Cross-Border Trade and the Parallel Currency Market: Trade and Finance in the Context of Structural Adjustment: A Case Study from Kano, Nigeria

Cross-Border Trade and the Parallel Currency Market: Trade and Finance in the Context of Structural Adjustment: A Case Study from Kano, Nigeria

Cross-Border Trade and the Parallel Currency Market: Trade and Finance in the Context of Structural Adjustment: A Case Study from Kano, Nigeria

Cross-Border Trade and the Parallel Currency Market: Trade and Finance in the Context of Structural Adjustment: A Case Study from Kano, Nigeria

Synopsis

The authors of this study challenge the assumptions of the World Bank that the expansion in informal cross-border trade is a vindication of the market-liberalizing thrust of structural adjustment, and that adjustment policies have improved the effectiveness of an "independent" bourgeoisie that is emerging out of this trade as an agent of regional integration. Instead, they make the case for the adoption of what they call a "development approach" for tapping the benefits of the informal currency markets, as an alternative to the "market coercion" of structural adjustment.

Excerpt

There is an increasingly glaring contrast between the intensifying political and economic disintegration in sub-Saharan Africa and the trend in the developed world toward the formation of large trading blocs. Within this context, attention has once again been turned to the issue of regional integration in Africa. This ‘new regionalism’, however, differs fundamentally from the original PanAfricanist approach which was characterized by autarchic, state-driven approaches to regional integration, an emphasis on the transformation of industrial production through import-substitution, and the proliferation of largely ineffective regional integration schemes. By contrast, the regionalism of the 1990s places a strong emphasis on a market-led strategy of regional integration, conceived as complementary to structural adjustment. This involves a shift in orientation from protectionism to liberalization, and from centralized bureaucratic regionalist institutions to a more decentralized approach grounded in popular support and private sector initiative (Daddieh, 1993:2ff; Bach, 1997:81; Lavergne and Daddieh, 1997:107).

In the context of sub-Saharan Africa, this new approach to regional integration has taken particular inspiration from the widespread operation of informal cross-border trading activities, which have succeeded in effecting extensive market integration where state-led initiatives have failed. Moreover, some commentators have noted that formal integration initiatives have been severely weakened by structural adjustment, owing to the pressures of mounting economic crisis, constraints on state spending, the liberalization of trade policies, and a proliferation of semi-official road-blocks and brigandage as civilians and officials alike resort to informal means of income generation under the pressures of increasing economic austerity (Daddieh, 1993:13; Herrera, 1995:148). By contrast, this same economic environment appears to have resulted in a flourishing of cross-border trade, even against the predictions of the architects of adjustment.

Owing to a range of historical and economic factors, cross-border trade is particularly intense in West Africa, with Nigeria operating as an epicentre of a significant proportion of cross-border trade flows within the region. Within Nigeria, the commercial centres of Lagos and Kano are the two major centres of cross-border trade, a fact that is linked to their proximity to the two most active borders for unofficial economic activity: Nigeria's borders with Benin and Niger. the intensity of unofficial trading activity emanating from Lagos is related principally to the position of the city as the commercial (and until . . .

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