Study: Women in SMEs disadvantaged by knowledge gaps in cross-border trade laws

Dr Kevit Desai

From left, Mary muthoni, CEO Association of Women in Business, Dr Kevit Desai, Principal Secretary in the State Department of East Africa Community, and UoN Wee Hub Leader Prof. Wanjiku Kabira, during the launch of the women economic empowerment findings at the University of Nairobi. 

Photo credit: Pool

Lack of access to information related to cross-border trade tops the list of issues inhibiting women traders from reaping the full benefits of regional trade blocs.

According to a study by the University of Nairobi’s Women Economic Empowerment (WEE) Hub, more than 50 percent of the women participating in cross-border trade do not know the laws and regulations governing regional trade. This figure is higher at the Busia border point (62.4 percent), followed by Namanga (44.5 percent).

This is unfortunate because some of these regulations are developed for the benefit of the traders. The EAC Customs Union, Simplified Trade Regime (STR) for instance, exempts small traders transacting in low-value consignments of below Sh200, 000 from paying import duty in the EAC destination country.

“These traders do not cross through formal border points where the STR is applicable, but instead go through smuggling points to avoid taxes and tariffs that do not apply to them. When caught, they are harassed and subjected to even higher charges in form of bribes or their goods are impounded,” noted Dr Mary Mbithi, Director of Research at WEE Hub, during a consultative meeting in Nairobi.

Kevit Desai, who is the Principal Secretary in the State Department of East Africa Community, challenged women in business to consider forming lobby groups to educate their members on some of the initiatives that seek to simplify trade, and also assist in policy formulation.

“The border points and areas surrounding them have an enormous potential to become large trade hubs and promote the economic empowerment of this special interest group, but first, we need to develop structures for the private sector to work with the government. This way, we will be able to know which are the main challenges facing cross-border traders and prioritise them for implementation,” noted Dr Desai.

The WEE study also identified lack of access to funding as an issue that greatly impeded the growth of these businesses. Because they could not access loans from larger financial institutions, these businesses mostly relied on chamas as their main source of financing. But the money they got from chamas was not enough for growth.

Poor security was identified as a cause of concern in cross-border trade. At least 40 percent of the respondents observed that there were cases of insecurity associated with cross-border trade. This was highest in Namanga (81.2 percent) compared to 56.6 percent in Busia.

“The main perpetrators of insecurity against traders at the Busia border were security agents (34.6 percent), while at Namanga they were fellow traders (38.3 percent),” notes the study.

Attacks on the women traders continued to be perpetrated because an overwhelming majority of the respondents, 96.7 percent, had not received any training on gender-based violence.

“45.2 percent of the respondents are aware of gender-based violence reporting mechanisms, with the remaining 54.8 percent of the respondents not aware of any reporting mechanism,” notes the study.

Women-owned SMEs also faced slow progression due to poor access to childcare for the traders. According to the study, 47 percent of business women involved in cross-border trade needed childcare but only 6.3 percent of these women had access to it.

To cope with childcare responsibilities, 19 percent of the respondents were forced to report to work with their children, 31 percent opened their businesses late, 27 percent missed work and 26 percent closed their businesses early.

The study also notes that women were constrained from travelling long distances to reach markets that offer better prices, as well as participate in networks. Ultimately, this reduced time spent on business resulted in lower profits.

“The main challenge with childcare was a high cost (29 percent), low quality (29 percent), and complete lack of childcare (24 percent of the respondents),” notes the study.

The study recommends the development of business incubation programmes to train women in cross-border trade on regional trade policies and regulations, security, and gender-based violence.

Further, it recommends the establishment of affordable and high-quality public childcare centres at cross-border trade areas as complementary measures to the existing regional trade regimes such as STR.