Public Procurement, a Tool to Boost Women’s Economic Empowerment

10 November 2017
ITC News
Speech delivered by ITC Executive Director Arancha González at Scuola di Politiche, Milano 10 November 2017

Good morning ladies and gentlemen,

It is a pleasure to be here in Milan with you all.

Thank you for the warm welcome and many thanks to MEP Alessia Mosca - who is a true champion of women’s economic empowerment - for hosting this public procurement themed-event on “Trade and Women in Europe.”

The European Union has made significant headway in promoting gender inclusive and responsive trade. This year for the first time, the European Commission co-hosted, with the International Trade Centre, a high-level event on trade and gender putting the issue firmly on the map.

Over the past few years, the impact of trade policy on gender equality has been progressively included in evaluations, and the recently concluded free trade agreement between the EU and Canada takes full account of gender equality objectives.

However, the practical day-to-day challenges and opportunities of women in trade are still relatively unknown. Progress is constrained by a lack of gender-disaggregated data, even in Italy. At the heart of Europe, Milan is the perfect place to deliberate such issues as there is much room for discussion and action—and it starts with you all today.

Worldwide, compared to their male counterparts, women entrepreneurs face disproportionately complex, and interconnected barriers to accessing equal economic opportunities. These range from legal and regulatory hurdles to sociocultural norms and gender biases and lack of skills, networks, and finance. For instance, women own or manage only one in five exporting firms even though they own an estimated 38% of all small and medium sized enterprises (SMEs). Women spend at least twice as much time on domestic and care work as men, which means the time they could spend on remunerated opportunities is reduced.

While it is imperative that all of these issues be addressed to unleash the full potential of women, today, I would like to focus on the $15 trillion dollar market opportunity that is, public procurement. I want to demonstrate that tapping into public procurement opportunities for women’s empowerment is really not as controversial or as complicated as some of you may believe it to be.

First thing to note is that governments spend the equivalent of over 30% of GDP in developing countries, and between 10-15% in developed countries. Of this, it is estimated that only 1% of the market is catered to by women entrepreneurs, in part, due to the various aforementioned barriers. Women also face challenges in accessing procurement contracts, and procurement processes tend not to facilitate successful outcomes for women.

Studies show that women-owned businesses that are able to successfully obtain government contracts usually grow, and in return, contribute to increased GDP growth and an improved female labour force participation rate. After all, women-owned companies tend to employ more women than men-owned firms - in 40% of women-owned firms, the majority of employees are female compared to only 22% in men-owned and managed firms. Therefore, greater procurement for women-owned enterprises will provide a springboard for advancements in women’s economic inclusion and labour market participation. It also makes sense that expenditure of public funds should go towards public benefit!

To achieve such goals, no one entity—whether that be the national government, a private sector company, or a multilateral organisation—can do it alone. There needs to be a comprehensive effort from all parties to make a change. Among other strategies, governments can redefine gender-responsive procurement policies and implement creative strategies that focus on women’s workforce participation such as the use of “set-asides” or e-procurement. Private sector corporations can improve supply chain diversity and volunteer for accreditation schemes to assess employment practices. Multilateral organisations can support women entrepreneurs and advocate for women’s economic opportunities.

At the global level, international organisations have been thinking about and acting on this issue. International trade agreements, including the WTO Government Procurement Agreement (GPA), and procurement guidelines set forth by international financial institutions such as the World Bank provide references for countries addressing the challenges of women-owned businesses.

The GPA helps create transparent and fair procurement systems, ensuring that women-owned businesses are not excluded. WTO GPA affords women-owned businesses the opportunity to bid on contracts in the markets of other parties to the GPA upon the accession of their country of origin to the agreement.

Many UN Members have also agreed to the principles of the 61st Commission for the Status of Women in March 2017 that specifically focuses on increasing the share of trade and procurement from women’s enterprises, cooperatives, and self-help groups; analysing value chains; and promoting “gender-responsive” procurement, which takes into account the impact that the selection of goods or services have on gender equality and women’s empowerment.

Public procurement in the European Union

Let’s consider the situation of the European Union. In the EU 14% of GDP is spent on services, works, and supplies by public authorities, which must adhere to procurement laws that cover transparency and equal treatment, including for disabled or disadvantaged persons, as well as open competition and procedural management. Procurement rules are based on the goal of strengthening the single market and the EU’s competitiveness. At the same time, the European Commission and OECD have been discussing strategies to encourage public procurement that takes into account social and environmental considerations. However, with reference to current EU laws on public procurement, giving preference to women-owned enterprises when selecting suppliers is unclear.

The highway could be for the EU to incorporate preferential procurement policies for women. But pending such legislative change, EU Member States can take certain steps to eliminate common barriers that women-owned businesses tend to face and focus on their inclusion in public tender procedures. Unbundling tenders, reducing bidding thresholds, improving accessibility of information, reducing bidding costs or favoring e-procurement are some of the low hanging measures that can be adopted.

Chile shows a promising avenue

Many countries have understood the importance of inclusive public procurement policies and practices. In some countries such as the United States or Kenya, government have mandated set-asides for women suppliers.

But today I want to highlight the model followed by Chili to give you a sense of the various ways in which this goal can be achieved. In general, Chile has shown a marked increase in women’s economic participation due to its supportive system of training and certifying women entrepreneurs, establishing women’s associations, and addressing regulatory reform. Chile’s public procurement system has proven very accessible for SMEs. In fact, the share of women participation in public procurement was approximately 37% in 2016, which equates to more than 21,345 women that were able to quote, offer, or take purchase orders.

Now, how did Chile do it?

ChileCompra is a public agency that is supervised by Chile’s Ministry of Finance and has committed to make public procurement accessible to SMEs, including women-owned enterprises. ChileCompra oversees Mercado Público, an e-marketplace for selling products and services primarily composed of MSMEs. The fact that this platform is online has helped address many common barriers that MSMEs face including very large contracts; lack of access to information; limited skills, experience, and time to prepare bids; and cumbersome bureaucracy.

Thanks in large part to the ease of doing business electronically, MSMEs - which is the usual characteristic of women-owned companies - account for about 45% of public procurement transactions in Chile. This situation is in line with findings from ITC’s recently published survey on e-commerce. Overall, less than a quarter of firms engaged in offline trade are women-owned SMEs. The share of women-owned firms doubles when moving from traditional offline trade to cross-border e-Commerce. In many ways, e-commerce levels the playing field and opens up new business opportunities and potential for broad socio-economic impact, especially for women.

In 2015, ChileCompra joined ITC’s SheTrades initiative and adopted an action plan focused on equalising access to public procurement policies for men and women by identifying and addressing gender-specific challenges, and building the capacity of women suppliers. The action plan endorsed modifications to regulatory policies in the state Public Procurement Law and resulted in a published document advising inclusion of gender criteria in public agency purchases, including those on Mercado Público.

ChileCompra also launched Sello Empresa Mujer, a Women Supplier Certification that helps procurement agencies identify women-owned enterprises that have more than half female employees. To date, there are more than 345 companies with this certification.

Additionally, ChileCompra developed a “commercial management” programme as well as a mentorship programme that trained women state suppliers with leadership tools, provided them with the certification, formed a women’s association of state suppliers known as the Associación de Mujeres Empresarias Provedores del Estado (AMEPE), and afforded customised assistance with state business opportunities.

Together with ITC, more than 500 suppliers were trained in 2016 and 2017 with plans to scale up the initiative over time and to support successful suppliers to leverage their experience with public tenders to internationalise. Such strategies not only help promote gender equality but also spark investment in social and economic development as well as poverty reduction.

This is why public procurement is one of the seven action areas under our SheTrades initiative which aims to connect one million women entrepreneurs to markets by 2020. The programme promotes equal economic opportunities for women through greater integration in global trade and investment, including through their participation in public procurement.

To this end, ITC published a guide entitled Empowering Women through Public Procurement that outlines the challenges that women-owned businesses face in participating in public procurement markets and tools to address them. The guide sets out the case for promoting gender equality as “smart economics,” and that public procurement can be used as a tool to achieve such socioeconomic objectives through the government’s regulatory and buying powers. Regarding women-owned businesses, the guide lays out key areas for action such as determining the definition of women-owned businesses and those eligible for preferential treatment, the importance of certification and registration programmes, and the need to close the information gap. Finally, the guide also suggests areas for public procurement policy reform, how public procurement can be leveraged through targeted assistance, and how progress can be monitored and evaluated.

ITC offers a free of charge, accessible, and interactive e-learning course on “Women and Procurement” that underscores the importance of women in the economy and how the situation of public procurement for women-owned businesses can be improved. The course looks at the barriers that women face in successfully obtaining public tenders and offers strategies that can help women-owned businesses improve their prospects. Furthermore, the course discusses capacity-building for women-owned businesses and the role that Public Procurement Officers can play to provide greater opportunities to women-owned businesses.

To facilitate access to information regarding public procurement, ITC has released an online market analysis tool known as “Procurement Map” that provides details on over 150,000 public tenders a day to help entrepreneurs seek new opportunities and identify potential buyers. The search system is based on an organisation’s target country and economic sector and provides information on public tenders, contract awards, legislation for women-owned businesses, legislation for SMEs, and sustainability standards.

ITC also promotes women’s participation in public procurement through policy recommendations, advocacy at the global level, and data analysis. In addition to our partnership with Chile Compra, ITC has provided technical advice to the governments of Uganda, Rwanda, and Liberia on targeting public procurement for women. At the WTO, ITC shares good practices and encourages signatories to the Government Procurement Agreement to consider options for inclusive and smart procurement.

SheTrades is also supported by a web and mobile applications that allow women entrepreneurs to connect to buyers, investors, and partners worldwide. Buyers can identify women entrepreneurs that meet their sourcing requirements. Sellers can easily expand their network and improve their skills through events, webinars, and market analysis information tools offered by ITC. Verifiers can register with SheTrades to help women entrepreneurs start out with a reliable name by confirming that businesses are a part of their network.

SheTrades interventions culminate in an annual event, known as SheTrades Global, where we convene a high-level policy dialogue, business to business (B2B meetings), buyer and mentor groups, and an investment challenge. I hope to welcome you next year at SheTrades Global, which will take place in Liverpool, UK from 26-28 June 2018.

The way forward

I wish to use my final remarks to encourage boldness in the public procurement for women in business and small businesses. If it is one thing that I would wish for you all to take away from my talk is that there are many ways to make a difference in this space. Public Procurement is complex, but the tools and ways to better lever empowerment opportunities for women does not have to be. Between deciding to publish tenders all in one place to writing a new law, there are many small and big steps that we can take to leverage public procurement for women.

This is why ITC is co-sponsoring a declaration on Women and Trade at the upcoming WTO Ministerial in Buenos Aires next month. We would like to use the next two years to foster an exchange of best practices among WTO members, including on issues such as procurement, that can generate better understanding and through that can lead to action on the ground.

I look forward to our interactive discussions today, and I am especially eager to hear from the students of Sculoa di Politiche as the youth perspective and mobilizing action is an important lever for change.

Thank you for hosting me today.