Small-scale cross-border trade contributes to the livelihoods of over 40% of Africa’s population, and is run predominantly by women, who have seen their incomes and livelihoods crash overnight – with a ripple effect on their families and communities.
Economic activities across land borders dominate regional trade, so measures such as lockdowns and domestic travel restrictions are directly impacting that activity.
Cannot charge forward and leave behind a majority
Women-led businesses face even further challenges, as they are typically smaller, with fewer employees and less access to capital. Together with young people, who have to deal with much of the same, women represent the large majority of the African population.
We’ve known for a while that our growth was not inclusive enough, but we cannot continue to charge forward and leave behind a majority of our people.
Women are the engines and the backbones of African economies.
As this crisis keeps unfolding, it is exposing deeper structural challenges, such as the inadequacy of our health systems and significant shortcomings on the human capacity front, but is also particularly shedding light on the structural inequality reigning at the global, regional and local levels. Grueling inequalities are, after all, at the heart of all human struggles.
What can and must we do differently?
In the immediate term, all actors – governments, private sector, development finance institutions, and civil society actors – have reorganized their plans to rapidly respond to the crisis and unlock emergency funding to cope with the effects of the pandemic.
The African Development Bank Group, for its part, has rapidly deployed a financing mechanism called the COVID-19 Response Facility of up to $10bn to support its regional member countries. The Response Facility is helping to mitigate some of the immediate effects by providing African countries with liquidity to meet their immediate financial needs and maintain essential government services in these extremely adverse circumstances.
But beyond the immediate term, we can rebuild our continent differently, by deliberately tackling inequalities now and not later.
We need a much stronger focus on human development, with investment in social and economic safety of populations. This can be done through the provision of basic services, from health to education and access to economic opportunity, to strengthen the micro-economic tissue of our societies.
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This crisis has shown the crucial role of health systems in nations’ overall security, and the terrible impact of a lack thereof. Building strong national health systems with adequate human resources will require a huge shift in the continent’s investment priorities, with adequate resources for massive infrastructure investment and human capacity building.
Strong health infrastructure and security also require the development of adequate social safety nets for the roughly 80% of Africans who are currently not covered by any pension, social protection programme or safety net. To get there, we will need diversity in leadership and decision-making processes at all levels, so we come up with robust, inclusive and locally adapted solutions.
Tackling inequalities = empowering women
Women are the engines and the backbones of African economies. The continent has the highest percentage of women entrepreneurs in the world, with one in four women starting or managing a business. That’s a huge asset to bank upon.
Furthermore, research has shown that when women earn an income, they reinvest 90% in the education, health and nutrition of their family and community, thereby providing some of the highest impact returns on investment.
If we can ensure equal access to resources, women can deploy their powers and unleash their proven competence, creativity and reliability to fully contribute to the recovery efforts and fundamentally change the game.
At a time when the commercial banking sector may be even more risk averse, it will be more important than ever to ensure women are equipped with access to the tools – be it finance, training, information or networks – to play their part.
Initiatives for women
For example, the African Development Bank’s Affirmative Finance Action for Women in Africa (AFAWA), is designed to tackle the challenges women in business face from access to finance and training to the lack of an enabling environment. It will fully deploy its risk-sharing mechanism to walk the talk and guarantee women-empowered businesses across the continent.
This initiative, alongside all other actors’ efforts, is needed more than ever to make a systemic change in the financing landscape in Africa and sustainably provide women with access to the real economic levers they need to contribute to growth that is more inclusive, and hence more resilient to future shocks.
In response to the COVID-19 crisis, AFAWA, through the Women Entrepreneurs Finance Initiative (We-Fi), will also work with equity and impact investing funds to empower women entrepreneurs who are innovatively repurposing their businesses as well as using new technologies.
The project will also leverage fintech platforms to facilitate access to digital financial solutions in the context of social distancing. It is at times of crisis that fundamental change happens. Let us seize this opportunity to do things differently.
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