How to help women cross-border traders in Africa?

15 May 2013

Unleashing the potential of women informal cross border traders to transform intra-African trade, UNWOMEN, 2011

Informal cross-border trade in Sub-Saharan Africa is characterised by a large share of female traders at around 70 percent, for whom profits from informal trade often constitutes the sole source of earnings and economic empowerment. Women informal cross-border traders sustain their family livelihoods and contribute to their country's economy. However, they suffer from undue taxation and poor working conditions, and have limited access to credit facilities, transport services, information on market opportunities, trade rules and regulations, and storage facilities. However, support measures for women informal cross-border traders can constitute an area where gender and aid for trade initiatives can play a key role. Indeed, initiatives should focus on the facilitation of women and girls in the trade and services sector by providing training, as well as building capacity to access skills, information, network and credit for improved delivery and higher level of competitiveness. Such factors can enhance women's economic potential while promoting a formalisation component in their trading activities.

Unsung heroes with untapped potential?

According to the World Bank report Defragmenting Africa: deepening regional trade integration in goods and services, Africa is not achieving its potential in regional trade. This unrealised potential is highlighted because a significant amount of informal cross-border trade does take place between African countries. The report mentions that 85 percent of cross-border traders are young women in the Great Lake region. Studies suggest trade provides women with 60 percent of non-agricultural self-employment in sub-Saharan Africa, and they play a key role in addressing vital livelihood issues such as food and income security. Official sources report an average value of informal cross border trade in the SADC region of US$17.6 billion per year, 70 percent of which is traded by women. Informal cross-border trade is mainly conducted by individual women traders and micro-, small and medium-sized enterprises and often consists of small consignments. An important proportion of the monitored informal trade flows concerns agricultural products (e.g. maize and rice), the second category of small business activities includes consumables such as sanitary products, medicines, footwear and textiles. It is estimated that the majority of women traders are small-scale traders who depend on the modest profits generated from their trade.

Women informal cross-border traders sustain their family livelihoods and contribute to their country's economy. Recently, they have cushioned the effects of the financial and the food crises, as demonstrated in a 2009 report conducted by the International Labour Organization (ILO) in Uganda. The illegality of trade prevents women traders from securing recognition from formal government structures as important traders, which leaves their contribution unrecorded and therefore not recognized or documented. Women informal traders are incited to escape trade-related regulations and duties when important price disparities arise between formally and informally traded goods in the importing country due to high levels of import and export duties on selected commodities. In addition, the fact that officially traded-goods might be subject to complex, non-transparent or divergent regulatory requirements (e.g., customs facilities, technical regulations and sanitary standards) that contribute to high transaction costs, arbitrary applications of trade laws and regulations at the borders constitute additional factors facilitating the conduct of informal trade.

Which role for gender and aid for trade initiatives?

The case of cross-border trade along Kenya - Uganda and Rwanda - Burundi borders comes under the spotlight in relation to the need to create an enabling environment for cross-border women traders. The Protocol establishing the East Africa Customs Union mentions the special role of women in trade in its Preamble and under its Objectives, which mandate the Union to mainstream gender in its different programmes. However, women informal cross-border traders across the region do not use available formal systems and structures for most of their trade-related activities, making it difficult for initiatives such as the East African Community (EAC) and the Customs Union Protocol to have any significant impact. The main reason why women traders lack confidence towards the Protocol is the fear of taxation, women traders being familiar with the actual non-application of the stated official rate of taxation. Women traders along the Rwanda - Burundi borders experience few problems of bribes by the fact that their goods pass mainly along unofficial border routes. Moreover, women traders show little evidence of knowing the Customs Union Protocol, and face the current lack of clarity concerning the use of national identity cards. Another major problem for small female traders resides in the revision of local by-laws in border towns to bring them in line with the Customs Union Protocol and the spirit of other EAC agreements. In these circumstances, in order for women traders to realise their full trade potential and trust in formal cross-border trading structures, individual countries should provide assistance measures and an increased access to trade facilities and services thus enabling them to fully take advantage of the opportunities created by the Customs Union.

Considering the factors facilitating informal cross-border trade, a working paper elaborated by the Organisation for Economic Co-operation and Development (OECD) formulated recommendations to governments, such as diminishing the costs of formal importing/exporting; enhancing compliance levels with existing regulations; and improving trading opportunities and services for traders in the formal sector. Additionally, governments could reduce informal cross-border trade by:

    • Simplifying and reducing documentation requirements and formalities

    • Lowering the levels of fees and charges for importing and exporting

    • Expediting the release and clearance of goods from customs custody

    • Enhancing transparency and predictability of trade-related regulations and fees

    • Improving border agency coordination

    • Enhancing efficiency of controls at the border in order to lower the incidence of corruption

Women informal cross-border traders need assistance measures to comply with existing trade regulations as strong incentives towards formalisation. In this regard, it is worth mentioning the ambitious programme carried out by Economic Commission for Africa (EAC) partner States, focused on mainstreaming gender into trade policy in EAC partner States. This initiative comes as a response to the reality that women constitute the larger proportion of those who practice the small scale cross-border trade in East Africa region. The actions considered include facilitation for women and girls in the trade and services sector by providing training, as well as building capacity of women to access skills, information, network and credit for improved delivery and higher level of competitiveness.

Support measures for women informal cross-border traders can constitute an area where gender and aid for trade initiatives can play a key role. Current aid for trade initiatives to facilitate trade across borders currently focus on facilities and services for formal traders. There is scope for aid for trade to include improvements in border and customs procedures that accommodate the needs of women informal traders, as highlighted in a Canadian International Development Agency (CIDA) guide for practitioners working on gender and aid for trade initiatives. This guide identifies several areas of interventions, including:

    1. Capacity building for women's business associations, including associations and cooperatives representing female informal traders, to articulate interests and needs;

    1. Extended trade-related infrastructure (transportation, processing and storage);

    1. Capacity-building for women informal cross-border traders on trade rules (the existence of multiple regional trade agreements makes it difficult for small traders to know the rules), tariff regimes and standards (for example, consideration of group certification as a way to reduce high costs to smaller producers), and information and communication technologies;

    1. Access for women informal traders to trade finance and multiple border agency requirements.

These support measures for women informal traders mentioned previously were emphasized during the First Annual Women in Cross Border Trade Conference which took place in Liberia in 2010, an event which saw the establishment of the Women in Cross Border Trade Association in Liberia.

Conclusion

Any policy aimed at improving informal traders' activities should include a formalisation component that takes into account the scale of their activities and the standard of living of women traders. This formalisation component would facilitate an increased social and economic security by both extending social and labour protection to previously excluded workers and, at the same time, offering increased opportunities for enterprise development support and higher productivity to be delivered. Aid for Trade initiatives focused on building capacities of women informal traders in the areas of trade rules, tariff regimes and standards, access to finance, trade-related infrastructure and communication technologies could constitute a good tool to enhance their trade potential and have a positive multiplier effect on poverty reduction, economic growth, government revenues and employment creation in the sub-region.
Author: Alissa Ghils is a consultant at the Social Security Department of International Labour Organization and a previous collaborator on gender and trade at ICTSD.

References:

Gender equality and trade-related capacity building: A resource tool for practitioners, CIDA, Canada, 2003

Gender dimensions of cross-border trade in the East African Community: Kenya/Uganda and Rwanda/Burundi borders, African Trade Policy Centre, Gender and Trade Policy Briefs No.1, February 2010

Henri J. Nkuepo, "The gender mainstreaming strategy for Africa's continental FTA, Africa's Trade Law Newsletter", 2012

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