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This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.
Author: Chinwe Egwim, Economist, FBNQuest
Trade activity is rooted in basic supply and demand. The female population is estimated to account for 50% of Africa’s total population, and so it is essential to consider women when deliberating on implementation of crucial policies such as the Africa Continental Free Trade Area (AfCFTA) agreement. The AfCFTA aims to create a single continental market for goods and services in member nations of the African Union. It is expected to be the largest global trade bloc, consolidating a market of 1.3 billion consumers with a combined GDP of about $3.3 trillion.
Africa could add at least 4.5% to that on the back of enhanced trade activities, according to the Africa Development Bank. The role of women in driving general consumption patterns cannot be overemphasized. Across households, women are more likely to spend their income on products and services that will benefit the smooth running of their homes. Evidence from a range of countries shows that increasing the share of household income controlled by women, either through their own earnings or cash transfers, changes spending patterns that benefit children. Industry sources suggest that women reinvest 90% of their income back into their families, while men reinvest only 30-40%. Therefore, women have a critical part in achieving the desired demand boost that would support the exchange of goods and services among countries throughout the AfCFTA.
In most of the African countries signed up to this agreement, the agriculture sector is a primary driver. The contribution of women to the agricultural labour force ranges between 60-80%. Meanwhile, a few research reports estimate that the average female labour share in crop production is 40%; it is slightly above 50% in Malawi, Tanzania and Uganda, but substantially lower in Nigeria (37%), Ethiopia (29%), and Niger (24%). There are no systematic differences across crops and activities, but female labour shares tend to be higher where women own a larger share of the land and are educated.
Agricultural value chains reveal disparities in access to formal finance for women. The median capital available to female agriculturists is two times lower than what is provided to their male counterparts. The lack of ownership of collateral, with tradition seldom ceding property rights to women, coupled with the absence of credit histories has stopped female agriculturists as well as women-owned businesses from accessing loans. Improving financial support for women would increase the number of new businesses, which in turn should boost economic activities as well as enable business expansion and lead to increased productivity and growth.
There have been several surveys carried out across communities within Africa (some conducted by the UNCTAD) that point towards poor access to vocational and on-the-job training for women. Such opportunities would increase their chances of sharpening the required skills to boost production, and then engage effectively in export-oriented activities that could expand trade – and by extension their livelihoods. In some cases, women in rural economies resort to an unconventional apprenticeship approach where they learn through observation, while supporting the skilled worker in managing some other menial responsibility for little or no wage.
Uprooted, a documentary about the aftermath of the Boko Haram insurgency and changing gender roles in northern Nigeria, made it clear that gender inclusion across all spheres of the economy is a necessity. The apprentice scenario described above was one means by which the women depicted obtained the life tools that helped displaced families after the insurgency. They acquired skills that allowed them to create locally demanded goods – such as handicrafts – as farms had been destroyed, and their husbands, the farmers, were unable to rebuild.
There are multiple transmission channels through which gender relations affect trade performance and a country’s competitiveness. For instance, educating girls translates into better knowledge and skills acquisition needed to push them towards becoming economically active as adults, so contributing to national productivity. According to a study carried out by the Nike Foundation, adolescent pregnancy costs Kenya’s economy at least $500 million per year, while investing in girls would potentially add $3.2 billion.
Ideally, if implemented properly, the AfCFTA should result in the rise of economic clusters and industrial parks across African countries similar to the flagship Hawassa Industrial Park in Ethiopia. It is expected to generate 60,000 jobs in its first phase; currently, 80% of those employed in the industrial park are women.
Based on reports around special economic zones, the link between trade openness and gender was initially established in the early 90s when women were drawn into paid employment in manufacturing in unprecedented numbers in Puerto Rico, Ireland and East Asian countries. In an attempt to tilt towards being export-oriented, these countries promoted light, labour-intensive manufacturing industries such as textiles, clothing, leather and footwear, with women accounting for the larger share of employed labour. Though the wages they earned were considerably lower than their male counterparts, paid employment provided relatively stable access to cash income that otherwise might not have been available in the informal or agriculture sector.
Entry into export-oriented manufacturing for women is described as a double-edged sword. The gender wage gap has led to a high demand for female labour in an environment of rising international competition. Given the favourable unit-labour cost on the back of lower wages for female workers, investments have increased partly because the differential in wage payment is channelled towards purchasing manufacturing inputs to boost output. The onus is on African government officials to ensure that wage payment is gender-neutral, not just in the light manufacturing industry directly correlated to export orientation, but in all sectors of the economy.
Policy formulation and implementation are important for every economy to thrive. Essentially, proper implementation of targeted policies that will address the structural deficit in each country within the continent is required for the AfCFTA to succeed. In the same vein, weaving policies that are female-focused to boost productivity from the female economy is equally important. A major concern is the low level of female participation in decision-making roles. Women’s collective voice is very faint when it comes to policy direction and decision-making across African governments.
Rwanda has made deliberate and laudable steps to boost female representation in critical areas of its economy. The country has the highest representation of women in politics, education and the workplace in Africa. Other African countries that have made some effort towards female inclusion include Mauritius and Namibia. However, a lot of work is still required among African countries to support the advancement of women into decision-making roles.
Women are essential in promoting economic exchange across countries; dialogue on trade and regional integration is incomplete without discussing policies that support them.
In summary, key recommendations for government policy that would enhance the AfCFTA are:
1. Improving financial support and access to credit to female-owned enterprises in Africa
2. Creating more relevant initiatives directly targeted at boosting the formal education of girls in Africa
3. Ensuring that African women and girls are included in skills acquisition programmes led by government, to equip them with the required tools that will enable them make valuable contributions to trade.
4. Providing policies that will assist with closing the gender wage gap, particularly in African industrial parks
5. Ramping up efforts towards increasing the level of female participation in decision-making roles, especially in the public sector and policymaking sphere.
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