Entrepôt Trade and Smuggling in West Africa: Benin, Togo and Nigeria

SMUGGLING is pervasive in Africa. Perhaps the most pronounced version of this is the development of ‘entrepôt states’ in West Africa, notably Benin, Togo and The Gambia (Igué and Soulé, 1992), whose economic development strategies have been largely based on enhancing their attractiveness as trading hubs. These countries serve as conduits for both legal transit to landlocked countries in West Africa (Mali, Niger and Burkina Faso) and illegal trade to more protectionist neighbours (Senegal and Nigeria) (see Figure 1 for a map of the region). The entrepôt states have deliberately sought to maintain low import barriers and relatively well-functioning ports to lower costs of importing and transshipping. This paper explores the ways in which Benin and Togo function as smuggling havens and compete for access to Nigeria. Theoretical analyses of smuggling, beginning with Bhagwati and Hansen (1973) and Deardorff and Stolper (1990), and surveyed in Azam (2007), have analysed the welfare effects of smuggling, focusing on whether smuggling raises or lowers transactions costs. These models often omit some important political economy effects, notably the effects on income and employment in