Strategy ConsultingFebruary 8, 2022by fieconIntegrating Women & Youth-Led Businesses into the AfCFTA Agenda

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Women and youths form a critical demographic that has direct impact to the success of the African Continental Free Trade Area (AfCFTA) agreement. The main agenda for the AfCFTA is to create a single market for goods and services across Africa; facilitated by free movement of people and capital. However, despite Africa being the youngest continent in the world, the participation of youths and women in cross border trade and corporate governance is still very low and not proportionate to their population.

In Africa, MSMEs which are mainly owned and led by youths and women, represent about 80% of the total number of businesses across the continent. They also account for more than 80% of  employment in in both the formal and informal sectors in Africa; while contributing more than 50% to the Gross Domestic Product (GDP) of the continent. Specifically, women play a key role as cross border traders; with over 70 percent of them engaging in informal trade.

Premised on the above economic significance of the youths and women in Africa; the AfCFTA agreement explicitly provides for gender equality, women empowerment and youth development under Article 27.2 of the Protocol on  Trade in Services. The article emphasizes the need to improve the export capacity of formal and informal service suppliers; with particular attention to micro, small and medium-sized (MSMEs) operators and women and youth service suppliers.

In line with this provision in the AfCFTA; it is expected that the free trade area will avail more trading and entrepreneurial opportunities for youths and women in the formal and informal sectors that relate to agriculture, service sector, manufacturing among others.

While the AfCFTA may seem like the magic bullet for all the financial struggles and infrastructural incapacitation for women and youths, the benefits will not accrue automatically. It is important to recognize that women and youth traders are impacted differently because of their economic representation; and societal inequalities such as being less equipped with resources, technology and skills that can help them to quickly take advantage of trade liberalization opportunities.

This demographic is constantly subjected to numerous other challenges including lack of skilled labor, poor access to financing, trade barriers, lack of infrastructure, bureaucratic procedures, which hinder their willingness to engage in and benefit from cross border trade,

A better understanding of what is required at the national and regional levels to enhance trade opportunities for the women and youth should therefore be a core development agenda for African governments. Proponents of AfCFTA advocate for appropriate national policies and programmes that allow youth and women to have access to regional supply chains and cross border trade opportunities to pivot their roles in the agreement.

 

Expectations of women and youth-led businesses from the AfCFTA

  • Financial support and business development assistance

Most women and youth led enterprises finance their projects through their own funds, family funds, and borrowings from friends; which are unstainable. Given that access to finance remains a key constraint to their operations, availability of sustainable financial support such as trade finance still remains to be a key success factor the achievement of women and youth agenda under the AfCFTA.

A current solution for the trade finance challenge is the African trade financing bank – African Export-Import Bank (Afreximbank) which is providing alternative financing instruments to support MSMEs expand their trade into new markets. To supplement the trade finance, MSMEs in Africa also need to access business development assistance from experts who can help them to streamline their operations and polish their regional expansion strategies.

  • Market access and investment opportunities

Mercy Chewetu Mukupa is the founder of Queen of Chitenge; a fashion business in Zambia. In the “Making the AfCFTA Work for Women and Youth” report by UNDP & AU; she expresses her desire for the AfCFTA to provide her with new market linkages, as well as access to capital to scale her business. “One of the biggest problems is finding markets within African countries. I believe the AfCFTA will help facilitate the easy movement of goods within the continent and make it easy to find markets where our goods can be sold to help increase exports,” she noted.

  • Access to education and training

In order to leverage on technological advancements that propel e-commerce and the growth of the digital trade; MSMEs also seek to equip themselves with digital skills and expertise through accelerated educational programmes, trainings and technical support.

Role of Member States in Preparing MSMEs for AfCFTA: A Case of Senegal

Governments, particularly at the national and regional levels, should foster an enabling environment that allows entrepreneurs to take advantage of the benefits in the AfCFTA Agreement.

Senegal developed the National Strategy for the Implementation of the AfCFTA Agreement (NS-AfCFTA). The priority action plan of the NS-AfCFTA includes targeted activities aimed at increasing the contribution of women and youth in the development of productive capacities, and creating new opportunities to access export markets for their goods and services. The estimated funding requirement for the successful implementation of the NS-AfCFTA is about USD250 million. The activities included in the strategy are focused on the following main thematic areas:

  • Capacity building and advocacy

The main aim for this activity is to strengthen the entrepreneurial capacities of women and youth, advocating for gender in trade; build the capacities of traders in business management, marketing and accounting, and conducting studies on gender and cross-border trade.

  • Support for the entrepreneurship of youth and businesswomen

The strategy aims to support the creation of incubators and start-ups by youth; support women in developing businesses that export goods and services to the African market; label and protect the products of young Senegalese entrepreneurs; and facilitate their market access.

  • Creation of small and medium-sized processing industries and service businesses in the regions, and the upgrading of enterprises
  • Support for market diversification by making trade information available on Senegal’s export markets

To fully participate and benefit from the AfCFTA, women and youth led businesses should seek information on the agreement; and follow-up with relevant authorities within their countries in order to ensure their unique needs are captured in the implementation of the agreement. On the other hand, governments at national levels should map and support these women and youth owned businesses; and prepare them to scale their operations to new export markets under the AfCFTA. With both the private sector and public sector proactively taking action; the aspiration of the AfCFTA in the context of women and youths will be realized sooner.

Author: Inzillia Sasi

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