EDITORIAL: Removal of informal taxation at Rwanda-DRC border will boost trade

The Congolese government has decided to reinstate the 24-hour operations of the Goma-Rubavu border posts. The move has been welcomed by residents of both sides of the border who look forward to increase trade volumes, mostly driven by cross-border trade. Cross-border trade plays an important part in the country’s economic health. For example, in 2014, Rwanda’s total informal transactions bordered around $138 million, a figure that speaks volumes. The trade also helps in reducing differences in prices of agricultural produce because of the proximity of the communities; prices tend to hover around the same levels. The growth of international trade, even if it is the small scale informal cross-border trade, helps to drive economic growth as well as poverty reduction. Unlike Kenya and Rwanda, informal trade is sometimes more than five times in volume, the size of formal trade in both Kenya and the DRC while in the other two countries, it’s the other way round. It is also important to note that 83% of cross-border traders are women and it is their main source of income. But in order to take full advantage of the proximities of both communities, it will take more than just opening the borders around the clock; it needs some policy review where there are no efficient fiscal controls on the Congolese side. According to World Bank the biggest obstacle to cross-border trade was the large number of DRC government services traders have to go through (sometimes more than ten). At each of these stops they experience “informal taxation” as they are expected to pay something. Once those trade barriers are removed, there is no doubt that cross-border transactions will rise even higher.

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EDITORIAL: Removal of informal taxation at Rwanda-DRC border will boost trade