Why Formalisation Policies Fail in Africa: Informal Trade as a Socially Learned Cognitive System
Informal cross-border trade remains the dominant mode of exchange in many African border corridors despite sustained policy efforts to promote formalisation through regulatory simplification, infrastructure investment, and regional trade agreements. Conventional explanations attribute this persistence to high compliance costs, weak administrative capacity, and limited enforcement of formal rules. While these factors are important, they do not fully explain why traders continue to systematically avoid formal channels even where simplified regimes and trade facilitation measures have been introduced. This paper argues that informality is better understood as a learned response to structurally unstable border environments in which enforcement variability, procedural unpredictability, discretionary decision-making, and cost uncertainty prevent the formation of reliable expectations about formal trade. In response, traders develop recurrent informal practices that, over time, consolidate into shared avoidance strategies, stabilising informality as the dominant mode of cross-border exchange and producing a self-reinforcing institutional equilibrium that policy reforms so far have failed to disrupt.