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How removal of trade barriers benefits women

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Female workers stitch garments at an Export Processing Zone factory in Athi River. FILE PHOTO | NMG

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Summary

  • Women stand to gain up to 2.5 percent more in real income with removal of trade barriers, a new World Bank report has shown.
  • The joint report by the World Bank Group and the World Trade Organisation has revealed that trade openness can increase women income and welfare by easing business activities and reducing the amount spent on specific goods such as food, clothing and childcare items that are highly demanded by women.
  • The report, Women and Trade: The Role of Trade in Promoting Women’s Equality, cites that higher tax burden is the result of many applied duties and higher spending on imported goods by women consumers.

Women stand to gain up to 2.5 percent more in real income with removal of trade barriers, a new World Bank report has shown.

The joint report by the World Bank Group and the World Trade Organisation has revealed that trade openness can increase women income and welfare by easing business activities and reducing the amount spent on specific goods such as food, clothing and childcare items that are highly demanded by women.

The report, Women and Trade: The Role of Trade in Promoting Women’s Equality, cites that higher tax burden is the result of many applied duties and higher spending on imported goods by women consumers.

In a sample conducted in 54 developing economies, the current tariff structure in 78 percent of countries benefit male- headed households.

Even though Kenya surpassed most economies, higher tariffs which translate to a lower share of income dragged down its profile.

“Although no country overtly imposes tariffs according to gender, implicit biases can amount to “pink tariffs” that put women at an economic disadvantage—as both producers and consumers,” the report states.

The global institutions add that improved trade would lead to reduced costs and hence increase women’s wages and raise economic equality.

Apparels industry

The report states that some of the trade barriers are directly related to the way the goods and services cross international borders, such as higher trading costs or discrimination that women face at border crossings.

It also adds that female-intensive sectors face high tariffs on both inputs and outputs, singling out the textile and clothing sector where most businesses are run by women from the analysis on the 54 economies, while they still make the highest consumers in the same industry.

According to Economic Survey 2020, women comprised 32 percent or 5,685 of employees in manufacture of textiles out of 17,705.

Similarly, women form 8.3 percent or 4,431 out of 53,531 employees in the apparel industry.

Another large number operate micro, small and medium enterprises, including fashion designers and small tailors, mostly working in the informal sector.

The report cites lack of access to trade finance, customs paperwork, shipping costs and delays as the main barriers despite sector being the most labour intensive in the manufacturing industry.

It adds that majority of firms owned by women have lagged in active global markets because of size, productivity, skill intensity and inexperience, creating additional barriers for export.

The textile and clothing sector in the country relies on cotton cultivation. However, challenges remain in quality of yarn and high productions costs.

Kenya is also a net importer of yarn, fabrics and apparel, creating more pressure on the local businesses.

The Economic survey report shows the country imported 21,828 tonnes of textile yarn in 2019 valued at Sh4.66 billion, a slight drop from 21,917 tonnes valued Sh4.94 billion shipped in 2018.

The domestic market has also relied heavily on import of second-hand clothing (mitumba) which has created increased competition for the Kenyan-produced fabrics.

This is made worse by the large number of multi-product fashion stores that also rely on imported products.

Kenya National Bureau of Statistics show the value of imported second-hand clothing in 2019 was Sh17.77 billion with 184,555 tonnes shipped in, a five percent increase from the previous year.

Thousands of traders and casual workers in both the second-hand and new products business have been affected through the global value chain (GVCs) for apparel due to the pandemic.

In March, Kebs imposed a temporary ban on mitumba imports in line with its standards prohibiting buying of second-hand clothes from countries experiencing epidemics.

Even though the move was reached to prevent importation of coronavirus, it raised debate on the need to uphold the ban as the domestic textile industry continued to suffer.

A large volume of order cancelations and temporary closure of retail shops and business activities have been witnessed since the ban was effected in April before being lifted in late July.

World Bank and WTO states that textile and apparel industries would benefit the most through access to cheaper imported inputs and smooth supply chain governance issues, resulting in gains in competitiveness and increased exports.

“This would in turn result increased demand for female labour because the gender composition of workers in both sectors significantly favours women,” the report states.

“Trade liberalisation reforms not only increase exports, imports, and GDP but also—in developing countries with a comparative advantage in female-intensive sectors, such as textiles and apparel— significantly expand female employment.”

Women were also found predominantly working in services sectors that are less trade-intensive such as hospitality, education, or health.

“These sectors face much higher barriers to trade than manufacturing sectors where most of the male labour force is employed,” it adds.

Other sectors that have been major job creators include horticulture, floriculture GVCs, food products and beverages.

In Kenya up to two million workers are employed in the horticulture sector, and women hold many of those jobs.

In manufacture of food products, 27.4 percent of the 142,169 employees were female, according to KNBS.

Horticulture, tea, articles of apparel and clothing accessories, coffee and iron and steel remain the leading export earners, collectively accounting for 59.0 percent of the total value of domestic exports.

AfCFTA

The report has vouched for doubling of the value of exports in manufacturing sector with projections to rise women’s share of total wages by 5.8 percentage points on average, through a combination of increased employment and higher salaries.

From the analysis, firms that are involved in export activities employ more women.

In developing countries women are reported to make up to 33.2 percent of the workforce of firms in export business, compared with just 24.3 percent of non-exporting firms and 28.1 percent for non-importing firms.

Women are also better represented in firms that are part of global value chains and that are foreign owned.

The World Bank estimates that free trade in the African continent would close the wage gap, especially for skilled women workers though the implementation of the African Continental Free Trade Area (AfCFTA).

AfCFTA is projected to raise wages for skilled and unskilled female labour by four percent and 3.7 percent from the baseline by 2035.

This is compared with a 3.2 percent increase for all males.

“That increase translates roughly to an extra two weeks’ pay each year—enough for a woman earning $5 a day to pay for one family member’s personal supplies, school supplies, and uniform for an entire school year.”

“Trade creates better jobs for women. In both developing and emerging economies, workers in sectors with high levels of exports are more likely to be employed formally - giving them opportunities for benefits, training, and job security,” the report states.

Pandemic shock

The analysis on the countries was, however made before the onset of coronavirus and report released amid the crisis that has laid bare the challenges and opportudnities faced by women in line of trade activities.

World Bank points that online platforms have helped women mitigate the impact of the crisis by marketing and selling goods and services, despite disruptions on the supply chains induced by the Covid-19 pandemic.

On the other side, women specialisation on manufacture of apparel and the provision of touristic services has left them more vulnerable to the trade shock of this crisis.

As a result, there are fears that the pandemic would reverse some of the economic gains on women.

“Because some trade links have already broken and near-term trade growth remains weak, women are in danger of losing a sizable share of the economic gains they have reaped as a result of trade,” the report adds.