LIBERIA CROSS BORDER TRADE ASSESSMENT Learning Evaluation and Analysis Project (LEAP-II)

GANTA BORDER POST, SOURCE: ROBERT KIRK LIBERIA CROSS BORDER TRADE ASSESSMENT Learning Evaluation and Analysis Project (LEAP-II) SEPTEMBER 2018 This publication was produced at the request of the United States Agency for International Development. It was prepared independently by International Development Group LLC (IDG), Robert Kirk. The author’s views expressed in this publication do not necessarily reflect the views of the United States Agency for International Development or the United States Government. CONTENTS EXECUTIVE SUMMARY 1 1. INTRODUCTION 4 2. CROSS BORDER TRADE IN AFRICA 4 INTRA-REGIONAL TRADE 4 INFORMAL CROSS BORDER TRADE 5 CROSS BORDER TRADE DATA 6 CROSS BORDER TRADERS 7 CHALLENGES IN FORMAL CROSS BORDER TRADE 8 3. CROSS BORDER TRADE IN LIBERIA 9 PRIMARY RESEARCH: SURVEY OF CROSS-BORDER TRADERS AT GANTA AND YEKEPA 15 WHO ARE THE CROSS-BORDER TRADERS? 16 UNDERSTANDING THE RATIONALE FOR CBT AND ICBT 17 TRADE VOLUMES AND COMMODITY COMPOSITION OF CBT 18 CHALLENGES FACED BY CROSS-BORDER TRADERS AS THEY ENGAGE WITH BORDER OFFICIALS AND MOVE GOODS ACROSS THE BORDER 20 GENDER AND CROSS BORDER TRADE 22 CASE STUDY: GANTA BORDER STATION LIBERIA-GUINEA 23 4. RECOMMENDATIONS 24 LIST OF REFERENCES 26 FIGURES Figure 1: Map of Liberia .................................................................................................................................................. 10 Figure 2: Liberia Doing Business 2018 ........................................................................................................................ 11 Figure 3: Liberia Distance to the Frontier 2018 ....................................................................................................... 11 Figure 4: Liberia Rural Border Posts Monthly Imports and Duty Collection 2017 ......................................... 13 Figure 5: Liberia Revenue Authority Rural Bo Rural Border Posts Monthly Imports and Duty Collection 2017 .................................................................................................................................................................................... 13 Figure 6: Ganta Border Post Imports (cif) and Revenue Collected 2017 .......................................................... 20 TABLES Table 1: Liberia Commodity Composition of Imports and Exports 2016-2017 ($ million) .......................... 12 Table 2: Frequency of Cross Border Trading ........................................................................................................... 16 Table 3: Cross Border Trade Gender and Trader Category ............................................................................... 17 Table 4: Value of Cross Border Trade at Yekepa ................................................................................................... 19 Table 5: Value of Cross Border Trade at Ganta ...................................................................................................... 19 Table 6: Number and Share of Unofficial Payments by Cross Border Traders ............................................... 21 Table 7: Cross Border Trade and Harassment ........................................................................................................ 22 ACRONYMS ASYCUDA Automated System for Customs Data BM Building Markets CBT Cross-border trade DB Doing Business EAC East African Customs Union ECOWAS Economic Community of West African States FGD Focus group discussion GBV Gender-Based Violence GOL Government of Liberia ICBT Informal cross-border trade IGC International Growth Centre LPRC Liberian Petroleum Refinery Corporation LRA Liberia Revenue Authority LRD Liberian Dollar LSA Liberia Strategic Analysis MRU Mano River Union TKG The Khana Group UEMOA West African Economic and Monetary Union UN United Nations UNIFEM United Nations Development Fund for Women United States Agency for International USAID Development WFP World Food Programme EXECUTIVE SUMMARY INTRODUCTION Liberia and its Mano River Union (MRU) neighbors - Cote d’Ivoire, Guinea, and Sierra Leone - have committed to increasing regional integration and intra-regional trade. Against a background of political instability resulting in border closures and large-scale movements of people seeking to avoid the conflicts, intra-regional trade was suppressed. Over the past decade the restoration of political stability has encouraged the growth of cross-border trade (CBT). This has been facilitated by large scale investments in improved road infrastructure along the Monrovia-Ganta/Yekepa corridor with Guinea. There has been increased migration, particularly young people, to several of Liberia’s border towns. While these developments have been reported in the press, the official trade statistics continue to show negligible trade between Liberia and the neighboring economies. USAID/Liberia requested a diagnostic assessment on formal and informal trade flows between Liberia and its MRU neighbors. The major questions to be addressed from the assessment are as follows: Are cross-border traders, both formal and informal, part of an emerging regional value chain that links with the growth of businesses in the major commercial center - Monrovia? How closely integrated are the border market sheds with the capital? Do these cross-border traders represent an important source of domestic revenue that is not being realized because of informality and inefficiencies at the border? How important is the cross-border trade for alleviating poverty and increasing food security? What could the government do to reduce the trade costs for cross-border traders? The assessment draws on existing studies of informal cross-border trade (ICBT) and a survey carried out in February-March 2018 at 13 borders in Liberia’s Nimba and Maryland Counties with Guinea and Cote d’Ivoire. This survey of more than 350 formal and informal cross border traders was completed under the Liberia Strategic Analysis (LSA) Activity. The survey also carried out 87 key informative interviews with a wide range of stakeholders involved either directly or indirectly with cross border trade and conducted nine focus group discussions. The surveys and interviews collected information on the characteristics of the cross-border traders, identifying the products, and detailing their experiences in moving goods into and out of Liberia to the neighboring countries of Guinea and Cote d’Ivoire. The data collected from the interviews are used to shed light on the validity of assumptions regarding economic linkages, potential missing domestic revenue, and the importance of border trade for poverty alleviation and food security. MAIN FINDINGS The movement of goods across Liberia’s land borders pre-dates the ‘formal’ boundaries. Longstanding incentives for CBT include: the existence of the same ethnic groups (including extended kinship networks) living on both sides of the border, a history of weak enforcement along long and porous borders, and regionally uncoordinated trade and other domestic policies resulting in large price differences. 1 | LIBERIA CROSS-BORDER TRADE ASSESSMENT USAID.GOV Liberia is a small low-income fragile economy dependent on rents from mineral and forestry exports for half of its GDP. Approximately 80 percent of the adult population is self-employed and most of the self- employed work in the informal sector. When this is separated by gender, nine out of ten women report being self-employed compared to seven out of ten men. The formal trade data show that imports are more than twice the value of exports, and 80 percent of imports originate from outside the MRU. Monrovia Freeport accounts for 75 percent of all imports. Women accounted for 70 percent of all traders interviewed. This is consistent with earlier work which reported that women represented the majority of cross-border traders. The men engaged in CBT have significantly higher education levels, with almost two-thirds having at least completed secondary education, relative to women where two-thirds had only completed primary education. The LSA survey found increased trade and economic linkages across border between members of the same ethnic grouping. Virtually all of the interviewed traders (95 percent) either owned their own business or jointly with their spouse. Approximately half of all the traders crossed the border once a week with a further 25 percent crossing monthly. Less than 4 percent crossed either daily or several times a day. One noteworthy finding was the large share of traders (more than 40 percent) who had entered the business in the past five years. The large number of new entrants may indicate a relatively rapidly growing market. Respondents identified the uncertain and depreciating exchange rate between the Liberian Dollar and the currencies of the neighboring economies as their most significant challenge. This indicates the importance of sound macroeconomic fundamentals to all aspects of the economy. CBT represented the main income source for 86 percent of respondents. The median monthly income from CBT was $61 and $53 for female and male traders respectively. When this is disaggregated, there is a wide range with 40 percent of all traders earning more than $68 per month, and 42 percent earning less than $38 per month. In 2017 Liberia’s per capita GDP was $456, or approximately $38 per month. Households dependent on CBT come from the poorer groups in the country. The approximately 40 percent of respondents earning above the average may result from the interviews being limited to the Nimba

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