Joining the dots - Trade

By Arif Zaman In a major report launched last month, the Commonwealth highlighted the fact that public procurement is increasingly being recognised as a vehicle to help governments to achieve social goals and sustainable economic development. Within the Commonwealth, South Africa and Malaysia are two examples of countries where a public procurement policy has been used to empower previously disenfranchised populations and thus pursue the goal of equitable sustainable development. Government procurement programmes, largely in member-countries of the OECD, attach additional conditions to government contractors, designed to raise environmental and/or social standards. These conditions include improvement of womenís rights. Unlocking government procurement for businesses owned by women could be one route to using trade as a vehicle for increasing the benefits of economic development for women. Policymakers continue to make the case that if inclusive, accelerated GDP growth is to be achieved, womenís economic empowerment must be embedded in our communities. Yet, governments are not alone in this drive towards unleashing the potential of women business owners in the supply chain. We are at a time of significant global demographic change, which is driving major multinational corporations to create new opportunities for women as leaders, managers, employees and agents of change and value, both as suppliers and consumers. This is not least because the business case for engaging with a powerful consumer is so convincing. The key objectives of public procurement policy are to define an efficient, transparent system which enables governments to procure value-for-money goods and services in order to run the day-to-day business of government. It is now largely recognised that the benefits of competition and transparency to the procurement process are extremely important. Studies carried out in the EU by the World Bank and the OECD suggest an overall cost saving of 30 percent, due to avoiding wasteful, incompetent or corrupt purchasing of goods and services. But why does gender matter in a public procurement policy? Government procurement is an important dimension of international trade. The size of the procurement market, which often makes up 10 to 15 percent of the GDP of developed countries and can amount to as much as 30 to 40 percent of GDP of developing countries, is thus a major factor in economic activity. How this segment of domestic trade is explored to serve women and men more equitably is an overarching concern. Given the magnitude of government spending on goods and services, public procurement can be an extremely useful policy tool for a countryís growth and socio-economic transformation. Gender is important for public procurement policy because it can ensure equitable access and provide benefits from diversifying the supply chain. Increasing opportunities for more economic agents, particularly small and medium-sized enterprises (SMEs) to engage in delivery of goods and services can result in alleviation of poverty and increase in gender equality, given that businesses owned by women are disproportionately located in this subsector of the economy. Can support to SMEs be an entry point for gender-equitable outcomes of public-private partnerships (PPP)? Expanding the participation of SMEs in the tendering process has a number of advantages for poverty reduction, gender equity and sustainable development. Empirical evidence from around the globe confirms that, unlike to larger businesses, SMEs are largely labour-intensive, low-technology or low-capital equipment enterprises. Therefore, a fast-growing SME sector has great potential for reduction of unemployment. Where does the private sector fit in? The private sector has a key role to play in increasing access to government procurement contracts. This role is encouraged by development agencies and bilateral aid donors. Multinational corporations, large domestic companies and medium-sized enterprises that are interested in increasing their customer base are exploring new opportunities to engage with smaller suppliers. The language of the private sector focuses on diversifying supplier value chains in the market. From global supermarkets, car manufacturing conglomerates, textile manufacturers and service-sector enterprises, the practice of supplier diversity continues to resonate. This trend has potential for promoting an inclusive approach that targets female suppliers. Supplier diversity is the proactive business process of sourcing products and services from diverse and previously under-represented suppliers. Diversifying their supplier base helps governments and large companies to effectively target a wider range of businesses in order to gain business benefits, including increased market share. But women owners with some understanding of the challenges of business development often reside in the margins of decision-making processes. This makes it difficult for their views to be heard and influence agendas. This marginalisation of womenís knowledge and key skills is evident in governance institutions and processes at all levels, including among civil society organisations (CSOs) ñ including chambers of commerce. The scarcity of women in leadership positions, whether in the boardroom (at every level and scale of an enterprise) or in executive positions in government and public institutions, reinforces the absence of women where it matters most for gender-responsive economic empowerment. Defining a gender-sensitive public procurement policy requires political will. Leading approaches can be found in Kenya, India, Australia and Jamaica. Experiences from around the globe, including Commonwealth countries, indicates that affirmative action is more readily acceptable where there is a historical reference to past discrimination. In a number of countries, past discrimination (often legally instituted) has eventually conceded to a willingness to discuss and construct laws, regulations and policies which protect the rights and opportunities of previously disadvantaged communities distinguished by ethnicity, religion or caste. This is seen in post-segregation USA, Malaysia, India and post-apartheid South Africa. Key recommendations: 1The importance of a transparent public procurement policy that is also gendered needs to be recognised. 2Procurement policies should consider as to what extent they benefit rural areas and more investigation needs to be done on how to increase rural participation. 3The disparities between countries should be considered in development of global procurement policies, and proactive policies are needed to protect and enhance local businesses. 4There is a need for increased capacity-building and technical assistance for womenís business to access national and international trading opportunities on a level playing field. 5Proactive policies for engagement of women businesses should be initiated alongside wider policy reforms to address inequalities within countries. 6There is a need for sensitisation of men to ensure that women businesses can benefit without having negative implications in other spheres. 7We need to widen policies beyond the local to the global arena and encourage women to take on more leadership roles within business. 8More research is needed to identify existing gaps and positively impact on women-owned businesses at all levels. The writer is an adviser to the Commonwealth Business Council