Empowering African Women in Cross-Border Trade: A Differentiated Approach for Success
November 20, 2023
Trade is an important pathway to Africa's export led industrialisation. The World Bank predicts that the African Continental Free Trade Area (AfCFTA) will boost Africa’s income by US$450 billion by 2035 and increase intra-Africa exports by over 81 percent. However, current estimates of African trade flows tend to miss the contribution of informal traders in border regions and small enterprises run primarily by women and youth. We also know that between 50 and 60 percent of total intra-African trade is carried out by unregistered traders or firms.
As women constitute up to 70 percent of informal cross-border traders, their contribution to trade and industrialisation is grossly undervalued. They are also locked out of emerging opportunities. According to a report titled Engine of Trade in Africa: Amplifying the voices of women across Africa on how to make the AfCFTA Protocol on Women and Youth in Trade work for development pre-existing gender imbalances at the macro, meso and micro levels could hinder women from taking advantage of, and fully benefiting from AfCFTA. If this gender gap is bridged, a McKinsey study projects that Africa could gain $316 billion in GDP by 2025.
If women in trade are to benefit fully and enhance their contribution to Africa’s industrialisation, we must go beyond generalisation. It is important to acknowledge the varied landscape of women engaged in cross-border trade. For instance, women entrepreneurs are often engaged in services, agriculture and natural resource-based sectors. They are often food processors, but also play an increasing role in the pharmaceuticals, cosmetics and textile industry using natural products. The scale varies from women carrying their goods across borders to international exporters to other African countries and beyond.
There are common and also distinct challenges faced by different categories of female traders. Across the board, limited access to information and knowledge on trade-related issues including knowledge on the benefits and impact of AfCFTA is a significant barrier. In addition, limited access to productive and financial resources hinders business expansion. Medium scale exporters have significant challenges with logistics and certification processes including limited information of property rights. For larger scale exporters, a key constraint is the lack of enabling environment for trade activities including harmonisation of regulations and processes at borders.
As the guided trade initiative opens doors for faster integration, now is the time to unlock the full potential of women in cross border trade. Building on the recommendations from the AU and UNDP Futures Report, 2020 on increasing productivity through skills, investment and innovation, we propose a differentiated approach to unlock the full potential of women in cross-border trade. To harness the opportunities presented by the AfCFTA, African countries should focus on the specific needs of small agro and food processors, medium innovators and large-scale traders.
Boost small agro and food processors by cultivating quality and aggregation
Small agro and food processors who form a substantial portion of women in cross-border trade process local agricultural products and contribute significantly to the agricultural value chain. However, they face challenges from inadequate infrastructure and limited access to technology that hampers the quality and quantity produced. They also have difficulties in meeting market demand. Initiatives that promote mechanisation, energy efficiency, quality standards and aggregation will help to improve their productivity and trade competitiveness while enhancing economies of scale.
Scaling up targeted assistance and better coordination across existing programs for capacity development, quality assurance, access to technology and financial support can help to transform the landscape for small processors. UNDP is supporting efforts by the Ghana Enterprise Agency and the AfCFTA National Coordination Office to create a digital gateway that empowers MSMEs through access to market information, knowledge about AfCFTA and connection to existing support programs and financial assistance targeting MSMEs by various actors.
Encourage medium innovators by harmonizing standards and connecting to supply chains
Innovative women in fields like textiles, herbal medicine, and cosmetics are the engines of creativity and entrepreneurship in cross-border trade. However, they face barriers such as non-harmonised standards across borders and difficulty connecting to African supply chains. Streamlining processes for these women to access regional markets, harmonization of standards across borders, creating a unified regulatory framework and easing the process of connecting to African supply chains will simplify the regulatory landscape, making it easier for them to comply with consistent standards and expand their market reach.
Developing mentorship programs to guide medium scale entrepreneurs in navigating the complexities of cross-border trade and connecting them through collaborative platforms will help foster innovation. Similarly, encouraging technologies such as Paystack an online payment platform, and online trading platforms such as Jumia and Kikuuwill continue to broaden the scope and security of online transactions for medium entrepreneurs transacting across national borders, ultimately driving economic growth.
Grow large-scale exporters by simplifying customs, taxation and logistics
For women involved in large-scale export businesses within and outside Africa, the challenges escalate. They have to navigate complex customs processes, taxation hurdles, and inefficient logistics systems all of which contribute to prolonged trade times and related expenses, limiting the full potential of their businesses. For instance, participants in Ghana’s national consultations on AfCFTA indicated that ‘It takes roughly 18 days to ship something from Ghana to Europe but twice as long to ship something from Ghana to Kenya. Similarly, a package that would cost $350 to ship to Europe would cost $12,000 to ship to Kenya’. Simplifying customs processes, ensuring transparent and fair taxation policies, and developing efficient logistical infrastructure can reduce trade times and related expenses, unlocking the full potential of the women enterprises.
As we commemorate this Africa Industrialisation Day, it is crucial to recognise the significant role that women play in cross-border trade. By dismantling homogenous perceptions and acknowledging the unique challenges faced by different categories of female traders, we pave the way for tailored solutions. A differentiated approach that tailors support to their specific needs ensures a more inclusive and robust industrial landscape where all women can thrive, fully leverage the opportunities presented by AfCFTA and contribute to the continent’s economic growth.
As we commemorate this Africa Industrialisation Day, it is crucial to recognise the significant role that women play in cross-border trade.Angela Lusigi