E.A.MUNC KOZHIKODE 2019

IMF INCREASING TRADE FLOWS

AND WOMEN’S ACCESS TO

FINANCE

INTERNATIONAL MONETARY FUND

(IMF)

TOPIC: INCREASING TRADE FLOWS

AND WOMEN’S ACCESS TO FINANCE

INDEX

Summary

Content And Concept

Aid For Trade Initiative

Women In Finance Service

Conclusion

TOPIC: INCREASING TRADE FLOWS AND

WOMEN’S ACCESS TO FINANCE.

The Global trade flow will continue to embellish well into 2019, but at a

slower pace than expected. The WTO anticipates growth in merchandise

trade volume of 3.8% in 2018, with trade expansion reducing further to

3.7% in 2019. The new forecast for 2018 is below the WTO's 12 April

estimate of 4.6% but falls within the 3.2% to 5.5% growth range. Trade

growth in 2018 is now most likely to fall within a range from 3.4% to

4.4%. Such a decrease in trade flows will ultimately prove disastrous

not only to developing economies but to developed ones too.

Trade flows are perhaps the most important asset of a nation and can be

both a boon and bane. On one hand a trade surplus, reassures the

economy while on the other hand a trade deficit means a weak or aging

economy, resulting in a deteriorating GDP. Thus, increasing trade flows

by addressing many challenges associated with it, is an important step

towards developing a stable global world economy.

There are several trade initiatives carried out at regional levels that have

sought to accelerate economic development and increase trade flows

and have shown limited success. It comprises of initiatives such as The

North American Free Trade Agreement (NAFTA) in North America,

The Trans-Pacific Strategic Economic Partnership Agreement (TPSEP)

between Australia and countries in South America, The European Union

(EU) in Europe, The One Belt One Road initiative in Asia and The

India-Sri-Lanka Free Trade Agreement (ISLFTA).

While initiatives at the regional level have helped to reduce barriers thus

facilitating trade flow. A few key aspects are common, most of these

agreements are bilateral and those that are multilateral are few and far

between.

Acknowledging these limitations, the December 2005 World Trade

Organization Ministerial Conference in Hong Kong paved the way for

the Aid for Trade Initiative, as a complement to the Doha Development

Agenda. The Initiative aims to improve the quantity and quality of Aid

for Trade (Aft), allowing developing countries to access easily the

benefits of WTO agreements.

Along with this in February of 2006 the WTO established a Task Force,

with the aim of “operationalizing” Aid for Trade. The task force focuses

on identifying the needs within recipient countries, replying to donors

and serving as a bridge between donors and developing countries.

Additionally, The WTO through aid for trade, has empowered women

especially in the spheres of trade and finance all over the world.

In the 5th Global Review of Aid for Trade in 2015, The WTO along with

the World Bank Group launched “The Role of Trade in Ending

Poverty” which included a chapter on Women, Trade and poverty. The

publication highlights the gender dimension of extreme poverty. It also

helps in evaluating how integration into global trade can positively

impact women's economic empowerment.

The conclusion from this analysis was that high trade costs have a

significant impact on least-developed countries, particularly on women

traders and on small and medium-sized enterprises.

Result:

Aid for Trade has been in effect for the last 10 years, and in those 10

years it has not moved from its ideals and goals: “Effective aid for trade

should enhance growth prospects, reduce poverty, complement

multilateral trade reforms, and distribute the global benefits of trade

more fairly across and within developing countries”.

More specifically they have:

1) Prioritized Trade

Central to the whole Aid for Trade Initiative is the notion that trade

should be mainstreamed as a priority in the strategies of developing

countries and donor agencies. Most donor agencies have reported that

they have specific aid for trade strategies. Some donors such as

European Commission Germany and the United Kingdom are in the

process of updating their strategies. UNDP of (2011), finds that the

progress has been observed in mainstreaming trade in developing

countries, capacities remain uneven. Recent reviews by the Diagnostic

Trade Integration Studies undertaken by the Executive Secretariat of the

Enhanced Integrated Framework suggested that progress in this area

continues.

2) Attracted to more Official Development Assistance (ODA)…

Prioritizing of trade as a means for economic growth and poverty

reduction was expected to result in securing “additional, predictable,

sustainable and effective financing for building trade capacities in

developing countries”. To assess additionality and ensure accurate

accounting at the global level, aid-for-trade benchmarks were agreed.

These include: official development assistance (ODA) and other official

flows (OOF) to help developing countries elaborate trade strategies,

negotiate trade agreements and implement their outcomes.

Aid for trade CRS categories

3) Reduced Poverty…

A literature review concluded that trade liberalization generally boosts

income and thus reduces poverty, with working in the export sector

predicting gains and, in the import sector, opposing sector losses. A

common finding is that female workers gain from trade liberalization.

For example, targeted aid to building productive capacities in

agriculture and insurance schemes to remove risks that can raise the

productivity of households close to the poverty line. Road reintegration

can also reduce the monopolistic power of traders in remote areas,

thereby raising the incomes of the poor selling agricultural products.

CONCLUSION:

Gender was a cross cutting issue in the Aid for Trade Work Programme

for 2016-17. The monitoring and evaluation exercise revealed that 35%

of the surveyed developing countries and 50% of Aid for Trade donors

considered that Aid for Trade can help achieve Sustainable

Development Goals even in the case of gender equality.

Women’s economic empowerment was the focus of the Aid for Trade

Global Review 2017. On the topic on how to increase the focus on

women’s empowerment and how the initiative controls women, several

key messages were stated:

Women are important for countries' economic growth and

development. Gender equality is key to end life-threatening

poverty and fostering sustainable growth.

Countries need to recognize women's role and potential as

entrepreneurs and should facilitate their access to finance. Women

are “completely in the background”, even though women

entrepreneurs have a 95% repayment rate for loans.

It is important to seal the digital divide for women. The share of

women accessing the Internet is 12% less than the share of men

accessing it. The smallest digital gender divide is in the Americas

(2%), the largest is in Africa (23%) and in least-developed

countries (31%).

WOMEN’S ACCESS TO FINANCE:

CHALLENGES IN EXPANDING WOMEN’S ACCESS TO

FINANCIAL SERVICES:

Women make up around 40 percent of the world’s workforce. Many of

the sectors that are precarious for economic growth in some of the

poorest countries count heavily on women. Small and medium-sized

enterprises (SMEs) with female ownership represent 30% to 37% of all

SMEs (8 million to 10 million women-owned firms) in emerging

markets. These businesses have unmet financial needs of between

US$260 billion and US$320 billion a year. This is their biggest barrier

to growth and development.

Access to credit can open up economic opportunities for women, and

bank accounts can be a gateway to the use of additional financial

services. However, women entrepreneurs and employers face

significantly greater challenges than men in gaining access to financial

services.

The Global Findex , a comprehensive database measuring how people

save, borrow, and manage risk in 148 countries, reveals that women are

less likely than men to have formal bank accounts. In developing

economies women are 22% less likely than men to have an account at a

formal financial institution and 18% less likely to have borrowed

formally in the past year. Even if they can gain access to a loan, women

often lack access to other financial services, such as savings, digital

payment methods, and insurance. Restrictions on opening a bank

account, such as requirements for a male family member’s permission,

restrict women’s access to accounts. Lack of financial education can

also limit women from gaining access to and benefitting from financial

services. In addition, many women may have access to financial

services in name only: A study in Pakistan showed that, although

accounts might be opened in the name of a woman, the decision-making

authority around the use of those funds often lies with a male relative.

The World Bank’s Gender at Work report (2014) asserts: “On

effectively every global measure, women are more economically

excluded than men.”

Through technical/advisory assistance and lending support, the World

Bank Group works to ensure the full potential benefits of financial

inclusion for women are secured by:

Increasing access to finance and markets by associating with

developing countries and financial institutions within those

countries;

Reducing gender-based barriers in the business surroundings

Creating business opportunities for institutions and in the private

sector to improve working conditions for female employees,

market segmentation, and inclusion of women in community

relationships;

Supporting business skills and financial capability trainings for

women; and

Building the business case for equal economic opportunities for

men and women.

An important World Bank-led mechanism to accelerate financial

inclusion through enabling country commitments is the new Financial

Inclusion Support Framework (FISF) which was launched in 2013. The

World Bank has committed to assist at least 10 IDA(International

Development Associating) countries to reach their financial enclosure

targets, including for women’s financial presence, and plans to expand

this support to at least a further 10 IDA countries.

IFC’s Investment Services – including risk-sharing facilities, credit

lines, loans, equity, SME and credit insurance, supply-chain finance and

combined finance – are all products that can improve women’s access to

finance. IFC launched Women’s Finance Hub in spring 2013 – an

online collaborative platform, as part of the SME Finance Forum that

aims to further advance access to finance for women-owned

businesses by addressing missing data, distributing research, promoting

best practices and providing information on critical issues related to the

women’s market.

The Women, Business and the Law project provides cross-country

similar data for 143 economies on where laws differentiate between

women and men – a factor that can hinder women’s ability to gain

access to finance.

Results:

Through its technical and financing partnerships, the WBG (WORLD

BANK GROUP) has helped developing countries secure expanded

benefits of financial inclusion for women.

For example:

Starting in 2010, the World Bank has helped Indonesia develop its

new Financial Inclusion Strategy, which includes empowering

women as a priority focus. One of the programs that the Bank

supports is financial literacy training for the 4.2 million Indonesian

migrant workers, the majority of whom are women from lower-

income rural families,

IFC’s banking on Women Program plays a catalysing role for IFC

partners and financial institutions to help them profitably and

sustainably serve women-owned businesses. As of December

2013, the program has developed a track record which includes 16

investment projects, ranging from long term loans to instruments

such as risk sharing facilities that help share the risk FIs undertake

when assuming greater exposure in new or riskier markets,

amounting to almost US$700 million in Africa, Latin America and

the Caribbean, East Asia and the Pacific, and East and Central

Europe.

For the first time, policymakers worldwide have a detailed picture of

women’s access to finance, provided by the Global Findex. This

complements data provided by Gender Entrepreneurship Markets

(GEM) program, Women, Business and the Law, Global Financial

Development Report 2014 on Financial Inclusion and Financial

Capability surveys—all World Bank Group-sponsored studies. WBG

experts are working with national policymakers and controllers in more

than 20 countries all over the world to design and implement reforms

that meet the limits identified by these surveys.

Ground-breaking research supported by the World Bank in

Pakistan found that more than two-thirds of women microfinance

borrowers required a male relative’s permission in order to qualify

for any kind of loan. Changes in loan selection procedures and

requirements, urged by this information, could help open up access

for women and enable them to manage their finances in a way that

meets their own priorities.

CONCLUSION:

We found that the gender gap in leadership does make a transformation

when it comes to bank stability. Banks with higher shares of women

board members has higher capital barriers and a lower proportion of

nonperforming loans, and greater resistance to stress.

We found the same relationship between bank stability and the presence

of women on bank controlling boards.

What can explain these findings? There are four possible reasons why a

higher share of women on bank and supervisory boards may contribute

to financial stability:

Women may be better risk managers than men;

Discriminatory hiring practices may mean that the few women who

do make it to the top are better qualified or more experienced than

their male colleagues;

More women on boards contributes to diversity of thought, which

leads to better decisions and;

Institutions that tend to attract and select women in top positions

may be better-managed in the first place.

Based on this evidence in papers and related literature, it has been

observed that higher stability is most likely due to the beneficial effects

of greater diversity of views on boards, as well as discriminatory hiring

practices that lead to hiring qualified or more experienced workers.

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217A6BDE8191

PREPARED BY:

VIBHU UTKARSH ADHIKARI (PRESIDENT)

AYUSH TRIPATHI (VICE PRESIDENT)

ASSISTED BY:

BHAVYA KAPOOR

EDITED BY:

CHETAS PUROHIT