Gov't must promote trade opportunities that empower women across the Commonwealth
Women still face higher barriers to entry to international trade compared to their male counterparts. This is an opportune time to think about how the UK can promote trade and investment opportunities in order to empower women across the Commonwealth, writes Theo Clarke MP.
Just a few days ago we celebrated International Women’s Day and Commonwealth Day, it is therefore an opportune time to think about how the UK can promote trade and investment opportunities in order to empower women across the Commonwealth. The June 2020 Commonwealth Heads of Government Meeting (CHOGM) in Rwanda, will be a fantastic opportunity for the UK to build on its Global Britain agenda.
When it comes to international trade, there is a clear advantage in being part of the Commonwealth. Yet, for this advantage to be realised, governments, private sector and international organisations need to work hand in hand to level the playing field.
Today, despite encouraging progress at multilateral and domestic levels, women still face higher barriers to entry to international trade compared to their male counterparts. Concerted efforts are needed to improve the business and policy ecosystem, boost women led enterprises’ competitiveness and connect them to markets.
2020 is the year to scale up our ambition.
The Commonwealth Advantage and women in trade
Commonwealth countries are more likely to trade and invest with each other, than they are with the rest of the world. Commonwealth members, collectively, are less protectionist than other countries. Reduced trade costs and similarities in business, regulatory and administrative systems underpin the ‘Commonwealth Advantage’. According to the International Monetary Fund’s forecasts, nine out of the top 25 fastest growing economies are Commonwealth countries. This demonstrates the trade potential of the group.
Around the world we see clear evidence of how the UK’s development budget is stimulating job creation and economic growth, helping to nurture new businesses and grow them into potential export partners. A good example in my constituency is JCB which has a local manufacturing plant in Hixon in Staffordshire, from which they export generators to numerous countries in Africa. By creating more opportunities for local businesses to export to emerging markets we can create more jobs in Stafford. This business model can be replicated across the world to provide exporting opportunities.
So how do women do in international trade? The International Trade Centre’s (ITC) large scale surveys, illustrate the extent of the challenge. They estimate that only one out of five exporting companies is women led. This disparity does not only occur developing countries, but also across Europe. Women led enterprises are generally concentrated in less dynamic sectors than male led ones and fewer women led enterprises are involved in both import and export. When it comes to employment, job segregation means that women tend to work in lower paid jobs.
What are the reasons for this disadvantage? Women face unequal access to finance, skills, property and business networks. While some of their disadvantages can be explained by the fact that women often run smaller businesses, other barriers to entry are gender specific.
Ecosystems, competitiveness and finance
Women’s economic empowerment is a key priority across the UK’s development assistance portfolio. Since 2010, the UK has supported the ITC’s women and trade programming. Under ITC’s SheTrades Initiative, which aims to connect three million women entrepreneurs to market opportunities by 2021, a UK funded programme for the Commonwealth was launched in 2018, to increase economic growth and job creation in Commonwealth countries by empowering women to trade.
While the challenges and solutions need to be context specific, broadly speaking, three things need to happen to change the status quo. First, we need to reform the business, policy and legal ecosystem, in order to ensure it does not stifle female entrepreneurship and participation in trade. To gain a clearer picture of the patterns of women’s participation in trade, we need better gender disaggregated data. This will help us understand which barriers prevent women from trading in the first place and, if they do trade, what holds them back. Women’s organisations need to have a voice when policies are designed and implemented. Better coordination between ministries and agencies is critical to ensure that solutions are comprehensive and have the desired effect. The private sector has an important role to play too, from mentoring and training women to supply chain diversity programmes. Companies must strive to create concrete opportunities for female entrepreneurs.
Secondly, if we want to accelerate progress, targeted interventions for women entrepreneurs work best. Supporting women to compete internationally on price, quality, packaging, standards and marketing as well as introducing them buyers and investors, can create a multiplier effect. This will benefit women individually as well as boosting their country’s economy. Results from SheTrades in the Commonwealth indicate that women entrepreneurs have employed more women and have, on average, added two women led companies to their supplier base. Three out of four women entrepreneurs are mentoring other women or invest in community projects. They are also powerful role models for the next generation of women entrepreneurs. This positive externality’s benefit to society, should not be underestimated.
SheTrades is moving women into sectors where they are currently nowhere to be seen. In Bangladesh, Akhtar Afrin’s company, Opus Technology, leverages the Internet of Things, Artificial Intelligence and Intelligent Controls. She is now partnering with a Chinese software company on a joint venture on mobile and web based applications. Another good example is Outsource Global, founded by Amal Hassan. It is Nigeria’s first international standard compliant commercial business process outsourcing company. It caters to both the US and domestic markets and, as a result of support from the UK funded SheTrades Commonwealth programme, supplies a Japanese communication company.
Finally, countries and financial institutions need to put their money where their mouth is. Without finance, female entrepreneurs cannot grow their businesses and enter global markets. Women led enterprises receive only three percent of venture capital funding and face an estimated financing gap of USD $285 billion per year. Women often get smaller loans, pay high interest rates and receive loans with time constraints. All these factors have a negative impact on how productively an entrepreneur can use the loan. It is vital that investors are flexible and work with women entrepreneurs, by providing them with support such technical assistance and connections with business networks. By taking these measures we can provide more trade opportunities for women led enterprises.
Now is the time
2020 is an important year for women’s economic empowerment.
It marks 25 years since the adoption of the Beijing Declaration and Platform for Action. As we celebrate over two years since 127 countries launched the 2017 World Trade Organisation’s (WTO) Buenos Aires Declaration on Trade and Women’s Economic Empowerment, the global trade community is taking stock of its successful implementation and is preparing to scale up the ambition at the next WTO Ministerial Conference in Nur-Sultan. This will also be an important issue to put at the forefront during CHOGM in June in Kigali, Rwanda. This issue is also high on the agenda of the various economic groupings the Commonwealth countries belong to: from G20, to the African Continental Free Trade Area, to APEC.
The UK has made a strong commitment to the trade and gender equality agenda. In 2020, building on the UK Government hosting the Africa Investment Summit, it can scale up its ambition even further.
Theo Clarke is Conservative MP for Stafford.
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