the normality of informality - amazon s3 · 2018. 3. 10. · dakar 2950 2650 1400 abidjan 2400 2050...

The Normality of Informality: Estimating Informal Trade Between Mali & Algeria

Gaël Raballand Sami Bensassi

Anne Brockmeyer Matthieu Pellerin

PICARD September 2015 1

Outline


Definition & Relevance of Studying Informal Trade

Methodology, Background, & Main Findings

Description of Trade Channels and Practices

Conclusions and Policy Recommendations?

Definition & Relevance


Informal trade is defined as:

Trade flows unreported (smuggling) or reported inadequately (fraud)

by customs.

Why is it Relevant?

Poverty puzzle in Mali.

Although informal trade is a relatively old phenomenon, there is no

data or estimates.

Impact on poverty, governance, customs procedures and revenues,

and security.

Methodology


Several methods to estimate flows:

Mirror statistics.

Informants in Algeria and Mali (among controlling agencies and

traders).

Price differential analysis.

Comparison with benchmark countries.

Focus on imports and legal goods.

Background: The Importance of Algerian

Subsidies Policies


Algeria massively subsidizes populations of the south (fuel, food products, transport…). Annually, 12.5 million USD in transport subsidies for the south of the

country. (3da/Tkm)

Main subsidized products:

semolina : 900 da/ 25 kg,

milk: 25 da/ litre,

flour: 2000 da / 100 kg,

sugar : 95 da/ kg

Economic Rationale for Trade between

North Mali & Algeria


Kidal Gao Bamako

distance (in kms)

Alger 2297 2597 4193

Dakar 2950 2650 1400

Abidjan 2400 2050 1150

Tema 2250 1900 2000

Kidal Gao Bamako

(average transport time, in days)

Alger 7 8 20

Dakar 18 17 13

Abidjan 23 22 19

Tema 24 23 22

Background: Legal Brief


1994: New barter trade regime to regulate Algerian trade with

neighboring countries.

Procedures highly decentralized

Wali may decide on the quantities to trade; he gives a list of the

authorized traders and has the power to remove licenses (=> local

political economy aspects).

Border officially closed in January 2013

What happens in reality?...


What happens in reality?... (2)


Main Findings


Informal trade around 85 million USD in 2011, 30 million USD in 2014.

Much more than official trade...

Cost of 60 million USD of subsidies for Algeria (in 2011).

Limited losses for the Malian Treasury (revenues limited to 2 million USD)

Governance impact

Relatively important share of regional GDP in Kidal and Gao in 2011.

Mirror Statistics Analysis


1-2 million USD declared officially (out of 150 million USD

estimated in 2011)

Ex. Algeria declared exports to Mali in fuels (HS code 271000) in

2007 and 2010 for 14,238 USD and 7,105 USD (out of more than

12 million USD).

= Official statistics do not capture reality.

Year Algerian exports

(Declared in Mali)

Algerian exports

(Declared in Algeria)

Malian exports

(Declared in Algeria)

Malian exports

(Declared in Mali)

2007 1.32 0.62 0.16 1.95

2008 4.94 0.64 0 2.39

2009 0 2.65 0 0

2010 1.54 0.27 0 3.11

2011 1.89 1.02 0.10 11.57

2012 1.84 0.58 0.25 1.85

Mirror Statistics Analysis


Number of imported

goods recorded by

Malian authorities

Number of exported

goods recorded by

Algerian authorities Number of Malian

exports recorded (to

Algeria)

Number of

Algerian imports

recorded (from

Mali)

2007 13 141 2 7

2008 149 21 8 1

2009 0 30 0 4

2010 35 27 6 0

2011 52 31 42 4

2012 59 70 6 4

Trade Channels & Estimates


Informal Trade Practices


Importance of GPS systems and mobile/satellite phones.

Avoid cities in North Mali.

4x4 pick-up and trucks – across the desert. without roads.

“Professionally” organized in Algeria.

Examples from Survey Results


Methodology: Interviews (semi structured interviews with 15 informal traders and 3 customs officials from Algeria and Mali)

Results: 180 trucks per week (2011) Tombouctou: 20 trucks; Kidal: 35; Gao: 35; Bamako: 30; Niger and

Nigeria: 60

35 trucks in flour, 30 trucks in pasta, 25 trucks in semolina, 20 trucks in other food products (oil, juice, sugar, milk powder...), 30 trucks of fuel, 30 trucks of dates, 5 trucks of electronic appliances.

Mali Main Exports: Cattle (5.5 million USD) today.


Price per ton

Product Bordj

Badji

Mokhtar

Kidal (540

km*) Gao(701

km*) Timbuktu(

1311 km*) Bamako(1

890 km*)

Flour 272 368 448 512 768

35% 65% 88% 182%

Pasta 432 560 672 720 896

30% 56% 67% 107%

Dates 432 ns 777.6 ns 1120

80% 159%

Semolina 192 256 320 384 560

33% 67% 100% 192%

Milk 2240 2532.8 3040 3360 4000

13% 36% 50% 79%

Diesel 320 400 480 560 560

25% 50% 75% 75%

Sugar 496 560 640 640 960

13% 29% 29% 94%

Appliances 240 304 368 448 940.8

27% 53% 87% 292%

Price per ton (USD)

Product Bordj Badji

Mokhtar Kidal (540

km*) Gao(701 km*)

Timbuktu(1311 km*)

Bamako(1890 km*)

Flour 272 368 448 512 768

35% 65% 88% 182%

Pasta 432 560 672 720 896

30% 56% 67% 107%

Dates 432 ns 777.6 ns 1120

80% 159%

Semolina 192 256 320 384 560

33% 67% 100% 192%

Milk 2240 2532.8 3040 3360 4000

13% 36% 50% 79%

Diesel 320 400 480 560 560

25% 50% 75% 75%

Sugar 496 560 640 640 960

13% 29% 29% 94%

Appliances 240 304 368 448 940.8

27% 53% 87% 292%

In 2011

In 2011


Product

Total turnover Mali

weekly in million CFAF

weekly in million USD annually in million USD

Flour 188 0.37 14.86

Pasta 189 0.37 14.94

Dates 169.2 0.33 13.37

Wheat semolina 104.3 0.21 8.24

Milk 166.8 0.33 13.18

Diesel 114.7 0.23 9.07

Gasoline 0.00 0.00

Sugar 38.5 0.08 3.04

Appliances 40.7 0.08 3.22

Other products 70.6 0.14 5.58

Total 1081.8 2.1 85.5

International Benchmarks


Estimated Informal Trade

per capita (USD)

Nigeria (Lagos Region) 250

Tunisia (Land Borders) 120

North Mali 45 (1) -125 (2)

(1) 2014

(2) 2011

Price Analysis compared to Kidal (2011)

official statistics


Profit Analysis


All goods traded in northern Mali (transit or final destination)

generated a weekly margin of 617 600 000 FCFA ($ 1.3 million) , with an average margin of 29%.

The margin is higher when the goods are to Bamako (43%) , Niger (30%) or West Africa , it may explain that northern Mali is a popular transit area.

For intra northeast Mali, Timbuktu (32.1%) and Gao (25.2%) are more profitable than Kidal (15.5%) and probably explains the role played by traders in the Kidal distribution in Mali and lower purchasing power in Kidal.

The most profitable of all being the flour with a margin of 42 %, ahead of electric appliances and gasoline.

Informal Imports over Regional GDPs


1.2%

5.2% 5.1%

0.5%

3.5%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

Timbuktu Gao Kidal Bamako Average three

nothern

Conclusion: A Paradox


Economically important and good for the North (for poverty alleviation and jobs, especially in Kidal).

But concentration of wealth. Dysfunctioning institutions. Reliance on Algeria and not Malian state with some possible resentment?

Vulnerability factor for Malian State since northern Mali has no control over Algerian policy making (for ex. decrease by 2/3 since 2013). Northern Malians may invest in an activity that may be subject to extreme policy changes.

Assuming that it is feasible, should it be repressed?

If yes, how?

Conclusions (cont…)


Repression of smuggling seems rather difficult (especially in

Mali) and would have a negative impact on the well-being of

northern populations.

Nevertheless, letting go is not an option either because the

margins of this trade allow smugglers to make inefficient and

collusive Malian institutions in the north (customs, military and

political authorities).

Key Questions


Do networks of illegal goods (drug. weapons) also trade legal

goods massively?

Could investments in the north (especially Kidal) « buy »

peace or reduce trafficking?

How is it possible to generate more cooperation with Algeria?

Probably make it an “Algerian” issue…

Some Policy Recommendations?


Need for Algeria to revise its rules on barter trade with Mali

Policy seems to benefit a very small number of players and has not put an end

to smuggling. In addition, it creates incentives for corruption in the institutions

in the south.

A review of the subsidy policy in the south

Facilitate discussions with Algeria to find a solution, including the most

sensitive trafficking (drugs and weapons).

But is it possible in the current political economy context?


Thank you

for your interest!

the normality of informality - amazon s3 · 2018. 3. 10. · dakar 2950 2650 1400 abidjan 2400 2050...

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