# **1. Introduction**

# **Events recently reported in the Tunisian press have highlighted the scale of the problems linked to**

**informal trade in Tunisia.**<sup>**2**</sup> Although most of the headlines focused on the illegal imports of fuel, many other products (in particular manufactured goods, fruit and vegetables, and products from the Far East) are both imported and exported illegally.

**Although informal trade is a relatively old phenomenon,** which developed significantly in the last few years of the previous political regime (Meddeb 2012), it appears to have even grown strongly following the revolutions in Tunisia and Libya. Following the Tunisian uprising, the border post at Ras Ajdir, on the Libyan border<sup>3</sup> was attacked and vandalized **.** Following a number of other problems and the closing of the border on two separate occasions, customs authorities were unable to properly control cross-border trade flows.

**As a result, informal trade levels are assumed to have risen.** This report sets out to assess the scale of this trade between Tunisia and Libya and Tunisia and Algeria and to try to evaluate the amount lost in taxes and duties as a result as well as to assess the local impact in terms of income generation.<sup>4</sup> As studies of this type have already been conducted in Sub-Saharan Africa and in Central Asia (Ackello-Ogutu 1997; Kaminski and Mitra 2012),<sup>5</sup> this study used the methodologies already tried and tested in these regions.<sup>6</sup>

**It is difficult to give a precise definition of informal trade because practices differ from one border to the other. For the purposes of this study, informal trade is defined as the flow of goods that are unreported or incorrectly reported by the country's customs authorities.** This definition therefore covers a number of different aspects, including trade in goods passing through border posts with falsified customs declarations (in terms of the type or quantity of goods concerned) as well as smuggling (i.e., when goods cross the border without the knowledge of customs authorities) either through border posts or elsewhere along the border. However, this paper does not cover products that cannot be licitly traded in the country (such as weapons or drugs)<sup>7</sup> .

> 2 For an example, see Leaders (2013).

> 3 The routes followed by informal trade between Tunisia and Libya were clearly identified in an earlier study (Meddeb 2012). Although the Tunisia-Libya border is long (459 km), there is only one main crossing point, namely the border post at Ras Ajdir.

> 4 This study focuses solely on informal trade and land borders and not on informal sector in general. Although some of the informal trade into Tunisia passes through the port of Tunis, this study does not take account of goods entering the country in this manner.

> 5 In addition to the specialized literature on informal trade, a significant number of academic papers and reports discuss the impact of subsidies in Middle Eastern and North African countries.

> 6 This study is based on fieldwork carried out in Ras Ajdir, on the Libyan border, and at Bouchebka, on the Algerian border. On May 1-9, 2013, questionnaires were handed out and completed by 192 individuals involved in informal trade at the crossing point at Ras Ajdir. Interviews were also conducted with customs officials at Ras Ajdir, Ben Gardane, and Médenine. The fieldwork on the Algerian border took place on May 25–29, 2013 in the Kasserine governorate in west-central Tunisia, more specifically in the town of Kasserine itself, at the border crossing point at Bouchebka, and at various locations on the border.

> 7 This is the main topic of ICG (2013).

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