Informal Solutions to Formal Barriers: Re-evaluating Intra-African Trade through the Lens of the Shadow Economy

Conventional analyses of African trade frequently highlight how low formal intra-regional trade volumes signify a significant economic integration deficit. This paper challenges that narrative, arguing that this conclusion largely obscures a substantial redirection of economic activity into the informal sector. Pervasive non-tariff barriers, combined with protectionist policies and excessively complex regulatory environments, create a powerful disincentive for formal trade, pushing economic operators to seek informal channels for market access. Drawing an analogy to fluid dynamics, economic activity is inherently adaptive, always seeking easier routes when confronted with formal obstacles. Despite this conceptual framework, a significant gap exists in current economic research. Quantitative studies are lacking that demonstrate a link between the frequency and severity of protectionist actions, regulatory burdens and trade barriers and measurable shift of formal trade into the informal economy. Filling this research gap is crucial for developing more effective policies aimed at promoting the formalization of intra-African trade. Read our research paper on the International Journal of African Studies.