Impact of Informal Cross Border Trade on Livelihoods: A Case of Rubavu District

Abstract

Informal Cross-Border Trade (ICBT) constitutes a major form of informal activity in most developing countries and plays a significant role in changing the livelihood of people and alleviating poverty. Nevertheless, the sector has not been accommodated within the city and national policies, it provides employment opportunities as a means of income generation for the urban poor, especially for those who migrate from the rural areas. It also provides to consumers convenient and accessible retail options and forms a vital part of the social and economic life of a city. The study entitled “Impact of Informal Cross Border Trade on Livelihoods; a case of Rubavu District” was guided the following specific objectives: to analyze the informal cross-border trade at Rubavu border between Rwanda and the Democratic Republic of Congo; to assess the prominence of livelihoods of informal traders in Rubavu District; to find out the relationship between informal cross border trade and the level of livelihood of informal traders in Rubavu District. The study used descriptive and correlational research design. The sample size of the study was 188 informal traders. A questionnaire was used to collect data and finally the study used descriptive statistics and inferential statistics as method of data analysis. The findings revealed that 71.8% of respondents strongly agreed that rules and regulations on border play a major role in determining the growth of ICBT. 72.3% of respondents strongly agreed that there is high cost of registering small business. 62.2% of respondents strongly agreed that tax laws of Rwanda are well defined. About the trade of commodities, 52.7% of respondents strongly agreed that they buy and sell agriculture products from Rwanda to DRC. About market and marketing, 84% of respondents strongly agreed that the informal cross border product marketing is the way of refusing the Government taxes. 87.2% of respondents strongly agreed that their source of income saving increased over the last three years (after joining ICBT). The findings indicated that there is high positive significant linear relationship between taxation policy and livelihood improvement in Rubavu District at r = 0.723^**; p-value =0.000 < 0.01. The findings indicated that there is moderate positive significant linear relationship between trade commodities and livelihood improvement in Rubavu District at r = 0.635^**; p-value =0.001 < 0.01. Based on the findings, the study concluded that there is positive effect on ICBT towards livelihoods of informal cross border traders in Rubavu District where the variation in livelihoods of its beneficiaries was related to changes in policy and legal framework, taxation policy, trade commodities and marketing strategies. The research recommended that Rwandan government should educate the business community about different tax rates, mode of payment because some informal traders do not know those rates and the mode of assessment.

Key concepts: Informal cross border trade, livelihood, improvement.

DOI: 10.7176/EJBM/14-22-08

Publication date: November 30^th 2022