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Informal cross-border trade by MSMEs in East Africa: Opportunities, challenges, and gendered experiences at Cyanika, Mpondwe, and Vvura border areas

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  • Ayoki, Milton

Abstract

This paper examines the opportunities and challenges facing Micro, Small, and Medium Enterprises (MSMEs) engaged in informal cross-border trade (ICBT) at three strategic border locations: Cyanika (Rwanda-Uganda), Mpondwe (DRC-Uganda), and Vvura (DRC-Uganda). Using primary data from stakeholder consultations and secondary data from official trade statistics, we analyze trade flows, operating models, and the unique constraints confronting women traders, who constitute over 70% of the informal trading population. The study reveals that Mpondwe and Vvura collectively account for 33.2% of Uganda's informal export revenue ($188.6 million in 2023), with fish, agricultural products, and manufactured goods dominating trade flows. While the Simplified Trade Regime (STR) and One-Stop Border Posts (OSBPs) have improved formalization rates, significant challenges persist including customs compliance burdens, inadequate infrastructure, regulatory inconsistencies, and gender-based vulnerabilities. Our empirical analysis employs a structural gravity model to estimate trade facilitation effects, demonstrating that behind-the-border costs reduce trade volumes by 23-35%. We find that women traders face disproportionate barriers including sexual harassment, limited access to market information, and inadequate childcare facilities. The paper concludes with targeted policy recommendations for gender-responsive trade facilitation, including mobile testing laboratories, digital trade platforms, and strengthened cross-border trader associations.

Suggested Citation

  • Ayoki, Milton, 2025. "Informal cross-border trade by MSMEs in East Africa: Opportunities, challenges, and gendered experiences at Cyanika, Mpondwe, and Vvura border areas," MPRA Paper 127325, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:127325
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    References listed on IDEAS

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    1. Roberta Piermartini & Yoto Yotov, 2016. "Estimating Trade Policy Effects with Structural Gravity," School of Economics Working Paper Series 2016-10, LeBow College of Business, Drexel University.
    2. James E. Anderson & Eric van Wincoop, 2003. "Gravity with Gravitas: A Solution to the Border Puzzle," American Economic Review, American Economic Association, vol. 93(1), pages 170-192, March.
    3. Andrew E. Hansen-Addy & Davide M. Parrilli & Ishmael Tingbani, 2024. "The impact of trade facilitation on African SMEs’ performance," Small Business Economics, Springer, vol. 62(1), pages 105-131, January.
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    Keywords

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    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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