The invisible hand of African trade: When borders bend to necessity

The recent Uganda decline in exports to the East African Community reported by some media, amounting to $228.19 million lost over the past year, might seem like a setback on paper. But what if this is not a decline at all, but rather a powerful, silent redirection? The truth is that a significant portion of this formal trade has not vanished, but simply slipped into the shadows, shifting from official channels to the vibrant, often necessity-driven, informal market.

What is driving this shift? It is largely due to a combination of non-tariff barriers (NTBs) and protectionist policies stubbornly clinging to life within EAC member states. The chairperson of the EAC Council of Ministers said that at least 47 non-tariff barriers were reported in different member states in the previous fiscal year. Among these, only 16 were resolved, while 31 remain still active.

While geopolitical tensions and border closures have certainly played their part, they often act as accelerants to an already burgeoning informal sector. For many Ugandan traders last year, engaging in informal trade was not a strategic choice. It was a matter of survival. Trade, much like water, is inherently fluid. When confronted with an obstacle, it does not halt: it simply finds another path around it. And the more African nations attempt to restrict its flow through red tape and protectionist measures, the more robust and resourceful this invisible, informal economy becomes. Perhaps this trend is not just a Ugandan story, but a profound lesson for the entire continent. It tells us a lot about the true dynamics of trade in Africa, and the resilience of its entrepreneurs when faced with stifling restrictions.

Ultimately, Uganda's experience should serve as a stark reminder: genuine regional integration is not only about signing agreements, but it means effectively implementing them, which implies the dismantling of real-world barriers. As long as countries keep putting up barriers to trade to protect their own businesses, official trade will struggle. And as long as non-tariff impediments and protectionist tendencies will persist, potentially profitable businesses will be pushed to shift into the less regulated, yet vital, informal sector. Who benefits? Nobody. This situation creates a typical lose-lose scenario: States lose crucial tax revenues, while traders are forced to operate on a smaller, less efficient scale to avoid detection, hindering their growth and potential.

For the EAC (and Africa) to truly unlock its economic potential, member states must prioritize actionable solutions to these challenges, ensuring that the flow of goods and services is at least as seamless as the resilience of its traders.