An actor-based perspective on informal cross-border trading

Informal cross-border trade (ICBT) is a prevalent practice, involving trade by agents that 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 formalization of trade. Using a qualitative case study of the Simplified Trade Regime at the Busia trading post between Uganda and Kenya, we analyze how traders perceive and respond to interventions aimed at encouraging formal trade. Our findings show that traders’ decisions are shaped not only by their familiarity with informal institutions and a corresponding mistrust of formal systems. Informal trade routes have organically evolved into networks in which both traders and state actors are embedded and considered relatively efficient. 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 embeddedness in patronage networks and orientation to formality. These insights underscore the centrality of traders' agency in the persistence of informality, even when simple interventions promoting formalization are introduced.