Women-Owned Businesses and AfCTA
By Sonwabise Mzinyathi
The African Continental Free Trade Agreement (AfCFTA) agreement was adopted and opened for signature on 21 March 2018 at an African Union Heads of States meeting in Rwanda. On 30 May 2019, after having received the twenty-second instrument of ratification on 29 April, 2019 in conformity with legal provisions, it entered into force. With its Secretariat headquartered in Ghana, it is governed by five operational instruments,the Rules of Origin; the online negotiating forum; the monitoring and elimination of non-tariff barriers; a digital payments system and the African Trade Observatory. If successful the AfCFTA will be one of the largest free trade areas since the formation of the World Trade Organisation, given Africa’s current population of 1.2 billion people, which is expected to grow to 2.5 billion by 2050.
The AfCFTA is expected to enhance competitiveness at an industry level utilising opportunities in large-scale production, continental market access and better allocation of resources within Africa. It is an important tool for women in Africa, who play an important role in intra-regional trade activities, either through formal trade or through informal and small-scale activities. I have been studying AfCTA to identify opportunities for women-owned businesses in Africa and this is what, in my opinion, I found to be the most significant.
The AfCFTA’s criteria for designating sensitive products and exclusion lists take into account restrictive trade liberalisation measures on specific products deemed essential for women’s needs such as reproductive health products and agro-processing. It adopts preferential trade regimes facilitating small-scale cross-border traders and smallholder farmers through measures that promote their integration into larger value chains. Granted, not all women in agriculture are subsistence or smallholder farmers, but according to Farmer’s Weekly, for example, despite women accounting for 60% to 80% of smallholder farmers in the developing world, because of legal and cultural constraints in terms of land inheritance, ownership and use, fewer than 20% of landholders are women. This figure varies widely between countries – from less than 5% in Mali to over 30% in Botswana. In sub-Saharan Africa, however, on average only 15% of landholders are women and they receive less than 10% of available credit and 7% of extension services. In addition, small-scale women farmers contribute 70% of the labour force in the agriculture sector. If AfCTA policies are properly harnessed on safeguards, standards, safety, land ownership etc. it will allow countries to protect and grow women small-scale producers and farmers.
AfCFTA provisions under the Protocol on Rules of Origin permit access to cheaper raw materials and intermediate inputs. Thus, women participating in value chains would be able to produce goods and services with significant African content in terms of raw materials and value addition in line with the preferential trade regime of the AfCFTA. Key however is for women-owned businesses to actually participate in the relevant value chains. Under the AfCFTA, women in informal cross-border trade will have greater opportunities due to the tariff reductions promised under the Protocol on Trade in Goods. Women in agriculture value chains will gain a comparative advantage by leveraging the AfCFTA’s Protocol on Rules of Origin and by increasing their participation in public procurement at the national level, with the impetus of AfCFTA preferential regimes, women will realize increased revenue gains and be better positioned to play a larger role in AfCFTA intra-regional trade opportunities.
Whilst paying tribute to South Africa’s women’s month, President Cyril Ramaphosa announced that 40% of public procurement will be set aside for women-owned businesses. In evaluating the supply-and-demand-side constraints to promoting women-owned businesses in government procurement in South Africa, a UN Women study found that women entrepreneurs account for only 9% of public procurement contract awards, and yet they account for 38% of all businesses in South Africa. Women-owned businesses in South Africa have historically faced various barriers and in other instances, appeared less competitive when tendering for government contracts.
On the other hand, whilst Rwanda’s public procurement policy framework is not actively vocal about preferential procurement for women-owned businesses, it remains the leading country in promoting gender equality in sub-Saharan Africa. Women professionals and women-owned businesses lead spheres of Rwandan public life, including in business. In fact, a recent UN Women study of Rwanda finds no significant differences between men’s and women’s participation in business.
In addition, there is great potential for women-owned businesses to leverage technology to benefit from Africa’s industrial development under the AfCTA. Technology and innovation are and will remain crucial for addressing the challenges of low structural transformation and inclusive development in Africa, of which the AfCTA wishes to address. If there was ever a time for women-owned businesses to embed technology in their businesses, it is now. Technology will be a crucial component of our participation in the opportunities presented by the AfCTA, ensuring that we are enhancing our competitiveness and shifting our resources from low to high productivity activities.
About the author
Sonwabise Mzinyathi is an advocate for using technology to bridge the inequality gap, specifically for the most vulnerable in the community – women and children. She is the Acting Chair of the South African Women in ICT Forum, a Councillor on the Broad-Based Black Economic Empowerment ICT Sector Council and she owns an impact investment company, Source Creations.