Chapter 195 9 Government Policies , Smuggling , and the Informal Sector

The informal sector in West Africa has become increasingly internationalized in the last few decades. This chapter explores informal cross-border trade— that is, smuggling—in West Africa, focusing on Senegal and Benin. According to official trade data, regional trade flows are minimal despite the West African Economic and Monetary Union (WAEMU) and Economic Community of West African States (ECOWAS) regional trading agreements. In fact, however, smuggling is flourishing in West Africa, reflecting artificial national boundaries imposed in the colonial period, the strong ethnic ties transcending these borders, which are described in chapter 8, the inability to police entry and exit points, and differing economic policies in neighboring countries that create incentives to engage in smuggling. This chapter illustrates the complex interplay between formal and informal aspects of international trade in West Africa. Much of regional trade is conducted by the large informal firms described in chapter 4. Indeed one of the most important industries controlled by the informal sector, as pointed out in chapter 3, is commerce, which includes cross-border transactions. The demarcation between domestic and foreign trading is very fluid in Africa. Regional exchange in traditional local food staples such as millet predates present national borders. Other bulk foodstuffs consumed in West Africa, such as rice, sugar, and wheat, are largely imported from Asia, Europe, and North America and then distributed around the region. Large informal enterprises are intimately involved throughout the distribution process and interact in complex ways with formal importers and shipping companies such as Balloré, Maersk, and Grimaldi. Cash crops and petroleum extracted in Nigeria are also distributed in West Africa through informal circuits. In short, there are numerous connections between smuggling (illegal trade) and the informal sector (actors operating illegally). This chapter highlights weaknesses in the institutional