Gender equality is not just a social imperative but a crucial economic driver. When men and women are granted equal rights and opportunities, the benefits extend beyond individual advancement to foster broader economic growth and social development. In East Africa, empowering women in trade is a vital step towards achieving this goal.
The Importance of Women in Trade
Research from the United Nations and the McKinsey Global Institute reveals that unlocking the economic potential of female entrepreneurs could add $28 trillion to global GDP by 2025. Moreover, investing in women’s economic empowerment yields a high return, estimated at $7 for every $1 spent. Women, when empowered economically, tend to reinvest in the education, healthcare, and nutrition of their families and communities, triggering a ripple effect of positive social impact.
Challenges Facing Women in Trade
Despite the clear benefits, women in East Africa face numerous obstacles to economic participation, particularly in trade. In Kenya, for example, women make up 47% of the labor force but own only 9% of businesses. This disparity is largely due to cultural, financial, and regulatory barriers.
Cultural Barriers
East African culture has traditionally favored men, who are often seen as the primary voices in the family and more likely to inherit and own land. This cultural bias limits women’s opportunities to hold prominent positions in business or to become entrepreneurs.
Financial Barriers
Women in East Africa also suffer from limited access to formal financial products. Although the gender gap in financial exclusion has decreased since the introduction of mobile money, significant disparities remain. In Kenya, 53% of those excluded from the financial sector are women, and this figure rises to 59% in Rwanda.
Women-led businesses tend to be smaller and more likely to operate in the informal sector, which further restricts their access to formal finance. These businesses are often perceived as riskier by commercial banks, leading to smaller loans with higher interest rates.
Regulatory Barriers
In addition to cultural and financial barriers, women in East Africa face regulatory challenges. For instance, in Kenya and Uganda, inheritance laws do not treat men and women equally. Upon the death of a husband or father, his property is more likely to be inherited by male heirs, leaving women without assets or collateral. This inequality can dissuade commercial banks from offering formal finance to women.
The Way Forward
To support women traders in East Africa, it is crucial to address these barriers comprehensively. Cultural norms need to evolve to promote gender equality. Financial institutions should develop products tailored to the needs of women-led businesses, and regulatory reforms are necessary to ensure equal rights and opportunities for women.
Empowering women in trade is not just a matter of fairness; it is a smart economic strategy. By providing the necessary support and removing barriers, East Africa can unlock the full potential of its women entrepreneurs, driving economic growth and social development for the entire region.
