Africa cannot scale trade without women-owned enterprises

Regional integration has been a major focus in Africa’s developmental agenda. Over the past decade in particular, there has been a significant effort to build the frameworks needed to move goods and capital at scale. But their existence, on its own, does not mean that everyone is able to use them.

Access to financing remains a key constraint for African businesses attempting to trade across the borders of the continent’s 54 states. Women-owned businesses, which account for over 40% of all small and medium-sized enterprises (SMEs) on the continent, are disproportionately impacted by this gap. 

Africa’s SME-financing gap

The ability to trade across borders relies as much on how businesses are structured and financed as it does on the infrastructure itself. Much of Africa’s enterprise base is not yet positioned to participate at the regional level, partially because trade architecture hasn’t evolved at the same pace that businesses have. e.

Conservative estimates place the number of SMEs in sub-Saharan Africa at around 44 million, an economic powerhouse that accounts for up to 90% of employment in countries like Uganda, Ethiopia, and Kenya. 

Yet, fewer than one in five African SMEs participate in export trade, and collectively they make up less than 15% of exports, a strikingly lower share than the 40% to 50% seen in OECD economies. 

The constraints are well known: access to finance is the biggest obstacle, with the trade finance gap on the continent estimated at well over $100 billion annually. 

This barrier for small businesses is often discussed in the context of compliance and logistical costs, expensive and time-consuming cross-border payments, and uneven border procedures and regulatory requirements. 

What is often overlooked in this conversation is who owns and runs many of these businesses.

African women: Entrepreneurs at the worst end of the financing gap

African women register the highest rate of entrepreneurial activity globally, with nearly one in four starting their own business. In non-agricultural sectors, women make up 58% of the self-employed and 45% of employers, a participation rate that ranks among the highest in the world. 

Against this backdrop, regional integration becomes increasingly concerned with whether women-owned businesses are positioned to trade across borders.

In reality, although women-owned SMEs deal with much of the same obstacles as other small businesses, those obstacles are often compounded as a result of broader, deep-rooted structural inequalities.

According to a report by the B20 South Africa forum, more than half of women-led firms report funding constraints, compared with 40% of those led by men.

Around 70% of women-owned firms operate informally, limiting their access to export and procurement systems, while two-thirds of women entrepreneurs in sub-Saharan Africa report that weak business networks restrict their ability to enter cross-border markets. Over 60% of women-led SMEs are also excluded from formal training programmes because of childcare demands, location or language barriers, and women-led firms are significantly less visible in digital markets 

For traders, these constraints are compounded, and they reach dangerous levels at border posts, where between 11% and 54% report coercion or sexual violence, and more than half experience extortion by officials.

When these constrained conditions define such a large share of the continent’s enterprise base, integration efforts that focus primarily on systems and regulatory alignment risk reproducing exclusionary systems. 

They deepen participation among those already equipped to trade, while leaving much of the continent’s productive capacity underutilised.

To make inclusion real and all-encompassing, Africa needs a move away from fragmented progress to efforts that address the faults within the system.

Overcoming the barriers to trade

A large part of that comes down to how trade risk is handled. At the moment, smaller exporters are often judged through the same lens as larger corporates, even though their capital structures and balance sheets look entirely different. That makes trade finance expensive, or even unavailable. 

Changing that requires risk to be approached and distributed more deliberately.  Blended finance and regional guarantee programmes can expand the pool of capital available for SME trade by absorbing part of the volatility that smaller exporters cannot carry on their own.

Even where finance is available, SMEs are often unfairly penalised at the border, where they have to pay what many describe as a friction tax: non-tariff barriers, inconsistent application of rules of origin, and clearance times that change from one crossing to the next. 

The African Continental Free Trade Area (AfCFTA) was designed to address much of this, with its ambition to reduce tariffs on 90% of goods over a five to 10-year period, alongside plans for the digitisation of customs procedures. 

But many of these measures are still in the early stages of implementation, and for small exporters, the practical experience at the border has hardly changed. 

In the near term, expanding simplified trade regimes (STRs) for small consignments and moving toward mutual recognition of certificates would ease pressure on smaller traders, allowing them to move goods with increased predictability while the broader AfCFTA frameworks take shape. 

Practical next steps

The work the continent has done to modernise its payment rails should be recognised as well. 

Initiatives such as the Pan-African Payment and Settlement System (PAPSS), the East African Payments System (EAPS), and the Southern African Development Community Real Time Gross Settlement (SADC-RTGS) have significantly improved connectivity between national systems. They have enabled faster cross-border payments in local currencies, reducing reliance on foreign correspondent banks.

For many businesses, that marks important progress. But for SMEs, payment interoperability only addresses one part of the trade equation, as much of the remaining trade process is still manual. 

Over the next few years, the continent needs to focus on the legal recognition of digital trade documents, including wider adoption of frameworks such as the UNCITRAL Model Law on Electronic Transferable Records (MLETR), which would allow commercial documentation to move electronically across jurisdictions. 

Structural reforms, the likes of digitised supply chain data flows and interoperable payment platforms, matter for SMEs broadly: but women-owned businesses will require more deliberate attention within them. 

Practical steps in the short term will need to focus on closing the trade finance gap that disproportionately affects women-owned SMEs by attracting more gender-responsive financing into the system, so that capital is structured around the realities they operate under. 

At the same time, documentary requirements for micro exporters should be reduced, and there also needs to be a stronger push to help women entrepreneurs take their businesses online. 

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Africa’s ambition under the AfCFTA is to expand intra-continental trade, which currently makes up around 17% of the total exports within the continent. 

SMEs can be major drivers of this shift, particularly if intra-African trade is to approach the 50% target that has been discussed for 2030. For that to happen, the women entrepreneurs have to be at the centre of the continent’s trade agenda.