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Dec 1, 20236 min read

Access to Markets


Access to regional and international markets can make a real difference for women-led SMEs in low income countries (LMICs) potentially opening doors to a wider customer base and more stable economies. However, before embarking on what can be a complex path, women in business need to understand why they want access to markets may be the right next step for the business.  Is the business export ready and is the investment capital available to support through the transition

of adapting to serve international markets. 

Understanding the motivations behind women-led SMEs' interest in accessing markets can help identify potential barriers and opportunities for partnerships. While increasing sales may be a primary driver, other motivations could include diversifying revenue streams, accessing new technologies or knowledge, and gaining exposure to new business models and networks. Understanding these motivations can help inform strategies to support women-led SMEs in achieving business goals.


Equally, impact investors, private sector partners and other service providers who support women-led SMEs must take the time to understand the business unique needs and stage of growth. While it can be tempting to measure success solely in terms of reaching a certain number of women with services, this approach can miss valuable opportunities to identify and support businesses that are truly ready for the next level of growth. There can be a tendency to provide, for example, foundational digital and financial inclusion skills training with a broad-brush approach omitting needs-based analysis that can help ensure that women-led SMEs are more likely to be successful when it comes to accessing markets and funding support.

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MOTIVATED TO TRANSITION TO THE FORMAL ECONOMY


Access to markets can be a significant motivator for women-led SMEs in the informal sector to transition to the formal sector benefitting from a range of advanced business development and growth opportunities. However, formalization can also be challenging and costly for informal businesses, particularly for those led by women who may face additional barriers and discrimination. It is essential for businesswomen to be aware of the costs of complying with formal regulations, such as taxes and licensing requirements and any changes to business practices and structures. It is important to recognize that formalization is a complex and multifaceted process that requires attention to a range of factors beyond just access to markets. Private and public sector actors can provide support with effective policies and programs aimed at promoting formalization, designed in consultation with local communities and businesses.

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IS THE PRODUCT EXPORT READY AND CAN IT COMPETE


From the outset, take the time to assess whether or not all partners have a good understanding of the product/service being offered and what is required to sell it across borders. This may include knowledge of local and international regulations, quality standards, certification requirements, intellectual property rights, and marketing strategies tailored to the target market. Access to information and training on these topics can play a critical role in enabling informed decisions to effectively navigate the market access process.

Developed economies are competitive market places and present challenges for women-led SMEs however, there are a number of strategies that business can use to differentiate and succeed in these markets. One approach is to focus on creating unique and high-quality products that appeal to niche markets. For example, many women-led SMEs in LMICs are able to leverage local knowledge and expertise to create products that are made from natural or sustainable ingredients, or that incorporate traditional production techniques. These products can appeal to consumers in developed economies who are looking for something different and authentic. 


There has been a growing trend in the export of beauty and personal care products, particularly from countries in Asia and Africa. This trend has been driven by a number of factors, including the growing global demand for natural and organic products, the increasing popularity of traditional beauty ingredients and techniques, and the rise of e-commerce and social media as marketing channels.


In Africa, for example, there has been a growing demand for natural and organic beauty products made from locally-sourced ingredients, such as shea butter, baobab oil, and moringa oil. This has led to the emergence of a number of successful beauty brands, such as Kudu Cosmetica from Ghana, Lulu Naturals from Kenya, and Alaffia from Togo, that are exporting their products to markets in Europe, North America, and Asia. Overall, the beauty and personal care sector has significant potential for women-led SMEs in LMICs, particularly those that are able to leverage their local knowledge and expertise to create unique and high-quality products that appeal to global consumers.


Another approach is to focus on building a strong brand and marketing presence that resonates with consumers in developed economies. This can involve investing in high-quality packaging and marketing materials, developing a strong online presence through social media and e-commerce, and leveraging partnerships and collaborations with other businesses and influencers.

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REGIONAL FREE TRADE AGREEMENTS


International regulation and policy frameworks have been put in place as part of free trade agreements that recognise the importance of and encourage small business to participate in international trade, including reduced tariffs and non-tariff barriers, greater regulatory alignment, and increased investor protection. There are examples of FTAs that include gender-focused provisions or initiatives aimed at promoting women's economic empowerment and participation in international trade. For instance, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) recognizes the importance of supporting SMEs, including those owned by women, to access the benefits of the agreement. The CPTPP also includes a specific provision on gender and trade that commits the parties to promoting gender equality and women's economic empowerment in trade-related activities.


The African Continental Free Trade Area (AfCFTA), among 54 African Union member states, aims to create a single market for goods and services, as well as to promote intra-African trade and economic integration, covering a market of over 1.2 billion people and an estimated GDP of $3 trillion. The AfCFTA has the potential to create significant opportunities for women-led SMEs to access new markets and expand their businesses. Realising these opportunities will require addressing challenges, including infrastructure constraints, regulatory barriers, and limited access to finance and technology.


In addition, negotiations are currently underway between the European Union and African countries on a new framework for cooperation, known as the Africa-Europe Alliance for Sustainable Investment and Jobs. The proposed partnership aims to strengthen economic ties and promote investment and job creation in Africa, with a focus on sustainable development and private sector engagement. Creating new opportunities for women-led SMEs to access European markets and benefit from increased trade and investment flows.


THE PRIVATE SECTOR AND IMPACT INVESTORS CAN UNLOCK OPPORTUNITIES


There is increasing commitment from the private sector and impact investor in supporting women-led SMEs' working towards market access. Whether that be to reach and create more sustainable and inclusive value chains, or focus more on the potential returns on investment. Respected reports from bodies such as the International Finance Corporation (IFC) and the World Bank Group have highlighted the importance of supporting women-led SMEs' market access as a key driver of economic growth and development.


There is growing evidence to suggest that the private sector and impact investors are increasingly interested in doing business with women-led SMEs that have negotiated access to international markets because these businesses can offer a number of advantages, such as greater diversification of revenue streams, access to new customers and markets, and potential for higher growth and profitability. In addition, many investor partners are promoting gender equality and women's economic empowerment as commitment to corporate social responsibility agendas. Supporting women-led SMEs in LMICs to access international markets is a way to achieve these goals, while also promoting sustainable economic development and poverty reduction in these regions.


However, it is important to note that access to markets is just one factor that private sector companies and impact investors consider when making investment decisions. Other factors, such as the quality of the business plan, the management team's track record, and the potential for scalability and profitability, are also important considerations.

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SEIZE THE OPPORTUNITIES, BUT DO THE RESEARCH


In studies conducted across Nigeria, Uganda and Ghana access to international markets was found to be a key factor in improving business performance and growth and that access is particularly critical for high-value products. A study by the International Trade Centre found that women-led businesses that export tend to have higher revenues and create more jobs than those that do not export. The study found that in Uganda, for example, women-led businesses that exported had 20% higher revenues than those that did not. Businesses that are more integrated into value chains are more likely to grow and innovate. A study by the World Bank found that access to finance and markets were the most important factors driving the growth of women-led SMEs in Kenya. The study found that businesses that had access to markets tended to have higher growth rates and were more likely to invest in product development and marketing.


We know that accessing international markets can bring significant benefits to women entrepreneurs who successfully promote products and services and expand market share. However, it is important to do the initial groundwork before launching into regional and international markets. Do the research, understand the business competitive advantage, design a plan and be clear about, and committed to, the long term objectives.

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