Introduction
In this paper, we respond to a longstanding gap in the international business literature by focusing on Africa’s informal cross-border trade (ICBT). We argue that ICBT is a phenomenon often overlooked in mainstream international business, despite its economic and social significance across the continent. We argue that acknowledging and strategically engaging with ICBT is essential for the African Continental Free Trade Area (AfCFTA) to realize its ambitious objectives of inclusive economic growth and deep regional integration (Kahiya & Kadirov, 2020; Luke, 2025). While international business scholarship has traditionally privileged formal institutions and multinational enterprises operating in advanced economies, this paper contributes to a growing but still underdeveloped stream of research that recognizes the relevance of informal economies, indigenous business practices, and alternative institutional arrangements in shaping international business in emerging economies.
For regional bodies, including the AfCFTA Secretariat, we propose concrete strategies to harness ICBT’s developmental potential. So far, AfCFTA has remained silent on ICBT, which is a significant shortcoming. These include formally recognizing informal traders, investing in harmonized, cross-country ICBT data collection systems, and developing infrastructure that supports both formal and informal trade networks. We also stress the need to address systemic inequality by actively empowering marginalized ICBT participants, many of whom are women and youth. At the national level, we call for policy alignment with supranational sustainable development goals and protective measures that ensure fair access and safeguards for vulnerable traders. By foregrounding the informal economy within the AfCFTA framework, we contribute to the ongoing debate on the importance of bringing the African context into the international business research and policy literature. With that, we aim to advance a more contextually relevant and inclusive theorization of trade and integration in Africa.
ICBT in Africa
We define ICBT as “market-based exchanges of legally produced/acquired goods, across national borders, which occur outside the remit of formal commercial activity” (Kahiya & Kadirov, 2020: 89; see also IMF, 2022). The available data suggest that intra-African trade remains low compared to other developing regions, primarily due to the absence of the high prevalence of informal trade from official statistics (Bensassi, Jarreau, & Mitaritonna, 2019). According to the United Nations Economic Commission for Africa (UNECA), the value of ICBT in Africa ranges from 10 to 24 billion USD annually (UNECA, 2021). This equates to approximately 30–72% of formal trade between neighboring African countries. Bensassi et al. (2019) attribute the significance of ICBT to high trade costs driven by tariffs and non-tariff barriers (NTBs) affecting formal trade channels. In this context, the AfCFTA represents a critical policy initiative that can help to formalize ICBT across the continent.
Launched in 2019 and operational since 2021, the AfCFTA is a landmark initiative aimed at creating a single continental market of 1.3 billion people with a combined GDP of around $3.4 trillion (World Bank, 2020). Its primary goals include boosting intra-African trade, fostering economic diversification, accelerating industrialization, and addressing critical development objectives such as poverty reduction and decent work across the continent. While the AfCFTA primarily focuses on formal trade structures, the widespread presence of ICBT in Africa presents both a significant challenge and a substantial opportunity for the AfCFTA agreement’s success (Debrah, Olabode, Olan, & Nyuur, 2024).
ICBT plays a vital, though often underestimated, role in Africa’s regional economy. Economically, ICBT serves as a critical source of income for millions, particularly women and youth who face barriers to entering the formal labor market. It provides self-employment, boosts household consumption, and supports livelihoods in communities where formal economic opportunities are limited. Socially, ICBT fosters extensive trade networks that are built on trust, kinship, and local knowledge, enabling the movement of goods, services, and people across borders with remarkable efficiency. These networks not only sustain regional demand for affordable goods, but also promote social cohesion and interdependence among communities. Notably, the decentralized and adaptive nature of ICBT aligns closely with the core objectives of the AfCFTA noted above. By recognizing, estimating and integrating ICBT into AfCFTA strategies, policymakers can unlock a more realistic and grassroots-driven pathway toward the continent’s trade and development goals.
Various institutional voids, including weak customs enforcement, limited access to formal markets and finance, and regulatory inefficiencies, drive the prevalence of ICBT across Africa. The key drivers for participation in ICBT by youth and women are summarized in Table 1. Women and youth engage in ICBT primarily out of economic necessity, finding it more accessible than the formal sector trading activities due to low entry barriers and flexible operation. However, this accessibility is a double-edged sword. While it offers immediate income and self-employment, it often traps participants in vulnerable and low-growth environments, with informality driven by institutional barriers such as overregulation, corruption by border officials, and limited access to finance reinforce informality. Participants in ICBT rely on strong social networks, informal finance, and traditional practices but, while resilient, these informal systems lack scalability and formal protection. This highlights the need for inclusive policy reforms that address structural barriers while leveraging existing community-based mechanisms to support long-term economic inclusion.
Despite its prevalence, the scale and value of intra-African ICBT is often underestimated (Ackrill & Igudia, 2024; Golub, 2015; Klopp, Trimble, & Wiseman, 2022). According to the Food and Agriculture Organization (FAO, 2017), ICBT constitutes a significant share of the informal sector in most African countries. For example, in the Economic and Monetary Community of Central Africa (CEMAC), unrecorded trade equates to as much as 96% of official trade between Cameroon and its neighbors (UNECA, 2023). In the Southern African Development Community (SADC) region, ICBT is estimated at US$17.6 billion, equivalent to 30% to 40% of total trade, with women making up a striking 70% of these traders (COMESA, 2022). Furthermore, Africa’s youthful population depends heavily on cross-border trade, with informal cross-border trade (ICBT) providing income for approximately 43% of young people across the continent—about 70% of whom are women. (AfDB, 2021).
ICBT contributes to livelihoods and regional economies through a few key mechanisms. First, traders—especially women and youth—buy goods across borders at lower prices and quickly resell them locally, generating fast-turnover income. This income is reinvested in basic needs, stimulating household consumption. Second, ICBT creates informal employment along the value chain, including transporters, loaders, and market vendors. Third, repeated trade builds cross-border social networks that foster trust, reduce transaction costs, and strengthen regional ties. Together, these actions drive local resilience, support livelihoods, and promote informal regional integration in line with AfCFTA’s goals.
Historical and Socio-Cultural Foundations of Informal Cross-Border Trade in Africa
ICBT in Africa has deep historical and cultural roots that significantly predate the drawing up of artificial borders by colonial powers. Pre-colonial networks facilitated the exchange of goods such as gold, salt, and textiles, strengthening regional economic and social ties (Mangnus & Vellema, 2019). These historical systems fostered prosperity and reinforced connections between ethnic groups. For example, the trans-Saharan and East African coastal trade routes connected diverse regions with various partners. At the same time, empires such as Mali, Ghana, and Songhai prospered through extensive trade in commodities like gold and salt (Conrad, 2009).
Despite disruptions during the colonial era, many ICBT trade routes persisted and adapted to changing political and economic conditions. This informal trade remains remarkably resilient today, with historical connections sustaining commerce across traditional corridors, such as those between Cameroon and Nigeria or within East Africa (Afreximbank, 2020; Klopp et al., 2023). Traders often bypass formal customs procedures by leveraging deep-seated cultural and kinship ties, sometimes with the assistance of corrupt border officials (Bensassi et al., 2019). This, unfortunately, leads to missed opportunities for government revenue collection as traders avoid and evade taxes. This enduring informality underscores the profound importance of historical trade patterns in shaping Africa’s current economic structures.
Cultural and social ties also play a crucial role in ICBT, particularly in regions with limited or inaccessible formal trade channels. The Cameroon-Nigeria corridor exemplifies this dynamic, as shared languages, kinship networks, and trust-based relationships sustain trade outside official regulations (Adebile, 2024). Ethnic groups like the Bamiléké in Cameroon and the Kanuri and Fulani in Nigeria maintain longstanding commercial relationships, fostering reciprocal trade in agricultural products, textiles, and consumer goods. These informal networks provide vital economic opportunities and resilience despite formal trade barriers.
Given the deep historical and socio-cultural roots of ICBT, it is crucial to question why post-independence African governments largely failed to integrate it into formal trade policies. This neglect can be attributed to a combination of factors: rigid cultural perspectives that may have favored state-controlled economies over indigenous trade systems, inherited colonial governance models, and persistent institutional weaknesses (Nachum, Stevens, & Newenham-Kahindi, 2023). These factors contributed to policy decisions that prioritized formal trade, thereby reinforcing economic structures that undervalue traditional commerce. This exclusion has significant implications, including economic inefficiencies, missed opportunities for regional integration, substantial losses in government revenue, and the continued vulnerability of informal traders, particularly women and youth, often at the hands of corrupt border officials.
ICBT is therefore a vital economic driver in Africa, offering income, employment, and entrepreneurial opportunities where the formal sector often falls short. It fosters regional integration by building trade networks and social capital across borders, supporting AfCFTA’s goal of deeper economic cooperation. Integrating ICBT into formal policy frameworks can unlock untapped revenue, reduce corruption, and enhance data quality, all of which are key steps toward inclusive growth and evidence-based trade policymaking across the continent.
The Value of Considering ICBT for Africa’s Economic Development
As recent international business research shows, Africa’s economic dynamism and distinctiveness demand greater attention (Nachum et al., 2023). We fully agree with this perspective and argue that recognizing the value of ICBT offers widespread benefits across the continent and a vast opportunity to augment AfCFTA’s objectives (see Table 2 below). Integrating informal cross-border trade into the formal economy could be a key driver of Africa’s development.
First, ICBT is a significant source of employment for marginalized populations (Kahiya & Kadirov, 2020), particularly women and youth who face barriers to formal employment. By neglecting ICBT in labor policies, governments inadvertently contribute to increased job insecurity, poor working conditions, and a lack of social protection for millions of traders (IOM, 2022). Conversely, recognizing and supporting ICBT can transform these informal livelihoods into more secure and formal opportunities, aligning with national development goals for job creation and poverty reduction.
Second, the exclusion of ICBT from formal trade agreements, including the AfCFTA, undermines regional integration efforts. A substantial portion of cross-border trade in crops and livestock occurs informally (COMESA, 2022; UNECA, 2023). This results in uncoordinated regulatory frameworks that create bottlenecks rather than facilitating seamless trade. By integrating ICBT, the AfCFTA can unlock significant untapped intra-African trade potential, leading to more robust regional value chains and greater market integration. This would address border inefficiencies, reduce corruption, and dismantle unnecessary trade restrictions, thereby enhancing overall trade competitiveness and boosting public finance through more effective revenue collection.
Third, the weak governance of ICBT, stemming from its informal status, risks encouraging illicit activities such as smuggling and the sale of counterfeit goods (AfDB, 2012; Afreximbank, 2020). Moreover, it fosters corruption among border officials, as traders often resort to informal payments to bypass restrictive regulations (Klopp et al., 2022). By formalizing or facilitating ICBT, governments can reduce the scope for illicit activities and enhance border governance, leading to greater security and integrity in trade flows.
Finally, ICBT plays a critical role in sustaining the livelihoods of women and youth (UNECA, 2023). For instance, in West Africa, ICBT in staple foods accounts for about 30% of total trade in the region. By excluding ICBT from official trade statistics, policymakers fundamentally underestimate the actual volume of intra-African trade, leading to ineffective economic policies and trade agreements that fail to address the realities of the African market (COMESA, 2022). Additionally, the lack of recognition for ICBT means that traders remain outside formal financial systems, limiting their access to credit, public revenue collection, and crucial business development services. Integrating ICBT into formal frameworks will broaden financial inclusion, empower vulnerable groups, and enable governments to capture previously unrecorded economic activity, leading to more accurate models of intra-African trade flows and better-informed policy decisions for the AfCFTA.
Measuring ICBT: A Crucial Step for AfCFTA Integration
A critical first step in understanding and integrating ICBT is accurately identifying its magnitude and characteristics. Measuring ICBT requires adopting a standardized methodology to ensure consistency in data collection and dissemination across all countries. Countries such as Uganda, Rwanda, Ghana, and Nigeria have already conducted studies and pilot surveys to estimate ICBT flows. For instance, the Central Bank of Nigeria, in collaboration with various local agencies, utilized a mix of data collection approaches to measure ICBT activities across the country, including observation-based monitoring (at strategic border points from 7:00 AM to 6:00 PM), assistant monitors, predesigned questionnaire booklets, and field supervisors.
We propose utilizing key features of a continent-wide harmonized methodology for ICBT data collection, recently developed and validated at the continental level. This methodology resulted from a series of technical consultations and workshops conducted in 2023 and 2024 by a task force established by key pan-African institutions, including the African Union Commission (AUC), African Export Import Bank (Afreximbank), and the United Nations Economic Commission for Africa (UNECA) (AUC, Afreximbank, & UNECA, 2024). For clarity, the goods and services involved in these ICBT transactions are classified in accordance with the guidelines set out in the Manual on International Merchandise Trade Statistics (IMTS) and the Manual on Statistics of International Trade in Services.
Practical recommendations
Below, we summarize the key areas of focus for practical recommendations, the issues identified, and the specific practical recommendations set out in Table 3. To integrate ICBT into the AfCFTA framework, policy recognition is essential. ICBT provides critical income and employment, but it remains overlooked in formal trade protocols. Simplifying customs procedures and introducing light-touch formalization pathways would lower barriers for traders and encourage their gradual integration into the formal economy. Collaborating with informal traders’ associations ensures policies are grounded in the lived realities of border trade, while addressing corruption and harassment at borders. Improvements require more vigorous enforcement of policies and the implementation of digital reporting mechanisms. These measures are vital to building trust, improving trader safety, and enabling inclusive growth under AfCFTA.
Reliable, timely data and digital inclusion are also fundamental to reforming ICBT policy. Without standardized data collection and valuation, informal trade remains invisible in national accounts, intra-Africa trade statistics, and regional trade strategies, undermining evidence-based policymaking. Daily data collection, standardized valuation methods, and strengthened institutional capacity are essential to capture the accurate scale and economic value of ICBT. This effort relies heavily on the effective use of digital technologies for efficient and reliable data gathering. At the same time, bridging the digital and financial divide will unlock broader participation. Implementing the AfCFTA Digital Trade Protocol and expanding mobile financial services for micro, small, and medium enterprises (MSMEs) can help informal traders transition into more stable, growth-oriented, and profit-making enterprises (Kedir & Kouame, 2022). Together, these interventions form a practical roadmap to ensure that ICBT contributes meaningfully to inclusive regional integration and economic transformation.
Conclusion
This paper has highlighted the vital role of ICBT in understanding the scale and impact of intra-African trade, an oversight deeply rooted in its exclusion from formal policy and data frameworks. For the AfCFTA to be truly impactful and inclusive, it must recognize the vital role of this dynamic sector by supporting ICBT actors in building thriving, successful trade enterprises. Recognizing ICBT’s significance is crucial for unlocking its contribution to national and regional economic development goals that the AfCFTA seeks to achieve through poverty reduction, employment creation, economic growth, and market access for all. By taking concerted actions to integrate, facilitate, and formalize aspects of ICBT, the AfCFTA can effectively harness its inherent dynamism and resilience, transforming it into a powerful catalyst for genuinely inclusive growth, deeper regional integration, and sustainable development across Africa.
Acknowledgements
The authors gratefully acknowledge the invaluable guidance, support, and patience of the journal’s editor and the two anonymous reviewers whose thoughtful comments and constructive suggestions significantly improved the paper from its original submission. Deep appreciation is also extended to the experts who participated in the Taskforce meetings organized by the African Union Commission (AUC), United Nations Economic Commission for Africa (UNECA), and African Export-Import Bank (Afreximbank) between 2022 and 2024, whose insights helped shape the thinking around a harmonized methodology for measuring informal cross-border trade (ICBT) in Africa. Special thanks go to Professor James Robinson of the University of Chicago, a recipient of the 2024 Nobel Prize in Economics, for the stimulating discussion on the measurement of ICBT and its deep historical roots across African borders. We are also grateful to Professor David Luke, Professor in Practice and Strategic Director at the Firoz Lalji Institute for Africa at the London School of Economics, UK, for our rich conversations on ICBT during the Digital Trade Workshop held in April 2024 in Florence, Italy and Prof. Robert Ackrill of Nottingham Business School, UK, for a final professional check on the final manuscript before submission.
About the Authors
Abbi M. Kedir (abbi.kedir@aercafrica.org) is a Director of Research of the African Economic Research Consortium. He was an Associate Professor of International Business from 2017- 2023 at the Sheffield University Management School (SUMS). He is an editorial board member of the Journal of Development Studies and Journal of Entrepreneurial Behaviour and Research. He supports the Academy of International Business (AIB) Africa Chapter by mentoring African scholars to enhance their capacity to publish in peer-reviewed international journals.
Juliana Siwale is a Senior Lecturer of International Business at Nottingham Business School, Nottingham Trent University. Her research focuses on financial inclusion in developing countries, entrepreneurial financing and women entrepreneurship. Her work is published in journals such as New Technology, Work and Employment, Journal of Business Research, Journal of Development Studies and Management and Organization Review. Juliana has also co-edited a book on African Diaspora Direct Investment: Establishing the Economic and Socio-cultural Rationale. She received her PhD from Durham University.
Samppa Kamara (s.kamara@sheffield.ac.uk) is an Assistant Professor of International Business at the Sheffield University Management School, University of Sheffield. He is an AIB African Chapter Executive Task Force team member and an IE ambassador for international entrepreneurship in Sub-Saharan Africa. His research focuses on Africa, immigrant entrepreneurship, and international business. His work has appeared in journals such as the Journal of Business Research and the International Journal of Entrepreneurial Behavior & Research, alongside several book chapters.