By Nnenna Nwabufo, African Development Bank’s Director General for East Africa Region
The African Continental Free Trade Area (AfCFTA) has officially become the largest free trade pact in the world since the establishment of the World Trade Organization. It seeks to transform the continent's economic prospects by creating a single market for 1.3 billion people across 54 countries with a combined gross domestic product (GDP) of more than US $3 trillion. The agreement is expected to boost intra-African trade, increase competition, create better employment opportunities and lift millions of people from extreme poverty.
Touted as a game changer, the AfCFTA raises optimism of empowering all participants in cross-border trade. However, there are legitimate concerns on how the pact can overcome historical challenges of exclusion, socioeconomic disparities and gender income gap.
We know for instance that women are over-represented among the poor in Africa, and make up the largest informal workforce on the continent. Women in Africa already sit on the margins of production and manufacturing sectors of the economy, meanwhile their economic activities are largely informalised.
On cross border trade, women constitute more than 70 percent of cross-border informal traders. Their trading activities contribute significantly to the continent’s economic output yet trade policies often overlook and undermine their activities. The status of their economic activity makes them particularly vulnerable to harassment, misinformation, and fraud. Recognising these problems and developing better ways to address them will be fundamental to realising the full potential of the AfCFTA. Africa stands to benefit greatly from the prospects of the AfCFTA if the interests of informal women traders are duly represented.
Mainstreaming gender into the implementation of the AfCFTA
The AfCFTA promises to improve the export capacity of both formal and informal service suppliers, with particular attention to gender equity. In particular, it aims to transition informal traders to operate through formal channels, so they can enjoy better protection. Meanwhile, for most of these traders, the informal space may be the only safest place. Hence, the extent to which the AfCFTA creates space for informal traders will be critical to its success. But what does it mean to mainstream gender into AfCFTA implementation?
Mainstreaming gender in the implementation of the AfCFTA means removing barriers that prevent women from fully engaging in cross border trade. Women encounter several limitations in their participation in trade and commence in Africa. These limitations include inadequate market information, low capacity and regulatory bias among others. To ensure that the AfCFTA addresses these obstacles and creates equitable opportunities for all requires focusing on information sharing, capacity building and enhancing access to markets.
Promoting information sharing is particularly essential to ensure women benefit from the opportunities the agreement present. With their limited access to technology, women informal traders are often insufficiently equipped with timely market information on commodity price, a situation which makes them victims of exploitation. Providing platforms for information exchange, facilitating access to digital trade and developing networks can therefore contribute to reducing information asymmetries in trade activities for women.
Another way to make the AfCFTA implementation gender responsive is by enhancing women’s ability to access new markets. A priority action in this area should involve supporting women entrepreneurs through capacity building and advocacy. Improving the legal framework and policy environment on cross border trade also has the potential to catalyse transition from informal trading activities to formalised ones.
Supporting inclusive digital technology is equally critical. There is enormous potential for digital technology to improve many aspects of trade activities for women. We have seen that opportunities for using digital technologies in Africa have grown rapidly in recent times as a result of the growing number of internet users across the continent. More importantly, COVID-19 has demonstrated how virtual technology can be leveraged to facilitate trading and distribution of products. Building the capacity of women on the use of digital trade applications and creating online functional trading communities will enable more effective integration and transitioning into formalised cross border trade.
What the African Development Bank is doing to promote inclusive AfCFTA
The African Development Bank has over the years invested in progressive initiatives that enable women in Africa to thrive in their various endeavours. The Bank acknowledges that women are key stakeholders in Africa’s integration and economic development, and as such support programs that extend economic opportunities to them.
In 2020, for example the Bank’s Board approved a new Gender Action Plan to enhance women’s capacity in accessing new markets and finance. At the beginning of this year, the Bank started the implementation of a strategic initiative known as the Affirmative Finance Action for Women (AFAWA). This initiative purports to unlock up to US $3 billion in new financing for women entrepreneurs and women-owned businesses across Africa. Through the AFAWA Guarantee for Growth program, the African Development Bank is helping to de-risk women-led small and medium sized enterprises and incentivize financial institutions to increase lending to women.
In terms of bridging the digital trade gap, the African Development Bank has approved two research grants to develop innovative platforms that will improve women’s access to a range of digital financial services and virtual markets, thus increasing their participation in e-commerce. This is particularly essential, given the prospect e-commerce has in reducing cost of trade and information for women entrepreneurs.
Despite these efforts, more needs to be done, and the extent to which the AfCFTA will achieve its inclusive objective depends on undertaking the aforementioned priority actions. More importantly, there is the need for strengthening partnerships between African countries and development partners in facilitating projects that help to reduce supply-side capacity constraints for women.