costs**

With the exception of the Ethiopia/Djibouti border, official
cross-border trade in the region is minimal. Official trade between
African countries is very low generally, including within the Horn.
African countries, for example, contribute very little to Ethiopia\'s
official trade, except with a few neighboring countries: Djibouti,
Kenya, and Somalia. Table 4 shows that the official share of imports
from neighboring countries never exceeded 8.3 percent for Ethiopia. The
contribution of official exports from Ethiopia to Somalia and Djibouti
assumes importance, because of the importance of Chat in the country\'s
export trade. This Ethiopian-grown natural stimulant is exported only to
Djibouti and Somalia (Table 5). Djibouti, in turn, primarily sells port
services to Ethiopia and it is the service industry in Djibouti, which
is strongly linked to the

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Table 4. Direction of Official External Merchandise Trade of Ethiopia
(in Share of Trade Partners)

<table>
<colgroup>
<col style="width: 18%" />
<col style="width: 6%" />
<col style="width: 6%" />
<col style="width: 6%" />
<col style="width: 6%" />
<col style="width: 6%" />
<col style="width: 6%" />
<col style="width: 6%" />
<col style="width: 6%" />
<col style="width: 6%" />
<col style="width: 6%" />
<col style="width: 6%" />
<col style="width: 6%" />
</colgroup>
<tbody>
<tr class="odd">
<td>Trading Partners</td>
<td>83/84</td>
<td>84/85</td>
<td>85/86</td>
<td>86/87</td>
<td>87/88</td>
<td>88/89</td>
<td>89/90</td>
<td>90/91</td>
<td>91/92</td>
<td>92/93</td>
<td>93/94</td>
<td>94/95</td>
</tr>
<tr class="even">
<td>Africa</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td><blockquote>
<p>Imports</p>
</blockquote></td>
<td>1.0</td>
<td>0.6</td>
<td>0.8</td>
<td>1.7</td>
<td>2.0</td>
<td>2.1</td>
<td>3.5</td>
<td>3.7</td>
<td>6.0</td>
<td>7.9</td>
<td>8.3</td>
<td>5.8</td>
</tr>
<tr class="even">
<td><blockquote>
<p>Exports</p>
</blockquote></td>
<td>6.9</td>
<td>7.8</td>
<td>4.4</td>
<td>7.9</td>
<td>7.0</td>
<td>3.9</td>
<td>9.3</td>
<td>11.1</td>
<td>3.2</td>
<td>8.9</td>
<td>12.4</td>
<td>7.3</td>
</tr>
<tr class="odd">
<td>West Europe, Middle East and USA</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td><blockquote>
<p>Imports</p>
</blockquote></td>
<td>74.1</td>
<td>76.1</td>
<td>76.8</td>
<td>77.5</td>
<td>74.6</td>
<td>75.0</td>
<td>69.4</td>
<td>70.4</td>
<td>34.7</td>
<td>65.7</td>
<td>64.4</td>
<td>68.2</td>
</tr>
<tr class="odd">
<td><blockquote>
<p>Exports</p>
</blockquote></td>
<td>70.4</td>
<td>73.9</td>
<td>83.9</td>
<td>72.4</td>
<td>80.1</td>
<td>81.8</td>
<td>80.4</td>
<td>83.5</td>
<td>89.5</td>
<td>80.0</td>
<td>60.4</td>
<td>73.4</td>
</tr>
<tr class="even">
<td>Others</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td><blockquote>
<p>Imports</p>
</blockquote></td>
<td>24.9</td>
<td>23.3</td>
<td>22.4</td>
<td>20.8</td>
<td>23.4</td>
<td>22.9</td>
<td>27.1</td>
<td>25.9</td>
<td>59.3</td>
<td>26.4</td>
<td>27.3</td>
<td>26</td>
</tr>
<tr class="even">
<td><blockquote>
<p>Exports</p>
</blockquote></td>
<td>22.7</td>
<td>18.3</td>
<td>11.7</td>
<td>19.7</td>
<td>12.9</td>
<td>14.3</td>
<td>10.3</td>
<td>5.4</td>
<td>7.3</td>
<td>11.1</td>
<td>27.2</td>
<td>19.3</td>
</tr>
</tbody>
</table>

Source: MEDAC, 2000.

Table 5 Ethiopia\'s Export to Djibouti and Somalia

  -------------- ------------ ------------- ------------ ------------- ------------ ------------- ------------ -------------
                 1996         1996          1997                       1998                       1999         

                 Qty (kg)     Value (Birr)  Qty (kg)     Value (Birr)  Qty (kg)     Value (Birr)  Qty (kg)     Value (Birr)

  **Djibouti**                                                                                                 

  Chat           4,189,522    178,785,397   5,774,777    258,025,682   6,187,307    291,543,492   4,888,502    229,871,863

  Fruits and     22,601,636   17,750,781    25,250,576   37,509,303    23,781,953   37,568,997    23,038,099   41,476,266
  Vegetables                                                                                                   

  Others\*       341,686      534,134       711,596      1,528,899     1,413,062    2,655,648     2,435,045    4,515,841

  **Somalia**                                                                                                  

  Chat\*\*                                                             2,686,809    66,651,723    9,883,743    249,751,236

  Haricot Beans                                                                                                

  Cement                                                                                                       
  -------------- ------------ ------------- ------------ ------------- ------------ ------------- ------------ -------------

\*Others include cereals and pulses, animal feed, beef, hens and eggs,
\* \*Export since the second half of 1998

Source: National Bank of Ethiopia, Dire Dawa

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

performance of Ethiopia's external trade. Officially imported food items
to Ethiopia through Djibouti and Somalia include rice, sugar, wheat
flour, milk powder, edible oil, spaghetti and macaroni. They are
primarily destined to markets in eastern Ethiopia.

Somaliland is now the largest importer of Ethiopia's second largest
export, *Chat*. The official export of this item to Somaliland started
in the second half of 1998. During this period more than half million
kgs of *Chat* was exported per month. The amount doubled in 1999 and
hence about one million kgs of *Chat* was exported per month. The amount
is almost 200 percent higher than the export to Djibouti during the same
period. According to the country's national bank (Dire Dawa Branch)
data, Ethiopia had also exported modest amounts of cement and haricot
beans in 1996 (Table 5). The situation implies a current tendency for
some products to shift from unofficial to official or legal trade. The
current expansion of trade infrastructure in the area would intensify
the official cross-border trade.

On the unofficial side, used clothes, commonly referred as *Bonda* by
local people, are one of the most important cross-border trade items in
eastern Ethiopia . In terms of their coverage, the clothes reach markets
throughout the entire nation. All categories of clothes are included but
shirts and coats for adult men and women dresses are the dominant types.
In most cases the origin of the used clothes is Europe and North
America. For example, during field visits in eastern Ethiopia, used
cloth traders at Melka Jebdu, Dire Dawa and Gedamaitu, Afar, identify a
pack of coats for adult men as Italian, German, French, or USA origin.
The used clothes cross the borders from Somaliland and Djibouti to
eastern Ethiopa.

Unofficial imports of new manufactured products to Ethiopia include
clothes and shoes, textiles and fabrics, electronics, household
utensils, pharmaceuticals, cosmetics and detergents. Similar to the used
clothes trade, these items reach urban throughout the country. From
Middle East and Asian countries, these items are unloaded from ships in
Somali ports. Trucks from Somaliland (Hargiessa and Berbera) move them
to the border towns of Ethiopia.

In terms of livestock trade in the study region, it is mainly affected
by the significance of two important external markets. In the southern
border areas of our study region it is the importance of the Nairobi
market. Cattle prices in Kenya tend to be on average 20 to 25 percent
higher than in neighboring countries, which explains why cross-border
cattle trade, including from Tanzania is mainly unidirectional: that is,
from neighboring countries to Kenya. In the early 1990s Kenya
liberalized its meat trade and numerous small-scale slaughter facilities
emerged. It is estimated that Nairobi purchases[^2] about 400,000 cattle
annually (1999), with about 360,000 for slaughter and 40,000 for
restocking or fattening on nearby commercial ranches. Of the total
number, Somalia supplies approximately 65,000 (16 percent) and Ethiopia
supplies about 30,000 (8 percent) animals.

The spectacular 'boom' in cross-border livestock trade is reflected in
the findings of trader interviews. In the case of the Somalia/Kenya
border site, the aggregate value of cattle sales in Garissa, Kenya has
grown by an astounding 400 percent since 1991 and 600 percent since
1989. In terms of volume, sales rapidly grew from 24,395 in 1989 to more
than 100,000 cattle in 1998. Excluding Somali cattle that may enter
Kenya through Hulugho (about 120 km southeast of Garissa) or along the
Kenya coast, about 65,000 cattle from Somalia are marketed annually in
Kenya and about 75 percent of them end up at the terminal market of
Nairobi. Kenyan traders acknowledge that this dramatic increase results
from the spectacular growth in cross-border imports from Somalia. In
most years they account for about 65 percent of Garissa's cattle sales,
but the trade is seasonal because of water and pasture shortages along
trekking routes.[^3] In 1998 Garissa market accounted for 659,880,500
Kenya Shillings or US \$11,783,580 in cattle sales alone. These amounts
of annual revenue in compare favorably with some of Kenya's major coffee
and cash crop-producing districts, a phenomenon that is rarely
acknowledged in Kenya's official economic reports.

In the northern borderland sites the export trade to the Middle East,
especially to Saudi Arabia, mainly determines livestock marketing
patterns. Prior to the recent ban on live animal exports due to Rift
Valley Fever (RVF), an estimated 50-60 percent of the 2 million+ live
animals exported from Berbera, Somaliland and Bosaso, Puntland,
originated from across the border in eastern Ethiopia. A modest estimate
would be that this trade generates about \$25 million for the economy of
eastern Ethiopia.

**Trade Channels**

The number of actors involved in the livestock trade increases at higher
levels suggesting various labor and capital contracts. In the
cross-border livestock trade between Ethiopia and Kenya, there are a
maximum of three ownership changes before the border is crossed (see
Figure 1). These transactions are from the herder to the first trader,
usually in primary and bush markets, and then from the first to a second
trader at secondary markets. Once the Somali and the Kenyan markets are
reached, the

+-----------------------------------------------------------------------+
| Herders                                                               |
|                                                                       |
| Broker                                                                |
|                                                                       |
| Bush & Primary Markets (First Trader)                                 |
|                                                                       |
| Water (community)                                                     |
|                                                                       |
| Feed (community)                                                      |
|                                                                       |
| Broker                                                                |
|                                                                       |
| Secondary Market                                                      |
|                                                                       |
| (Second Trader and few consumers)                                     |
|                                                                       |
| Water Supplier                                                        |
|                                                                       |
| Feed Supplier                                                         |
|                                                                       |
| Transporter (trekking)                                                |
|                                                                       |
| Broker                                                                |
|                                                                       |
| Markets in Kenya and Somalia                                          |
|                                                                       |
| (Traders to central markets for consumption and re-export by other    |
| traders and consumers in border areas of Kenya and Somalia)           |
|                                                                       |
| **Figure-1. Cross-border Livestock Marketing Channel from Southern    |
| Rangelands of Ethiopia to the Neighboring countries (Kenya and        |
| Somalia) (Teka et al 1999)**                                          |
+-----------------------------------------------------------------------+
|                                                                       |
+-----------------------------------------------------------------------+

involvement of Ethiopian traders drops substantially. The marketing
channel, on the other hand, becomes more complex on the Kenyan side as
different agents such as exporters, importers, consumers, and
large-scale transporters become involved.

**The Importance of Transport**

Transportation is the most important element of marketing costs in
cross-border trade. The elements of transaction costs, including those
for transport, vary depending on the type of good transacted and
transported. In the specific case of cross-border livestock trade, a
trader incurs costs on market information, transport, feed and water,
loses due to animal disease or theft, and market fees by the government
at various sites. Most of these costs were incurred by livestock traders
interviewed at border markets. For many of the key market routes
movement costs for animals rarely exceed US\$0.18/kilometer per animal
and trekking costs are relatively well integrated across different
border sites.

Poor transport infrastructure in border areas is a major constraint to
efficient trade among countries in the region. Transport-related
expenses for the livestock trader are not only cash payments by the
trader to drovers and water and feed suppliers, but also quality
deterioration of animals due to live weight loss as a result of long
distance trekking. Livestock transportation from southern Ethiopia to
domestic markets and external markets, such as Kenya and Somalia, is
undertaken by trekking. Motorized transportation is limited and is
restricted within the range of official channels. These include from
border markets of Kenya to Nairobi and from border markets of Ethiopia
to central markets like Nazareth and Addis Ababa.

Traders incur various costs related to transport in the cross-border
livestock business. They must pay off a range of different actors,
including middlemen and trekkers, and cover the expenses of different
services provided en route, such as veterinary and water. The higher up
in the market chain the merchant works, the greater the transport costs
s/he incurs. Large-scale traders can absorb these unanticipated loses
and invoke strategies to shift these costs on to actors lower down in
the market chain. They often do this by delaying payments to smaller
traders and middlemen.

**The Importance of Veterinary Services**

Veterinary services for animals crossing the border are not available by
official means, but in the case of Kenya they are available once they
have crossed the border. In Kenya animals are required to be inspected
prior to movement to domestic markets. Most of the time, however,
livestock traders themselves treat common animal diseases using
veterinary drugs bought in Kenyan border towns. Out of a total of 100
livestock traders interviewed in the Ethiopian border catchment 89
percent incurred some costs for veterinary services. About 55 percent of
traders paid less than 500 Birr (about US \$55), which is about half of
the price of one first quality cattle at Moyale, Kenya.

While traders do not frequently complain about shortages of veterinary
drugs, they do lament their high costs and in the case of the Somalia
border areas they use them less frequently than during the 1980s. In
1998 about 75 percent of Somalia traders purchased veterinary drugs, a
rate that is below 1987-1988 when more than 90 percent of traders bought
veterinary drugs for their herds (Little 2000). While it is unclear if
the decreased use of veterinary inputs is due to the unavailability of
drugs or to recent price increases or to both,[^4] the result is that
animal health problems have increased in the region. Without a
government there is little public context for organized animal
vaccination campaigns and those NGOs that have tried to implement them
have been able to provide only partial coverage due to insecurity and
major logistical problems. There is concern in the region that an
outbreak of a highly contagious and dangerous livestock disease would be
difficult to contain, particularly its spread across the Kenya border.
In short, the lack of public institutions for implementing animal
vaccination campaigns is a casualty of the Somalia war that could
eventually jeopardize the country's dynamic pastoral sector. The current
import ban by Saudi Arabia on Somali livestock has raised public
awareness of the importance of functioning veterinary institutions and
services.

## 

**Market Volatility and Risk**

Coefficients of variation were calculated for different types of
livestock in different border markets . The coefficients of variation
for the eastern Ethiopia border market of Jijiga show that sheep and
goat prices are more volatile in markets located near the border, than
in those of the interior. The border markets are supplied by feeder
markets found inside the domestic territory. The values also suggest
that price risks (and potential benefits) faced by different market
agents vary by market type. In this regard, pastoralists and small
traders tend to face lower risks but get lower prices because they
concentrate equally on domestic and export (cross-border) trade. On the
other hand, larger traders who sell at higher prices face higher risk of
price variation because they concentrate almost exclusively on the
export/border markets. In short, border markets are more lucrative than
interior/domestic markets but also experience greater volatility and
risk, as the recent ban by Saudi Arabian has so dramatically
demonstrated.

It is important to acknowledge that wide variations in prices can occur
within only a few days if a conflict erupts. Data on price patterns for
livestock and non-livestock goods at the Bulla Hawo, Somalia border
market indicate wide variability in prices for non-livestock goods and
livestock. While both types of commodities show volatility, the swings
are greater for non-livestock goods; for example, the price of imported
wheat flour more than doubled in some months during 1998. What is
interesting to note about this border market is that the livestock
commodity produced mainly for the local market (goats) shows the least
price volatility, especially when compared with imported rice, imported
pasta, and imported wheat flour. A similar pattern also was found for
the eastern Ethiopia borderlands. The discrepancies between livestock
and non-livestock products are even greater in high conflict areas, like
Baidoa and Dinsoor, where food prices can increase 300 percent in months
when transport and trade is disrupted.

Market risks are associated with conflict and political instability. For
example, cattle prices in insecure border areas of southern Sudan are
very low compared to other border markets in the region, and account for
less than 25 percent of the selling price in Nairobi (see Guvele and
Lautze nd). The politics and prolonged fighting around Kismayo, Somalia
town also discourages market integration with other border markets in
the region and has kept prices there very low. Traders throughout the
study region incur high risks of livestock losses from banditry and
avoid certain volatile areas, such as Kismayo (Somalia). The rapid
growth in cross-border cattle trade from southern Somalia to Kenya is a
result of the war that has forced local Somalia traders and herders to
seek markets in Kenya.

Poor access to market information also is major risk associated with
cross-border trade. As we will discuss later, prices are poorly
integrated in most border areas, and traders rely on informal means of
obtaining market information. Official information about prices of
different types of livestock is virtually non-existent. [^5] This
complicates the market search by individual traders and herders. Market
search by pastoralists (primary suppliers) and traders involves
negotiations and is, in most cases, facilitated by brokers locally known
as *dilaal*. The broker's role is to match the buyer with a seller and
to insure the legitimacy of the sale, in some cases by insuring that the
animals are not stolen. Not all traders use brokers to address
information constraints, but instead they may rely on their own
middlemen or other contacts to find buyers. In the Nairobi marketplace,
for example, Somali traders almost always deal with Somali rather than
non-Somali brokers.

**Lack of Spatial Market Integration**

The results of the market integration tests show that with the exception
of the eastern Ethiopian border area livestock prices are not integrated
spatially. For example, the positive association between the border
markets of Ethiopia and Kenya is not supported at conventional levels
(p‹0.05). Moreover, the standard deviations of the price differentials
are very high and correlation results on first differences are very low.
Similar computations for small stock (male goat) in the same border
revealed no relationship suggesting that the prices do not co-vary in
border markets (also see Barrett et al. 1998).

The results of correlation analyses generally suggest that the southern
Ethiopia border markets during the period July1997-March 1998 were not
contagious. Price volatility measured for different types of livestock
in the three Ethiopian markets (Moyale, Dubluk and Negelle) also
supports the absence of stable spatial relationships. The coefficient of
variation was high and different for the same type of livestock in
different markets. The implication of the absence of spatial integration
is that any intervention in one market or area will not induce
significant changes in other markets. For instance, improvements in
livestock price in neighboring countries may not be disseminated to
supply markets in the southern rangelands of Ethiopia.

In the eastern Ethiopia border area, however, regression results show
that there exists some spatial integration between livestock market
centers at a statistically significant level. Hence feeder market prices
respond, but weakly, to past price differentials and to price changes in
different, nearby border markets. Accordingly, in contrast to other
border areas in the study region market segmentation as a constraint can
be rejected in eastern Ethiopia. However, a complete analysis of spatial
market integration needs to investigate the relationship between
Ethiopia's domestic border prices and prices in Hargessa and Berbera,
Somaliland. Because of incompatibility between existing data sets this
type of analysis is not feasible at present.

**Food Security**

Because most herders in the region finance food purchases through the
sale of livestock, any downward trends in cross-border commerce and
prices will have a negative effect on pastoral food security.
Cross-border trade networks affect the food security situation in the
border areas in one or more of the following ways. First, cross-border
trade broadens available market options for commodities produced in the
area and pastoralists benefit from increased demand for their animals.
Secondly, people in the area consume food items produced elsewhere and
imported across the border that could not be supplied officially or
cheaply from domestic markets. For instance, rice, wheat flour, pasta,
vegetable oil, and sugar are major food items imported across the
Djibouti and Somaliland borders and sold in many places of the eastern
Ethiopia. Similar items produced domestically often are unavailable
and/or more expensive than their imported substitutes. Thirdly,
cross-border trade widens non-pastoral employment opportunities in zones
of chronically high unemployment. The absence of alternative employment
in the border areas compel many people to engage in cross-border
trading, in order to earn income to purchase food

.

A critical indicator to examine for food security in the border areas is
the terms-of-trade between what herders receive for their products
(livestock) and what they must pay to purchase needed grains (for
example, maize flour and sorghum). Marketing patterns and incomes from
livestock trade provide good indications of the conditions of the
pastoral sector and of local food security. Real income to the
pastoralists is a function of their sales (livestock) and their major
purchases (grain). Livestock marketing is critical for understanding
food security in these areas because it is the main source of income to
subsidize grain consumption. Not surprisingly, combined purchases of
maize grain and flour account for the largest expenditure item for
herders in the region.

It should be noted that livestock prices show strong seasonal variations
and fluctuate by as much as 50 to 60 percent during any single year.
Nonetheless, based on available data livestock prices in the border
region show considerably less volatility than prices for grains and
cereal products, which for most Somalia border markets are imported from
outside. As noted earlier, the Somalia border areas are major
grain-deficit zones. Prices for imported wheat flour and rice can vary
by as much as 250 percent in only a few months in high-risk Somalia
markets, like Kismayo or Dinsoor. Unlike the livestock trade that often
avoids roads and major markets, food trade can be easily disrupted by
road blockades, looting, and armed conflict.

Throughout the study region the terms-of-trade for herders has
deteriorated, as increases in grain prices have generally outpaced
livestock prices. For instance, in three selected markets of the Afar
region near the Djibouti border the terms of trade between livestock and
grain shows that there has been a consistent decline. The overall drop
during five years was more than 80 percent. In other parts of eastern
Ethiopia, the decline in the terms of trade has ranged from about 11 to
50 percent in Jijiga and Hartishiek to about 28 to 66 percent in
Kebribeyah, eastern Ethiopia during the same five year perioid
(1995-1999). Price data show that declines are higher for locally
supplied maize than for rice, which is imported unofficially across the
border. The problem is more severe in the Afar region where cross-border
market access is limited in comparison to the Ethiopia-Somali region.

Assessments of two other border areas, Somaliland/eastern Ethiopia and
southern Somalia/northeastern Kenya, highlight the critical role of
cross-border trade in regional food security. The most graphic
illustrations deal with events that dramatically disrupt cross-border
trade, including government border closures, widespread conflict, severe
climatic events, or in the case of Somaliland the loss of a key export
market. For example, during the Saudi Arabia ban on livestock exports in
1998-1999 it is estimated that cross-border commerce along the
Somaliland/Ethiopia border was reduced by about 30 percent (Steffen et
al. 1998). The export of animals that were critical for financing the
import of rice, wheat four, cooking oil, and pasta declined
considerably. This reduction meant that Ethiopian consumers on the other
side of the border were adversely affected along two fronts: their
livestock prices declined while prices of imported foods (which were
largely financed by livestock exports) increased. It should be noted
that there already is evidence that the new ban imposed by Saudi Arabia
is having similar impacts on trader and herder incomes and regional food
security (see UN Office for the Coordination of Humanitarian Affairs
2000).

Table 6 shows the exchange value of livestock during 1997-1998 at three
different markets in Somaliland, all of which are important in
cross-border trade. Local currency equivalencies are used and five key
foods that figure in cross-border trade are tracked: rice, wheat flour,
pasta, rice, maize, and sorghum. As the table shows, the terms of trade
between livestock and food commodities worked against the herder at
every market. In some cases, the food equivalency from the sale of one
small stock declined as much as 38 percent during 1998. For a herder in
Borama a goat or sheep bought 79 kg of wheat flour in 1997, while it
only purchased 49 kg in 1998. Prices for foods at Berbera, the export
market furthest from the border, are the highest but changes in
livestock-food equivalencies were less than elsewhere. For imported
foods that come through Berbera port, the terms of trade equivalent in
livestock changed very little during 1997 and 1998, while the declines
were substantial at the border markets of Togwajale and Borama. It is
important to note that the border market, Togwajale, which is most
distant from Berbera port---suffered the worst terms for small stock
sales among the three markets, especially relative to imported foods. It
is located along the Ethiopian border where prices for import foods are
highest and livestock prices are lowest. However, prices of local
foods---maize and sorghum\--are lowest at the border, but most Somalis
prefer rice in their diet.

**\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_**

**Table 6. Terms of Trade between Small Stock and Foodstuffs in the
Somaliland Border Markets, 1997-1998: The Effects of the Export Embargo
and Decline in Cross-Border Trade**

**Exchange Equivalencies from sale of one small stock (export
quality):**

  --------- ---------- ---------- ---------- ---------- ----------- ---------- ----------------
  Food      Berbera               Borama (in            Togwajale              Range of Change
            (in kg)               kg)                   (in kg)                

  Item      **1997**   **1998**   **1997**   **1998**   **1997**    **1998**   **1997-98**

  Maize     67         53         89         66         68          52         -21 to -26 %

  Wheat     54         54         79         49         37          30         0 to -38 %
  flour                                                                        

  Rice      55         55         54         39         37          30         0 to -28 %

  Sorghum   60         51         69         58         88          55         -15 to -38 %

  Pasta     28         28         25         16         19          15         0 to -36 %
  --------- ---------- ---------- ---------- ---------- ----------- ---------- ----------------

Notes: Based on FEWS/FSAU market data, 1997-1998.

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

The El Nino catastrophe of late 1997 and early 1998 is another event
that highlights the key role that cross-border trade plays in local and
regional food security, in this case in the southern Somalia
borderlands. Once again, we can analyze livestock exchange rates for a
bundle of key cross-border commodities, in this case wheat flour, maize,
rice. Here the disruption to cross-border trade was concentrated in
about a four-month period, so it is important to observe monthly and
weekly market data rather only annual trends.[^6] Table 7 shows the
incredible impact that the climatic events of late 1997 had local food
markets in the border market of Bulla Hawo, and what happened to the
terms of trade for herders in the area. From September 1997 to December
1997 the livestock sales equivalencies for maize, wheat flour, and rice
declined 79, 53, and 61 percent, respectively. Thus, a herder who sold a
head of cattle in September 1997 could purchase 298 kg of maize, but in
December it was only 64 kg. For an average family of 8 members who
depended on livestock sales for their maize consumption, this was
equivalent to a per capita decline in food availability from 37.25 kg to
8 kg.

**Table 7. Terms of Trade between Cattle and Food Products, Bulla Hawo
Border Market Exchange Equivalencies from sale of one head of cattle
(medium quality-2):**

+---------+-----+-----+-----+-----+-----+-----+------+---------------+
| Food    | (   |     |     |     |     |     |      | Range of      |
|         | Kg) |     |     |     |     |     |      | Monthly       |
|         | (   |     |     |     |     |     |      | Change        |
|         | Kg) |     |     |     |     |     |      |               |
|         |     |     |     |     |     |     |      |               |
|         | 1   |     |     |     |     |     |      |               |
|         | 997 |     |     |     |     |     |      |               |
|         | 1   |     |     |     |     |     |      |               |
|         | 998 |     |     |     |     |     |      |               |
+---------+-----+-----+-----+-----+-----+-----+------+---------------+
| Item    | **  | *   | *   | *   | *   | *   | *    |               |
|         | Sep | *Oc | *No | *De | *Ja | *Fe | *Mar |               |
|         | t** | t** | v** | c** | n** | b** | ch** |               |
+---------+-----+-----+-----+-----+-----+-----+------+---------------+
| Maize   | 298 | 221 | 133 | 64  | 238 | 256 | 369  | 26 to 272 %   |
+---------+-----+-----+-----+-----+-----+-----+------+---------------+
| Wheat   | 162 | 115 | 58  | 76  | 115 | 47  | 170  | 31 to 262 %   |
| flour   |     |     |     |     |     |     |      |               |
+---------+-----+-----+-----+-----+-----+-----+------+---------------+
| Rice    | 143 | 132 | 77  | 56  | 131 | 129 | 176  | 2 to 134 %    |
+---------+-----+-----+-----+-----+-----+-----+------+---------------+

Notes: Based on FEWS/FSAU market data, 1997-1998.

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

With the floods and the disruption of cross-border links, the price of
cattle also declined during these months. This deterioration further
damaged herder economies of the area, and increased their vulnerability
to food shortages and hunger. As the rains subsided and international
food aid became available in the area, food prices began to decline in
early 1998. A massive airlift of food aid occurred in southern Somalia
during January to February 1998, but not before hundred individuals had
perished. By March 1998 the terms of trade for local herders had
improved to the point that the equivalency rates for cattle, vis-a-vis
the three food items in Table 7, were actually better than during
pre-flood months. The last column in the table shows that changes in
monthly food equivalencies were as high as 272 percent for particular
foods in certain months. These wide swings in prices show how volatile
the market can become when trade is disrupted.

In sum, although there exists a potential for cross-border trade to
enhance food security in the pastoral areas of eastern Ethiopia
borderlands, the distribution of the proceeds of livestock sales is
biased in favor of non-pastoral agents due to weak spatial integration.
Moreover, pastoralists face unfavorable terms of trade as a result of
declining prices for their animals and rising prices of their major
purchases. Therefore, to improve the food security situation in the
area, broadening market access for both sales and purchases is required.

**POLICY IMPLICATIONS**

The materials presented in this paper show the extent to which
cross-border trade drives the economies of the border region and areas
well into the interiors of Ethiopia, Somalia, and Kenya. They provide
telling evidence of how important cross-border trade is for the
inhabitants of the border region and for consumers and producers located
several hundred km from the borders. Examples from the comparative
research program show what happens to local incomes, food security,
pastoral welfare, and local and regional markets when cross border
commerce is disrupted. The critical question becomes what should
governments and other parties do, if anything, to affect cross-border
trade. What is particularly challenging is that because of its informal
nature cross-border trade thrives in the absence of government
interventions and policies, while punitive controls against it usually
redirects the trade in unexpected ways.

**Official Recognition of Its Importance**

To address this issue the first tactic should be educational; that is,
to acknowledge the extent of cross-border trade and its importance to
local and regional economies. Throughout the study we have been
surprised by the lack of understanding on the part of policy makers
either of the scale (which is well above \$40 million annually in
livestock exports alone at the four border sites) or importance of
cross-border commerce, and their general sense that it because it is
unofficial it should be stopped. The latter point assumes that it could
be halted even if governments wished to do so. Evidence from other parts
of the world with far more resources and infrastructure than Horn
countries shows how hard this can be (for example, the cases of Iraq,
South Africa, and Mexico). Policies that acknowledge and encourage
regional trade across borders---rather than discourage it\--would
capitalize on comparative advantage for different local and national
economies; strengthen local food security; increase collection of state
revenues and investments in key market and transport infrastructure; and
reduce price volatility and market imperfections. By recognizing the
importance of cross-border trade rather than discouraging it, the
government could greatly expand its own revenue through customs and tax
collection.

The data contained in this paper and in the case studies of the
BASIS/OSSREA Cross-Border Project represent a unique data set for policy
dialogue. Official trade statistics of governments and international
bodies (e.g., FAO and World Bank) contain only vague estimates of the
importance of cross-border trade to local, regional, and national
economies. As a start, discussions of cross-border trade and its
importance should be encouraged at the border sites themselves (among
customs and government officials of relevant countries), national
ministries, and in regional bodies, such as the Inter-Governmental
Authority for Development (IGAD). The policy dialogue must occur at
these three levels because: (1) the local officials are 'on the ground'
in these sites and can play a key role in encouraging/discouraging
policies---the isolation of many of these sites means that local
officials have some degree of autonomy; (2) national officials and
diplomats must be involved because it requires international agreements
and dialogue with other states, and because domestic policies have a
direct effect on cross-border trade; and (3) IGAD's involvement is
required because it is one of the few organizations in the region with a
cross-border mandate and with priorities focused on trade and improved
transport links between member states. These three different levels of
institutions need to be involved in policy discussions about
cross-border trade.

A second policy strategy would call for a series of workshops starting
initially in selected border regions and national capitals at the
bilateral level, and then moving to a series of regional meetings
sponsored by IGAD (or even the OAU) or COMESA. At these meetings general
agreements would have to be reached on practical actions to encourage
regional trade. These might include: investment plans between and within
countries for needed market and transport infrastructure; regional price
and market information and monitoring systems; agreements on or
reductions of tax and tariff levels; liberalization of currency controls
and exchanges (which in practice do not operate anyway); licensing and
insurance agreements between member states, so traders could move goods
from one market to the next without cumbersome fees, regulations, and
harassment. Without these kinds of agreements, individual governments
will lose potential revenues and local economies will be vulnerable to
periodic border closures and market instability. Regional integration
would help to create a common market for a wide range of goods and
services.

Already there is recent evidence that some border countries of the Horn
are in negotiations on encouraging cross-border trade in livestock (see
*Daily Nation*, November 9, 2000), as well as relaxation of restrictions
on petty trade in the border areas (e.g., Ethiopia). Bilateral
discussions of this kind are important, as are multilateral meetings to
ventilate differences and discuss benefits and costs of different
cross-border initiatives. Not all parties will share equally from
different policies and some states may lose valued foreign exchange if a
critical official export, such as coffee in the case of Kenya and
Ethiopia, is redirected to informal channels. Moreover, states with
strong domestic manufacturing capacity also will be resistant to
unofficial trade in tariff-free manufactured goods, third party imports
that usually originate from Asia.

**Improve Infrastructure and Communications**

Roads and transportation facilities are generally lacking to and from
many border markets, as are most other important infrastructure. The
study has shown that the lack of infrastructure greatly increases
transaction costs and inefficiencies, and that a lack of communication
facilities leads to poor dissemination of market information.

**Enhanced Security**

The absence of security in many of the border areas is a strong
impediment to efficient trade and often results in banditry, violence,
and the attraction of criminal elements into the trade. It also greatly
distorts markets and significantly reduces incomes for the poorest
populations of the region, especially pastoralists. The study has shown
the downward effect that insecurity has on producer prices for
livestock. Without improved security, required investments in
infrastructure, veterinary services, and communication facilities will
not be possible.

**Importance of Veterinary Services**

The recent bans on livestock exports from the Horn region highlights the
overwhelming importance of improved veterinary services in border areas.
It is not expected that governments will have the resources to implement
major investments in veterinary infrastructure but there are smaller,
perhaps more effective measures that can be taken. Our study has shown
that traders are willing to pay for veterinary services and drugs, but
that they often are limited in their availability. Efforts should be
made to support para-veterinary efforts in the region. They have the
potential to play critical roles in supplying services to herders and
cross-border traders, and are means to combat disease epidemics before
they devastate local and regional economies. Official recognition of
cross-border livestock trade would also enable the development of other
support agents, such as water providers and veterinary drug suppliers,
so that they could operate in a more efficient manner.

**Improve Market Access and Equity**

The official recognition of cross-border trade would attract more
traders to the business. Such increased competition would depress the
marketing margin in favor of producers (herders) and ultimate consumers;
that is, producer prices would rise and consumer prices would decline.
Other things being constant, the food security situation, among these
groups also would be enhanced as a result of increased market access and
improved incomes for pastoralists. By contrast, trade restrictions would
greatly limit pastoral incomes, which are required to purchase needed
grains and other foodstuffs.

Given the importance of livestock to livelihoods in the region, the
performance of livestock markets substantially affect welfare. However,
our study showed that with one possible exception markets in the area
were not well integrated based on simple correlation and regression
results. Due to the absence of spatial integration in different markets,
selective intervention is required to maximize benefits for all actors
involved in cross border trade. In addition, in the case of the eastern
Ethiopia borderlands, lack of access to cross-border livestock markets,
may exert pressure on rangelands and may induce diminishing returns if
other alternatives, such as domestic and official export livestock
trade, cannot fill the gap. We are already seeing the strong
environmental effects from overstocking in the Somali region of Ethiopia
as a result of the Saudi ban.

**Effects of Economic Reforms**

Recent developments in Ethiopia to legalize small-scale cross-border
trade between Ethiopia and Djibouti, as well as between Ethiopia and
Northern Somalia could provide relevant models for other border areas.
The government has recognized informal cross-border petty trade since
1998. In identifying the items that could be traded tariff free, the
trade policy focused on those goods (vegetables, grains, and prepared
foods) that are used by people in the borderlands and at the same time
do not impact on the country\'s large-scale foreign trade. For instance,
the prohibited commodities are those traded in the large-scale official
trade that are key sources of foreign exchange. Ethiopian items excluded
in the Djibouti and Somaliland trade are (i) Oil seeds, (ii) Coffee,
(iii) Chat, (iv) Hides and skins, (v) Live animals, (vi) Pulses, (vii)
Live wild animals, (viii) Ancient and National Heritages, and (ix) other
items that are not produced in Ethiopia. The arrangement also ensures
that items produced in Djibouti have improved market access in Ethiopia
by allowing traders to import salt and fish free of tax. Commodities
included in this direction of trade are said to be those consumed by
people in the border area and that are not supplied by domestic
industries or official large-scale import. Since the maximum value of
trade items carried by a trader in a single trip is Birr 2000 (about US
\$55), many traders involved in cross-border are not enthusiastic about
the petty trade policy because of the restrictions on volume. The policy
presently has little impact on large scale traders and importers.

Government controls on cross-border trade can bring about substantial
declines in the production of exportable commodities if they are not
complemented by favorable macroeconomic environment. The unofficial
export trade from Ethiopia is more on re-exportables such as livestock
and to some extent coffee. Liberalization measures in the country were
able to redirect the coffee trade to official channels. The dependence
on these items by the neighboring countries for their foreign exchange
earning is the most important factor. Accordingly, these countries have
been paying better prices compared to domestic alternatives. The impact
on the livestock trade, however, is very minimal.

In sum, regional trade collaboration between states would bring about
important impacts if it focused on such issues as harmonization of
fiscal and monetary policies; the control of livestock diseases (RVF),
insecurity, and uncontrolled imports of third country origin; and the
strengthening infrastructure in the borderlands. While many individual
states fear the potential loss of national food self-sufficiency and
government revenues from increased cross-border trade, this study shows
that potential government revenues and contributions to food security
can be increased through cross-border trade.

**REFERENCES**

Addou, Sidow I. And Mahdi Gedi. 1999. Trip Report on Cross-Border Trade
between Somalia, Ethiopia, and Kenya. Nairobi, Kenya: Famine and Early
Warning Systems (FEWS).

Barrett, C., Peter D. Little, D. Bailey, F. Chabari, and K. Smith. 1998.
How Might Infrastructure Improvements Mitigate the Risks Faced by
Pastoralists? **Ruminations:** Newsletter of the Global Livestock
Collaborative Research Support **Program,** Fall, Pp. 1-10.

*Daily Nation*, Nov. 9, 2000, 'Livestock to move freely across Borders,'
Nairobi, Daily Nation Newspaper.

Ensminger, Jean. 1992. *Making a Market: The Institutional
Transformation of an African Society*. Cambridge: Cambridge University
Press.

Famine and Early Warning Systems (FEWS). 1997. 'Regional Trade Important
for Increasing Food Security.' *Special Report 97-1*, February 26, 1997.
http://www.fews.org/fb970225/fb97srl.html

Gessesse, Belay. 1996. 'General Overview of Economic Cooperation in the
Horn of Africa,' in: *Trading Places: Alternative Modes of Economic
Cooperation in the Horn of Africa*, Pp. 1-28. Horn Africa Series 2.
Uppsala, Sweden: Life and Peace Institute.

Guvele, Cesar and Sue Lautze. Nd. *Unofficial Cross-Border Livestock
Exports from Southern Sudan to Kenya.* Boston, MA: Feinstein
International Famine Center, Tufts University.

Kenya, Government of. 1995. Garissa: District Development Plan,
1994-1996. Nairobi, Kenya: Government Printers.

Little, Peter D.1996a. *Livestock Trade and Food Security in the
Kenya/Somalia Borderlands*. Binghamton, NY: Institute for Development
Anthropology.

\_\_\_\_\_\_\_\_\_\_\_\_.1996b. "Conflictive Trade, Contested Identity:
The Effects of Export Markets on Pastoralists of Southern Somalia."
**African Studies Review** 39(1): 25-53.

\_\_\_\_\_\_\_\_\_\_\_\_.2000. Cross-Border Livestock Trade and Food
Security in the Northeastern Kenya and Southern Somalia Borderlands.
Madison, WI: Land Tenure Center, University of Wisconsin BASIS CRSP.

Little, Peter D. and Catherine S. Dolan. 1994. Labor Relations and
Trading in the Peri-Urban Areas of Banjul, The Gambia. Binghamton, New
York: Institute for Development Anthropology.

Nobera, Epitace. 1998. *Food Comodity Cross-Border Trade Between Uganda,
Southern Sudan, Congo, Rwanda, and Tanzania*. Kampala, Uganda: FEWS
Project.

Steffen, Phillip, A.H. Shirwa, and Sidow I. Addou, with contributions
from Mahdi Gedi Qayad. 1998. The Livestock Embargo by Saudi Arabia: A
Report of the Economic, Financial, and Social Impact on Somaliland and
Somalia. Washington, DC: FEWS Project.

Teka, Tegegne, Alemayehu Azeze and Ayele Gebremariam. 1999. Cross-Border
Livestock Trade and Food Security in Southern and Southeastern
Borderlands of Ethiopia. OSSREA Development Research Report Series no.1.
Addis Ababa: Organization for Social Science Research in Eastern and
Southern Africa.

Teka, Tegegne and Alemayehu Azeze. 2001. Cross-Border Trade and Food
Security in the Horn of Africa: The Case of the Eastern Ethiopia
Borderlands. OSSREA/BASIS CRSP Project on Cross-border Trade and Food
Security in the Horn of Africa. Addis Ababa, Ethiopia: OSSREA.

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Ogadeen Livestock Traders hit hard by Ban."
Http://www.reliefweb.int/w/rwb.nsf/48fa.

[^1]: Since 1997, the interest in cross-border trade in the Horn of
    Africa has grown considerably among researchers, development
    organizations, and policy makers. Several reports have appeared in
    the past three years alone (Addou and Gedi 1999; FEWS 1997; Guvele
    and Lautze nd; and Nobera 1998) but formal publications on the topic
    remain minimal.

[^2]: It is important to note that about 10 percent of purchases at
    Nairobi area markets, such as in Njiru and Ngong, are for restocking
    or fattening on nearby commercial ranches and not for slaughter in
    the city. That is why it is important to distinguish overall
    purchases from slaughter figures.

[^3]: This estimate is based on recorded sales at Garissa market from
    the author's surveys and from using estimates of the number of
    Kenyan cattle sold at Garissa. The latter was calculated by using an
    annual commercial offtake rate of 7 percent for Garissa, Kenya
    cattle, which comes to about 25 to 30,0000, and assuming that about
    10 percent of cattle sold at Garissa market originates from other
    Kenyan districts (i.e., Mandera and Wajir districts). The remainder
    of cattle sold at Garissa are from Somalia.

[^4]: Under externally-imposed reform programs of the World Bank and
    IMF, Kenya has reduced subsidies for most agricultural inputs,
    including veterinary ones. The rapid inflation associated with these
    programs may be an important reason why farmers are using less
    modern inputs in the 1990s than in earlier periods. The same could
    hold true for traders and herders regarding the purchase of
    veterinary supplies and might explain the decline in their use as
    recorded in the trader study.

[^5]: Some NGOs and government organisations operating in the area
    collect prices on different types of animals, grain and fuel wood.
    However, the dissemination is limited and their market coverage is
    limited. Moreover, neither farmers nor livestock traders use this
    information very often.

[^6]: Weekly market data are available and are a better source for
    showing drastic disruptions to markets, but to keep the analysis
    simple monthly aggregates were used.