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.
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.
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.
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 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.
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.
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.
IMC and UKAid donated a library to a primary school in Pakistan’s capital city Islamabad, which will increase access to books among pupils and, ultimately, stimulate curiosity, learning and problem-solving skills.