On 1st January 2021, trading under the African Continental Free Trade Area (AfCFTA) Agreement commenced after months of delays caused by the COVID-19 pandemic.
The AfCFTA aims to bring together 1.3 billion people in a $3.4 trillion economic bloc, making it the largest free trade area since the establishment of the World Trade Organization. Ghana is hosting the AfCFTA Secretariat in its capital city, Accra.
A pathway to achieving development goals
If African countries enhance competitiveness through trade and create more efficient regional value chains and labour markets, as envisaged in the AfCFTA Agreement, they would increase momentum towards implementing the 2030 Agenda for Sustainable Development. Poverty and inequality would be greatly reduced through sustainable structural transformation that prioritizes reaching those farthest behind.
In addition, the expansion of choices and capabilities for women and youth through intra-Africa trade and interconnectivity would help to achieve several goals under the Agenda 2063 of the African Union, including Goal 4 on transformed economies through sustainable and inclusive economic growth, Goal 17 on full gender equality in all spheres of life and Goal 18 on engaged and empowered youth and children.
The AfCFTA as a driver of structural transformation and job creation
The AfCFTA could transform Africa’s economic landscape and create productive opportunities. The potential increase in manufacturing jobs, commercial enterprises and agribusinesses could change the lives of millions of women and youth who often face higher levels of unemployment and are overrepresented in vulnerable jobs.
According to the United Nations Economic Commission for Africa (ECA), the AfCFTA could become the largest regional free trade zone in the world, with a combined business and consumer spending of US$6.7 trillion by 2030.
The Commission also estimates that intra-African trade would increase by 15 to 25 percent, or US$50 billion to US$70 billion, by 2040. The United Nations Conference on Trade and Development has estimated an increase of up to 33 percent.
The extreme vulnerability of women’s enterprises
The coronavirus disease (COVID-19) has disrupted the movement of goods, services and people, which has most impacted the poorest and most vulnerable. Workers and entrepreneurs in the informal sector, comprising 85.8 percent of Africa’s workforce, were particularly affected by social distancing and stay-at-home orders that saved lives but decimated livelihoods. In addition, 9 of 10 African working women are in the informal sector, and most are self-employed or contributing to a family business.
Strengthening women’s enterprises through stronger trade and value chains creates opportunities for wealth and empowerment that could lift millions out of poverty. These entrepreneurs are often engaged in services, agriculture and natural resource-based sectors, for which there is significant potential to increase productivity by enhancing skills, increasing investment and promoting innovation.
Women and youth in decision-making
Current estimates of intra-African trade undervalue the contribution of informal traders in border regions and small enterprises run primarily by women and youth. Estimates of intra-African trade are quite low–approximately 16 percent of imports and exports in 2018; however, between 50 and 60 percent of total intra-African trade is carried out by unregistered traders or firms. Women are the face of informal cross-border trade in Africa and account for up to 70 percent of informal cross-border traders.
Workers and entrepreneurs in the informal sector, comprising 85.8 percent of Africa’s workforce, were particularly affected by social distancing and stay-at-home orders that saved lives but devastated livelihoods.
And yet, women traders and their organizations are often excluded from programmes and decision-making on trade issues. Furthermore, research shows that women are not reached by development interventions to facilitate trade, increase productivity and improve competitiveness in export-oriented sectors.
Many women traders and entrepreneurs do not have access to the information and training opportunities available through trade networks. Their voices and needs, particularly those of women in the informal sector, are absent in AfCFTA negotiations, policymaking and decision-making.
Prioritizing women and youth for prosperity for all
Only resilient, prosperous and sustainable livelihoods can withstand future crises in a post-COVID-19 world. More equitable access to the opportunities arising from the implementation of AfCFTA could create shared prosperity and reduce vulnerability to future shocks.
This includes increasing the participation of women and youth-led enterprises in agricultural and food trade, which is expected to increase by 20 to 35 percent (US$10 billion to US$17 billion).
These opportunities are not gender or scale neutral. Overlooking the specific challenges faced by women and youth in business may result in many being left behind. African women who work as informal traders often face harassment, violence, confiscation of goods and even imprisonment.
The operationalization of the AfCFTA and the development of institutional mechanisms and support infrastructure must be guided by their potential impact on women and youth, as well as the potential contributions these groups can make.
In order to leverage Africa’s rich human assets in the AfCFTA, the needs and priorities of women and youth must be reflected in the legal and technical frameworks currently being established. Including their voices will ensure more equitable and sustainable opportunities, which is critical to the effectiveness of the ongoing liberalization of the services trade.
This includes facilitating cross-border investment, protecting intellectual property rights, collaborating on customs and taxation, and implementing trade facilitation measures. In particular, innovative solutions and new technologies must be applied to offset the uneven distribution of benefits from liberalization, which stems from differences in resource availability and levels of industrialization.
Moving forward, women must drive the agenda
Women in business should be fully engaged in the implementation of the AfCFTA in order to improve the distribution of benefits and accelerate the Agreement’s impact on jobs, livelihoods and economies. Boosting productivity and closing the gap in resources between women and men in trade could change the trajectory of the AfCFTA, leading to faster implementation and shared prosperity.
Governments, regional institutions and trade associations and networks must take three bold policy actions to ensure that micro and small enterprises owned primarily by women and youth are not left behind.
First, Governments should support real citizen engagement in the design and implementation of legislation and the development of hard and soft infrastructure for the free movement of goods and services. They must promote advocacy, raise awareness and create space for consultations. This includes engaging with empowered and capable women’s business associations and networks.
Second, regional institutions should help countries to collect and share trade-related data that captures the informal sector. Realtime monitoring of the Agreement’s impacts on economic, social and environmental indicators is essential for compensating losers and convincing late adopters.
Mapping and connecting trade observatories across countries and employing digital technology could provide real-time, disaggregated data to aid in negotiations and dispute settlements, as well as promote transparency and accountability.
Third, more public and private partnerships are needed to support gender-sensitive financing and business development services. It is necessary to scale up and sustain investment in women’s enterprises and provide skills business development services in order to grow viable women’s businesses and value chains that transition from the informal sector and respond to opportunities emerging from the AfCFTA.