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Recognising women as serious players in global trade

Trade drives sustainable development in low-income countries. Women’s contribution to the sector is key to maximising their country’s trade potential and advancing gender equality. However, they still face numerous barriers.

Tuesday 08 May 2018, Suzanne Woodman

As the Addis Ababa Action Agenda states, international trade drives economic growth and sustainable job creation, which leads to more stable income sources and better living standards.

While the importance of trade to lift low-income countries out of poverty is widely acknowledged, the role women play in this sector is often a secondary thought. Yet, their contribution is key to maximising their country’s trade potential, which boosts sustainable economic growth.

Furthermore, trade contributes to women’s economic empowerment, as it increases their financial independence, decision-making powers and improves their living standards.

Trade has proved to be a significant source of employment to women in sub-Saharan Africa, providing 60% of non-agricultural employment for self-employed women.’

However, trade policies should be far more inclusive to ensure women can both access and benefit from trade activities, which in turn will lead to their countries’ sustainable economic development.

According to the World Trade Organization, only one in five export companies in the world are women-owned.

An unfavourable policy framework contributes to explain why in developing regions far fewer female-owned and managed businesses are engaged in international trade, compared to those owned by men (Figure 1).

Figure 1: Women-owned and managed companies by region.

Figure 1: Women-owned and managed companies region.

In Vietnam, women head approximately 21% of micro, small  and medium enterprises (MSMEs), the majority (57%) being microenterprises. Female entrepreneurs can be seen as one of the ‘brightest opportunities within the SME sector’ and have increased at an astonishing pace of over 20% in the last two years.

Key challenges

Women face a multitude of bottlenecks that hinder their participation in trade. They are more likely to own smaller businesses which often lack the capacity to expand into new international markets and face correspondingly larger costs to overcome barriers.

However, the primary challenge is access to finance, with the global financing gap estimated at USD 287 billion for formal female owned enterprises. Lack of finance undeniably restricts the growth of women-owned enterprises, particularly at the start-up stage of the business cycle when finance is most needed.  

Until this very deep and very wide gap is globally addressed, the potential value of women-owned business will remain significantly untapped. However, viewed positively, this also presents an immediate and significant opportunity for financial institutions to invest in women, that will expedite local growth, encourage gender equity and drive a new approach to ethical investments – which  many other investments will struggle to achieve. 

Non-tariff barriers

Non-tariff barriers are regulations or restrictions that are imposed on trade by governments and local authorities. Women are disproportionately affected by the costly non-tariff barriers, such as red tape and lengthy border processes, as they are unlikely to have the capacity to overcome them as efficiently as larger firms.

74% of female-managed businesses reported difficulties arising from non-tariff barriers – compared with only 54% for their male equivalents.

Based on the responses from a survey carried out on 11,500 firms in 23 developing countries, it was widely suggested that reducing the number of non-tariff barriers by cutting red tape and streamlining border procedures would substantially reduce trade-related costs.

Female trader in Devarakonda, India. Credit: Ron Hansen via Unsplash
Female trader in Devarakonda, India. Credit: Ron Hansen via Unsplash.

Rwanda, for example, has seen a higher proportion of women (75%) engaged in cross-border trade compared to men. However, many of them are informal traders due to the difficulties in clearing goods across the borders, regulations, high export processing fees and poor transport conditions.

It is clear that breaking down these barriers  can increase women’s participation in formal trade and promote their integration  into global trading system.

Recognising the role women play in trade is not only important for their empowerment, but also for economic development to be inclusive and sustainable.  

Other key barriers

Other key barriers that we have identified include the following:

  • Laws prevent women from gaining ownership and control of assets or land, which limits the necessary collateral required for loan approvals.
  • Women struggle to access finance compared to men, due to their lack of access to collateral and difficulty in understanding loan processes, which constrains their capacity to expand.
  • Access to information and formal networks can be limited for women. This can be explained by socio-cultural norms that prevent women’s participation.
  • Women are more likely to lack ICT skills and access to the internet compared to men. According to research, there is a 33% gender gap between men and women with access to the internet in least developed countries. Again, contributing factors include socio-cultural norms and educational gender imbalances.
  • Domestic obligations in providing family care reduces time to create or run a business.

Together, these cultural and regulatory constraints paint a picture as to why female-led businesses are more likely to be smaller and less productive than their male counterparts. Some of these issues require national-level policy changes or shifts in socio-cultural attitudes.

However, improving women’s financial literacy in the loan application process, their formal networks and technological ability could be done through business associations. Building up the capacity of these organisations to target female-owned entrepreneurs will provide women with the vital support and training they need to overcome some of the barriers they face.  

Positive Steps – #SheTrades

We must take action to boost women’s access to economic opportunity, and empower them to create and build their own businesses.

 – Theresa May at the Commonwealth Heads of Government Meeting

At the Commonwealth Heads of Government Meeting (CHOGM) on 16 April 2018, Theresa May announced that Commonwealth countries will receive access to a £7 million fund dedicated to support female entrepreneurs through the ‘SheTrades’ Programme.

The SheTrades Programme aims to dismantle gender barriers in international trade and support female entrepreneurs by providing training and connecting them to markets and investment opportunities.

The way forward

Recognising the many and varied – often unique – challenges that women face is important to increase their participation in trade-related activities. Governments around the globe need to acknowledge that female-owned businesses are usually smaller than their male-owned counterparts and consequently face greater proportionate costs to fight and overcome non-tariff barriers. Moreover, they must urgently consider the unintended consequences on minority (including women) owned businesses from seemingly innocuous legislative and bureaucratic hurdles.

How IMC’s trade offer can help?

IMC Worldwide’s Trade and Investment team seeks to support female-owned SMEs.

Firstly, we build up their capacity to create products and services that are suitable for export. Secondly, we develop their capability to overcome impacts of trade barriers and regulatory standards to compete in the global markets. This includes training programmes to improve export knowledge and issues faced by SMEs. Finally, we create connections to expand their access to new markets and trade opportunities.

It is time that women are recognised as serious players in the economy. Striving towards greater gender equality not only boosts economic growth and increases international competitiveness of the economy, but is also associated with better education and health, and towards a path of prosperity, growth and inclusive, sustainable development.

Cover photo credit: Australian Department of Foreign Affairs and Trade, courtesy of Flickr Creative Commons.

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