By
Tom Odhiambo
Title: Walking in the dark: Informal cross-border trade in the Great Lakes region
Publisher: International Alert; Authors: Kristof Titeca and Célestin Kimanuka; Publication Date: September 2012; Pages: 56. Electronic Access: Free Download. Use the free Adobe Acrobat Reader to view this PDF file.
Kenyans today use the term boda boda quite conveniently. Generally, it simply refers to the motorbike guy around the neighborhood corner who can ferry someone to any nearby destination at an affordable cost.
The boda guy (trust Kenyans to even tax a phrase) is the local solution to quick human transport needs, delivery of parcels, delivery of foodstuff etc.
Yet many Kenyans do not really know where the tax came from. They would be even more surprised if they were told that one of the reasons boda boda came about is because of taxes and taxation.
The boda boda phenomenon was a natural result of the failed economic policies of President Idi Amin Dada in Uganda. The 1970s and early 1980s saw a rise in cross-borders smuggling of goods from Kenya and agricultural produce from Uganda.
The smugglers avoided the official border crossing points and used what Kenyans call panya (rat)routes. Considering that the governments of Kenya and Uganda could not fully monitor their borders, often the smugglers did not need to bother much about their activities.
Lack of fuel on the Ugandan side also meant that the bicycle was a convenient way of travelling across the border. It was expedient as it also meant that the travelers avoided answering too many questions from border control officials who were often too eager to solicit bribes or extort.
So, although the travel by bicycle acquired the name boda boda because the riders would ask the potential customers if they wanted to cross the border, “border, border?”, the name was also popularized by the fact that the cyclists would outmaneuver the Kenyan police patrol vehicles, who could not catch the riders on a chase across the borders.
The so-called panya routes were really just that, if one accepts the metaphor: they were more or less quick or ‘slippery’ paths, allowing the smaller bicycles to cross easily, whilst posing obstacles to the bigger cats, the police patrol cars.
All this hide and seek, chase, and lose or get caught games happened because the smugglers and the traders who depended on the goods that crossed the borders did not wish to pay the official and sometimes unofficial taxes that have always been part and parcel of official border crossing points.
Today your boda boda could be a motorcycle or saloon car in the city, although there are still bicycle boda bodas in towns such as Busia (Kenya and Uganda) where the term originated.
What can we learn from this boda boda story? This is really a story of how small cross-border business is key to the survival of border towns.
A study done by International Alert in 2012, Walking in the Dark: Informal Cross-border Trade in the Great Lakes Region offers interesting insights into how small traders are an important part of the commerce and economies of border regions.
This study covered the border points between the Democratic Republic of Congo (DRC), Rwanda, Burundi, and Uganda.
It specifically examined the activities of small traders, mostly women, at the DRC-Rwanda border point of Goma-Gisenyi; DRC-Rwanda border point of Bukavu-Cyangugu; DRC-Burundi border point of Uvira-Gatumba; DRC-Uganda border point of Aru/Ariwara-Arua; as well as the Burundi-Rwanda border point of Cibitoke-Bugarama.
The authors of Walking in the Dark, Kristof Titeca and Celestine Kimanuka, highlight the significance of the economic activities of the small traders studied. They argue that these traders enable “… regions that do not produce enough to cover their own needs to receive supplies of products for individual consumption (mainly foodstuffs).”
Indeed, most cross-border towns in East Africa do not have formal industries. They tend not to have established economic structures on either side of the border, as they were originally established as mere symbolic crossing points.
Considering that these regions would naturally urbanize – immigration officers and other government officials needed accommodation and other services not provided by the government, travelers needed hotels and temporary accommodation, as well as other services such as document processing and health – the borders inevitably grew beyond what they originally had been planned to be.
More important is the fact that beyond the officially stated control of flow of human traffic and goods between countries, and the consequent taxes paid on goods in transit, border points all over the world are always open to smuggling or cross-border trade in small quantities.
In certain jurisdictions there are established taxes to be paid on certain amounts of goods that cross borders. However, at many border points, especially in the cases cited in Walking in the Dark, these points are famously known for the illicit taxes collected by both state officers and quasi government agents, if not outrightly criminal elements.
The authors of Walking in the Dark say this of the traders they studied: “This trade is mostly informal insofar as the traders are not registered and pay no income taxes. However, they do pay export or import taxes accordingly and often pass-through official border crossings with the appropriate travel documentation. They thereby contribute to the national economy, even though part of their operation is informal.”
Yet they also note that as part of the strategies of outwitting the official tax collectors, they sometimes hide certain products in the ones they declare at customs. For instance, one could hide fruits in a sack of grains, or hide jewelry in a pack of clothing.
This is a survival mechanism to reduce the cost of unfair, if not wholly illegal, taxation.
One of the most interesting, but probably most obvious, outcome of the research is the traders’ “… preference for informal taxes as they were ‘negotiable’; however, (i) certain taxes are not supposed to be paid and therefore constitute a violation of national laws, and (ii) these taxes are based on informal agreements that are unpredictable, not sustainable and must constantly be renegotiated.”
Well, any taxpayer would always wish to negotiate what they owe to the tax agent. However, the problem with the situation described above is that a large percentage of taxes paid by such traders do not reach the government’s receiver of revenues. In most cases such levies end up in the personal pockets of the official tax collectors.
One serious consequence of this arrangement is that the traders are at the mercy of the agent with whom they have an arrangement. Should the agents be away from the station or be transferred elsewhere, the traders may probably end up paying a higher tax rate than previously.
In other words, even when they pay the official tax rates, the traders are less likely to receive services that their taxes are meant to pay for.
For instance, their goods may not be inspected as fast as they may desire; their documents – such as receipts – may not be issued on time; they may not have proper waiting rooms at the exit and entry points etc.
If we go back to the case of boda boda that we started with, one can see that just as the cross-border traders then sought to smuggle goods across the borders rather than pay the ‘official’ government exportation and importation levies, even today traders such as described in Walking in the Dark would find it more convenient to try and outwit the inefficient or corrupt government bureaucracies at the border (including crossing the border ‘walking in the dark’) in order to increase their profit margin on their sales.
If only governments across the region could find mutually acceptable and beneficial ways to tax the small cross-border traders, the border towns would be thriving and major business centers.
Tom Odhiambo teaches at the University of Nairobi. He can be reached at: tom.odhiambo@uonbi.ac.ke or +254720009155.
