Youth in trade and trade governance in Africa
Trade supported by improvements in trade governance can contribute to reducing inequalities by distributing benefits more equally across all segments of the society. Meaningful participation by all groups of society including marginalised groups such as women and youth in trade policy making processes can contribute to achieving inclusive, sustainable growth and development, as well as social stability. Experiences and lessons learnt from gender mainstreaming in trade can help in developing and adapting tools to assess the impact of trade policy on young people. Young people should be drivers and beneficiaries of international trade. We are seeing that young people are no longer passive recipients of socio-economic transformation – this is important for trade too.
Almost 60 per cent of Africa’s population is under the age of 25, and 19 of the world’s 20 youngest countries are in Africa. Despite making up a significant percentage of the continent’s population, young people’s participation in cross-border trade and trade governance matters is still very limited in Africa. This youthful population can be harnessed to achieve Africa’s sustainable development. The inclusion of young people in trade and trade governance matters would be one of the ways to achieve this. The African Union recognises Africa’s youth as the continent’s biggest resource. However, Africa’s youth is disproportionately affected by high unemployment, poor quality jobs, labour market inequalities and barriers to entry to cross border trade.
The World Trade Organisation (WTO) recognises the role of the youth in trade and the importance of empowering young people to participate in global trade. For the first time in October 2019, the WTO Forum dedicated a high-level panel to interrogate challenges facing the youth in global trade. The Director General of the WTO admitted that one of the major challenges the organisation faces today is inclusivity — how rules can be simplified so that start-ups and micro, small and medium enterprises (which are mostly owned by young people) around the world can reap the benefits of international trade.
According to the International Trade Centre (ITC), ‘youth are 1.6 times more likely to start a business than those above 35 years old.’ Another tralac blog discusses how to increase youth entrepreneurship in Africa. However, young entrepreneurs in Africa – and other developing regions – continue to face a wide range of bottlenecks that constrain their capacity to participate and benefit in international trade. Youth-specific barriers in international trade include power dynamics and business networks based on age; lack of access to assets and finance; limited access to trade-related or market information, limited trade-related education or skills; and administrative and regulatory frameworks that do not favour young people. Trading across borders is taxing for young entrepreneurs due to the prevalence of non-tariff barriers.
To address the high unemployment rate, social inequality and many other challenges the youth are facing, African governments should make efforts to assist the youth to participate in regional and global value chains and international trade. According to ITC, ‘value chains and export sectors that are inclusive can be a source of new opportunities for young entrepreneurs. Integration to value chains and international markets can have a role in ensuring the long-term success of SMEs which can lead to positive spill overs like new jobs, ideally for other young people, given the fact that in developing countries, the greatest potential for job creation lies in the local small and medium-sized enterprises (SMEs).’
Access to adequate credit increases the ability of young entrepreneurs to trade (export and import). Access to credit is a complex process most often still requiring immovable property-based collateral and guarantees and cumbersome financial documentation. A process most young entrepreneurs cannot afford. Young people should be given low-interest access to finance which does not require property-based collateral and guarantees. There is a need to create an enabling legal, regulatory and administrative environment for youth to actively participate in trade and governance processes.
One of the ways to increase the capacity of youth to trade is for trade supporting institutions (national and regional) to provide enhanced services to young entrepreneurs such as trade-related information on market access issues and trade opportunities.
Accelerating the participation of the youth in the services sector, as a growth engine, is also important. Some services sub-sectors have relatively low barriers to entry, providing good opportunities for youth entrepreneurship and cross-border trade. A strong services sector can bring enormous benefits to the economy that results in sustainable and stable economic growth, poverty reduction, social inclusion and foreign currency earnings.
Technological advancements that are driving e-commerce and digital economy developments - demand special skills and knowledge. While education alone is not enough, it remains an essential ingredient for empowering youth. At the national level, this implies countries adapting public education to provide the young people with more relevant learning opportunities they need to create jobs for the future and for them to be employable. A digital economy needs capable, healthy and skilled workers – presenting opportunities for young people.
Equally important, the reduction of non-tariff barriers to trade can increase the meaningful participation of the youth in international trade, by lowering trade costs. The African Continental Free Trade Area (AfCFTA) has the potential to address non-tariff barriers continent-wide if the legal instruments on trade facilitation matters are effectively implemented. While the AfCFTA may hold many opportunities, trade liberalisation will not automatically translate into developmental outcomes. It is expected that the AfCFTA will contribute to improving trade governance, through its trade facilitation provisions and enhancing customs and border management. The implementation of the AfCFTA must be supported by appropriate national policies and support programmes. This can play a pivotal role in making trade opportunities accessible to young people. This will help countries to reduce the social inequality gap.
Further, youth has an important role in holding governments and policy makers accountable – this is essential for good governance. This is also important as regards the implementation of international trade agreements such as the AfCFTA and the monitoring of national trade policies. The African Union has created a platform for youth participation at the continental level. Similar platforms are required at both regional and national levels to facilitate active and meaningful participation of the youth in trade governance.
It is important to remember that the trading environment in the next 10 years will be very different from today. How the trading environment evolves, will be is contingent on the decisions made today. It is imperative therefore to give the youth opportunities to participate in trade policy making and to remove barriers to trade that inhibit the integration of youth-led businesses into regional and global value chains. It is the responsibility of today’s trade policy makers to listen to the youth, and understand their challenges and work with young people to ensure that trade and trade governance contribute to more inclusive, sustainable development outcomes.
About the Author(s)
Leave a comment
The Trade Law Centre (tralac) encourages relevant, topic-related discussion and intelligent debate. By posting comments on our website, you’ll be contributing to ongoing conversations about important trade-related issues for African countries. Before submitting your comment, please take note of our comments policy.