Informal Cross-Border Trade in Agricultural Commodities: Examples from Kenya and her Neighbours

Kenya - 30 November 2012

Informal Cross-Border Trade in agricultural commodities between Kenya and her neighbours has been growing with time, but knowledge of its magnitude, determinants and consequences remain largely inadequate. This has acted to inhibit formulation of appropriate policies and strategies to help exploit its impact particularly on food security. It has also led to possible undervaluation of the national accounts. On the basis of surveys and relevant government, scholarly and civil society documentation and studies, we attempt to assess the direction and volume of informal trade flows, the types of agricultural commodities involved and the existing supportive trade infrastructure. We also derive the incentive to informally trade between Kenya and her neighbours.
Our findings show that ICBT is so deeply entrenched in the region that it almost equals in size formal trade, yet it continues to expand. The study identifies maize as the most traded good. Other leading agricultural commodities traded include beans, rice and livestock. In addition, we find that Ethiopia and Sudan have the highest incentive to informally import while Kenya and Uganda have the lowest incentive. The latter two however, also have the highest incentive to informally export within the region.