# **1. West Africa**

While formal intra-African trade accounts for only about 10 percent of total African exports and imports, casual observation indicates that informal cross-border trade (ICBT) is thriving almost everywhere in Africa. And while most informal trade is illegal in the narrow sense of going unreported and untaxed, the products involved are mostly otherwise legal. ICBT can take a number of forms: “A particularly significant component of unofficial trade in Africa involves “re-exports” whereby goods are imported formally into a low-tax or low-cost country with the intent of then transshipping them clandestinely into neighboring countries with higher taxes, restrictive import quotas, costly trade facilitation services or tougher regulatory standards.” (Golub, 2014) Similarly, trade in local primary products across borders to balance local shortages and stabilize prices has a long tradition.

Since informal trade is unrecorded, various sources are brought together to generate estimates of these flows. The methodology generally includes examining official trade statistics for signs of unofficial cross-border trade, hiring national consultants to conduct brief and confidential surveys of traders at the borders, observing transactions at key border crossings, and interviewing customs officials and private sector representatives about these transactions.

An example of using official trade statistics, “Mirror” trade data compare recorded imports of a country to recorded exports from partner countries. If the reported exports exceed recorded imports by more than apparent trade costs, the remainder is probably informal trade. This approach was used in _Cross-border Trade within the Central Asia Regional Economic Cooperation,_ World Bank (2009). However, mirror data does not fully capture Intra-African informal trade, since the trade flows go unrecorded in both the importing and exporting countries.

Nevertheless, Raballand and Mjekiqi (2010) and Golub (2012) use mirror trade data to show that Benin imports an unusually large amount of certain products, in excess of what can be explained by domestic consumption and production, and infer that the residual is re-exported unofficially. Benjamin, Golub and Mbaye (2014) similarly look at imports per capita of particular consumer goods in Benin and The Gambia and find them inexplicably high for commodities with high protection rates in neighboring countries. Further, national customs offices often collect information on whether imports are “for domestic use”, “re-exports” or “transit”, although extracting this information from them may take some effort.

Observation at borders is best supplemented by surveys, so that the observed volume of flows can be complemented by survey questions about content. Even so, transport routes taken by ICBT are varied, and while some traders cross at official border posts, with partial or full cooperation of customs officials, others avoid customs checkpoints.

Interviews with major players in the business of informal trade can help illuminate the modalities of the trade – the financing, transport, re-packaging, arrangements with wholesalers and retailers. ICBT in Africa is closely connected to domestic wholesale-retail trade, where the informal sector dominates. Further, ethnic, religious and kinship networks play a large role in organizing the informal sector, and are particularly important in ICBT given that their populations often straddle national borders (World Bank, 2013; Golub and Hansen Lewis, 2012).

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