Global HotSpots

#SheTrades: Global Actions to Empower Women to Trade

It is time to unlock women’s economic potential!

Akinyi Odongo, Kenyan fashion designer, with Arancha Gonzalez Credit: ITC

Takeaways


  • Unequal access to capital is a reason why women are underrepresented among trade firms.
  • Helping women-owned firms to go global is a concrete contribution to women's economic empowerment.
  • Whether as entrepreneurs or employees, women face restrictions on their economic opportunities.
  • In several countries, laws confine women to low-paying business activities in the informal sector.

Akinyi Odongo is a fashion designer in Kenya. Her elegant dresses and colourfully printed waistcoasts would look good in high-end boutiques anywhere.

But making a top-quality product isn’t enough to open the door to international markets. To scale up her business and reach customers from Johannesburg to New York, Akinyi needs to build relationships with potential buyers who will stock her clothes. And she needs capital to buy machinery and raw materials, and to employ more tailors.

It’s a global market out there

About a thousand kilometers north of Nairobi, in Ethiopia’s capital city of Addis Ababa, Sarah Yirga owns and manages YaCoffee, a small roasting operation.

For Sarah and her husband, international sales would mean the difference between breaking even and hiring more workers, investing in vacuum-packaging machinery, and securing easier access to the country’s best coffee beans.

But finding customers is easier said than done.

Businesses the world over are confronting similar challenges, especially when they try to sell into new markets. But these obstacles are particularly high for women entrepreneurs in developing countries.

Removing hurdles for women entrepreneurs

Access to finance is particularly daunting. Women are significantly less likely to have bank accounts and access to financial services than men.

The International Finance Corporation estimates that the worldwide gap in financing for formal, women-owned small and medium-sized enterprises (SMEs) totals close to $300 billion.

Unequal access to capital is just one reason why women are underrepresented among firms that trade.

That ought to change expeditiously, not least for this simple reason: Firms that trade incidentally tend to be more dynamic, sustainable and productive.

Discrimination persists, even if it is self-defeating

Given that women-owned firms tend to have more women workers, helping these businesses go global is a concrete contribution to women’s economic empowerment.

Business surveys in 20 developing countries conducted by the International Trade Center indicated that only about a fifth of companies that export are owned or managed by women.

Whether as entrepreneurs or as employees, women face widespread restrictions on their economic opportunities. In far too many countries, discriminatory laws confine women to low-paying business activities, more often than not in the informal sector.

In 18 countries (see chart), the law gives husbands the right to prohibit their wives from working outside the home.


Table: Gendered restrictions of rights within marriage, by country. (Click to enlarge)

Enlarge Source: Women, Business and the Law database, World Bank

Gender-based job restrictions tend to be result in wider wage gaps and lower employment rates for women.

Like China and US – combined!

The social and legal barriers that relegate hundreds of millions of women to subordinate or marginal economic roles exact an enormous economic cost on all of us.

The McKinsey Global Institute has estimated that if women’s wages and labor force participation were raised to make them equal to those of men, it would boost global output by over 25%.

It is worth understanding the true significance of that 25% number: This is equal to adding a new United States and China to the world economy.

At every level, from individual families to entire countries, discrimination is not only unjust, it’s bad economic policy.

When women are paid for their work, and have control over how the money gets spent, they invest much more of their income than men do in their families’ education and health.

Especially in the poorest households, empowering women yields positive social and economic effects that last for generations.

Companies, too, benefit from gender equality. Research shows that having more women on corporate boards and in leadership positions is associated with higher profitability.

When women have greater economic opportunities, countries tend to rank higher on measures of national competitiveness. This confirms what we instinctively know to be true: If a team neglects the talents of half of its players, it is no recipe for victory.

How to make real progress

Women’s economic empowerment is not a matter for government policy, the private sector or social change alone. All have critical roles to play.

This is why we at the International Trade Centre have launched the “SheTrades” initiative, which seeks to connect one million women entrepreneurs to global markets by 2020.

The initiative’s Call to Action spells out seven areas in which governments, the private sector and civil society groups can make concrete pledges to remedy obstacles holding back women-owned businesses.

– The private sector

Multinationals can pledge to source more from women-owned suppliers like Sarah Yirga. Banks and investors can pledge to ensure that businesses like Akinyi Odongo’s will have equal access to the financing they need to grow.

– Governments

Governments can promise to fix discriminatory laws, procure more goods and services from enterprises run by women, and support institutions like trade promotion agencies that can help businesswomen like Sarah and Akinyi find new market opportunities.

– Other actors

Standards-setting agencies can help women-owned businesses comply with the quality benchmarks needed to access major markets.

Academics and civil society groups, together with statistical agencies, can collect and analyze the gender-disaggregated data needed to inform better policies. Such data would help financial institutions understand the business case for investing in women!

Momentum behind SheTrades is building. Last month, stakeholders in Nigeria pledged to enable 200,000 women entrepreneurs to connect to global markets.

Barclays Bank of Kenya has set up a $50 million fund together with a program to provide financial services and business skills training for 10,000 women entrepreneurs.

The Finnish government has set specific development aid targets for supporting women’s economic empowerment. Rwanda and Chile are working to ensure public procurement provides better opportunities for women’s businesses.

Finally, SheTrades is also a web and mobile app that helps women in business connect with each other, share experiences and conclude business deals. In the 21st century, it should no longer be difficult to find a good women-owned business as a supplier.

The Global Goals on Sustainable Development adopted by the United Nations last September aim to eliminate extreme poverty by 2030 and to achieve gender equality in education and work. The link between the two is no accident: they must happen together, or neither will.

To learn more about SheTrades, click here.

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About Arancha González

Arancha González is the Executive Director of the International Trade Centre (ITC).

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