An Actor-Based Perspective On Informal Cross-Border Trading

Informal cross-border trade (ICBT) is a prevalent business practice that involves trade by agents who wholly or partly evade payment of duties and charges. Employing an actor-based lens that situates the traders within the broader political economy of border governance, we explore the persistence of ICBT despite government initiatives aimed at fostering the formalisation of trade. Using a qualitative case study of the Simplified Trade Regime at the Busia trading post between Uganda and Kenya, we analyse how traders perceive and respond to interventions aimed at encouraging formal trade. We show that traders’ decisions to trade informally are shaped not only by their familiarity with informal institutions and a mistrust of formal systems but also by the presence of informal trade routes. A key feature of these networks is neopatrimonialism, where traders and border officials have developed complex (but functional) patron-client relationships. We distinguish between traders as being defiant, habitual, unembedded, or transitioning agents, based on their level of embeddedness in patronage networks and their orientation towards formality. These insights underscore the centrality of traders’ agency in the persistence of informality, even when simple interventions promoting formalisation are introduced.