Informal Economy Reports

The Informal Cross Border Trade Survey

Introduction and Background

Uganda started the Informal Cross border Trade Survey (ICBT) as a means of bridging the gap identified in the external trade statistics. A baseline survey conducted in 2003 revealed that informal cross border trade was a significant component of merchandise trade between Uganda and her neighbouring countries. Therefore, its exclusion was a substantial underestimation of the overall merchandize trade statistics in the Balance of Payments and National Accounts.

The full scale ICBT survey was launched in 2007 [1], and has since been conducted consistently over the years [2]. The main objective of the survey was to reduce the data gaps identified in both the balance of payments (BoP) and national accounts (NA) statistics. More specifically, the survey was intended to establish the main commodities traded informally, determine the value and volumes traded, and ascertain the direction of trade.

Scope

Presently, the survey covers a total of 20 border posts distributed across the country. Prior to selecting the borders to monitor, on-spot visits to the potential borders are done. These visits are intended to gather useful information required for the border selection process. In this case, choice of the border posts was guided by a number of factors including, the volume of trade captured by the Customs Department; security; transport and communication links; and availability of supporting institutions like Uganda Revenue Authority (URA), Uganda Police, other security agencies and Immigration offices.

In addition to the 20 border points, enumerators are also stationed at four (4) bus terminals which form the departure/arrival points for buses destined to/arriving from the neighboring countries.

The survey collects information on transactions in goods between residents and non-residents of Uganda that are not documented in the official customs clearance system and therefore are not included in the official trade statistics of the country. These may include all goods entering or leaving the country at the border posts but are not captured by the customs authorities irrespective of the value; goods not declared or partially declared on customs documents; and goods loaded or offloaded at bus terminals destined to or originating from foreign countries. The survey does not capture information on smuggled goods, transit goods as well as goods crossing the border points beyond working hours.

Methodology

Data collection is done over a period of two consecutive weeks in a given month, and estimates are uprated to cover the entire month. During monitoring at the borders, enumerators observe and record all merchandize entering and leaving the country, between 7:00am and 6:00pm. The number of enumerators deployed at a particular border post ranges between two (2) and six (6), depending on the volume of trade.

The main method of data collection is direct observation with occasional interaction with the traders whenever clarification about the goods they are carrying is needed. Local units of measure for quantities have been established for the main items traded, although enumerators, at times, weigh the items to ascertain the actual quantities. These units are then aligned to the standard units according to the tariff nomenclature for integration of the data with that collected from the formal system of Customs. The data collected is initially recorded in a counter book before it is transferred to another form known as the Summary Form A. This form contains a summary of the day’s transactions by commodity, quantity, and price, mode of transport and country of origin/destination. In addition, a special form, the Vehicle form, is used for capturing trade data of commodities ferried on vehicles especially at the busy border posts where vehicles are the dominant carriers of traded goods.

The survey team comprises of Enumerators, who collect data from the borders; data Entrants and data Editors; who are responsible for processing the data collected. These are recruited from the headquarters of the key stakeholder institutions namely, Bank of Uganda (BOU) and Uganda Bureau of Statistics (UBOS). Individuals selected on the survey team should be persons of high integrity, honest and must have a reasonable command of the languages spoken in their areas of operation. The minimum qualification is the Uganda Advanced Certificate of Education (UACE) with credits in Mathematics and English at the Uganda Ordinary Level of Education. Any higher qualifications such as degrees or diplomas are an added advantage. Potential candidates are subjected to an interview through which the successful candidates are picked.

Prior to deployment, all enumerators must undergo training to equip them with the knowledge and skills needed to collect the requisite data. Presently, this is normally done at the beginning of every financial year and it is intended to refresh the enumerators’ knowledge. The training sessions cover areas such as; basic terms and concepts used in the compilation of trade statistics in general; ICBT data collection techniques and survey instruments; recording of information in the various instruments such as Counter books and Summary Form “A”; common errors encountered when recording data; estimation of quantities and prices; use of correct units and conversion factors; tips on handling survey materials and writing field reports and a session on how to capture data at the Bus terminals. The training activity is often crowned with a simulation exercise in the use of data collection instruments.

Compilation Practices

Compilation of ICBT data is in line with international best practice. Exports are valued on a free on board (FoB) basis, while imports are valued at cost insurance and freight (cif). Prices of the traded goods are collected from around the border on a daily basis.

In addition to consistency checks and other data validation procedures, data processing involves coding the data into standard international codes and nomenclatures consistent with the Harmonized Commodity Description and Coding Systems (HS) and Standard International Trade Classification (SITC) to facilitate merging with customs data.

Since data is collected for only two weeks in a month, an uprating model is used to derive estimates for the weeks not monitored. Similarly, missing data, arising out of failure to conduct the survey in a given period due to logistical and other challenges is estimated using standard linear interpolation and extrapolation models.

Dissemination

Data in ICBT is disseminated in two major ways:

• As Part of Merchandize Trade Statistics: data from the ICBT survey is integrated in the country’s formal merchandize trade statistics and published. It can be accessed through the merchandise trade statistics disseminated by both BOU and UBOS. It is also part of the country’s balance of payments statement. This data is available on a monthly, quarterly and annual basis.
• ICBT Annual Report: the data is also published in an annual report on the informal cross border trade survey activities. In addition to the findings, the annual report provides a detailed description of the survey the methodology, uprating models, and other useful information about the survey.

Both categories of disseminated information on ICBT can be accessed on the websites of both BOU (www.bou.or.ug) and UBOS (www.ubos.org).

Challenges

Funding for the survey: The ICBT survey is a grand activity that requires a huge and consistent flow of funds. Where such resources are not available, some months may not be monitored, which poses challenges in assessing seasonality effects in the flows. Currently, funding for the survey is shared between BOU and UBOS.

Transforming the ICBT data into international commodity nomenclature, such as, Harmonized Commodity Coding and Description System (HS) and Standard International Trade

Classifications (SITC) is necessary for integration of the ICBT data into the main external trade database. However, this is often a long and tedious process given that some of the items are recorded in local names that may not have direct matches in these nomenclatures.

Quantifying the items is not always easy especially where items do not have standard units of measure e.g. live animals.

Concealment of items: Some traders deliberately conceal items through bulk packaging and/or repackaging which makes it hard for the enumerators to ascertain what they are carrying. Under such circumstances, enumerators must probe for additional details and thus rely on the information provided by the traders; which may not be correct.

Recording and pricing of assorted goods: Some items are often packaged together in a single pack which complicates their recording and quantification. This is because much as the items may be of the same category, e.g. vehicle spare parts, the individual parts normally differ in form, weight, purpose etc., and as such attract different prices. Such items should be recorded individually but this is not always possible.

Comparison with the COMESA SSCBT

Looking at Uganda’s ICBT survey in relation to the COMESA Small Scale Cross Border Trade (SSCBT) program, the ICBT survey mainly focuses on merchandize trade with no attention given to cross border services trade. The SSCBT program on the other hand focuses on both merchandize and services trade.

Furthermore, the SSCBT program captures some variables such as ‘gender of the trader’ which are not captured by Uganda’s ICBT survey. However, owing to the desire to harmonize with other stakeholders, plans are at an advanced stage to capture the variable ‘gender of the trader’ in the ICBT survey.

Conclusions

Since its inception, the ICBT survey has provided useful information to bridge the gap in external trade statistics for the country. Informal export trade continues to contribute significantly to Uganda’s merchandise trade with her neighbours. Over the last five (5) years, informal trade has on average accounted for about 14.0 percent of total export earnings. Overall, Uganda remains a net exporter under informal trade.

Bibliography

1. BOU and UBOS, “The Informal Cross Border Trade Survey Report 2016”; Kampala, Uganda; 2016; Available at: https://www.bou.or.ug/bou/bou-downloads/publications/TradeStatistics/ICBT/All/ANNUAL-INFORMAL-CROSS-BORDER-TRADE-SURVEY-REPORT-2016.pdf.

2. BOU and UBOS, “Field Instruction Manual For Informal Cross-Border Trade (ICBT) Survey”; Unpublished; Kampala, Uganda; 2009

3. EAC Secretariat, “2^nd EAC Meeting on Harmonization of Informal Cross Border Trade Survey Instruments and Methodology”; Unpublished; Mutukula, Uganda; 2013.

4. EAC Secretariat, “Harmonized Informal Cross Border Trade Compilation Manual”; Unpublished; Arusha, Tanzania; 2013.