Chapter

Chapter 9C. West African Economic and Monetary Union

Editor(s):
Kalpana Kochhar, Sonali Jain-Chandra, and Monique Newiak
Published Date:
February 2017
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Author(s)
Stefan Klos and Monique Newiak 

Gender inequality in the eight member nations of the West African Economic and Monetary Union (WAEMU)1 is among the highest in the world and is impeding the macroeconomic performance of the region. The United Nations’ Gender Inequality Index shows that the WAEMU performs worse than most of the rest of the world. In particular, in contrast with two groups of fast-growing benchmark countries,2 the Gender Inequality Index in the WAEMU is much higher and has declined more slowly (Figure 9.7, panel 1). With the global evidence pointing to gender inequality as an impediment to a more equal income distribution, lower poverty rates, and sustainable growth (Figure 9.7, panels 2–4), the WAEMU’s high levels of gender inequality could have significant macroeconomic consequences.

Figure 9.7.Gender Inequality and Macroeconomic Outcomes

Notes: Data labels use International Organization for Standardization (ISO) country codes. HICs = high-income countries; MICs = middle income countries; LICs = low-income countries. PPP = purchasing power parity; WAEMU = West African Economic and Monetary Union.

Gender and Income Inequality in the WAEMU

Labor force participation rates have increased on average in the region but remain very low in several countries (Figure 9.8). The gender gap in labor force participation has declined significantly in the region over the last two decades from more than 30 percentage points in 1990 to about 20 percentage points in 2013. This reduction was driven mainly by large reductions in these gaps in Benin, Côte d’Ivoire, and Niger, with the latter two having started from very high levels. However, the gap remains higher than in the fast-growing Asian benchmark group, where the average gap is less than 17 percentage points, and substantially higher than the African benchmark group’s gap of only about 6 percentage points. However, female labor force participation is very low in some of the WAEMU countries even at very low levels of income per capita (Mali, Niger). At these levels of income, countries usually observe higher labor force participation rates by women, as they need to work for subsistence. When they do participate in the labor market in Côte d’Ivoire and Mali, women are more likely than men to work in the informal sector.

Figure 9.8.Gender Gaps in Labor Force Participation

Notes: ILO KILM = International Labour Organization, Key Indicators of the Labour Market database. SSA = sub-Saharan Africa; WAEMU = West African Economic and Monetary Union.

WAEMU countries are also outperformed by benchmark countries in boys’ and girls’ educational equality, and health indicators (Figure 9.9). Adult literacy rates, generally lower in most WAEMU countries compared with benchmark groups, remain particularly low for women. Gender gaps in primary education have shrunk but are not closed in the majority of WAEMU countries. In Benin, Côte d’Ivoire, Mali, and Niger fewer than nine girls are enrolled in primary education for every 10 boys, implying that these countries lag behind Sustainable Development Goal #4 for inclusive and equitable quality education. Only seven girls are in secondary education for every 10 boys, and women are less than 50 percent as likely to be enrolled in tertiary education. Health indicators remain poor in several WAEMU countries. The risk of maternal death is much higher in WAEMU countries, especially in Mali and Niger, as compared with the benchmark groups, as are adolescent fertility rates.

Figure 9.9.Educational Inequality in the WAEMU

Notes: Data labels use International Organization Standardization (ISO) country codes. HICs = high-income countries; MICs = middle-income countries; LICs = low-income countries. PPP = purchasing power parity; WAEMU = West African Economic and Monetary Union.

Finally, women face a number of legal restrictions in the region. Legal inequities between men and women have been shown to put a heavy toll on women’s labor force participation and thus growth (Gonzales and others 2015a). According to the World Bank (2015), in at least half of the WAEMU’s countries women cannot be the head of a household the same way as men, and no WAEMU member countries have legislation that prohibits gender-based discrimination in access to credit. In Niger, where female labor force participation is particularly low, there are restrictions on women’s ability to get a job on par with men. In Côte d’Ivoire and Senegal, men and women are treated differently in property rights. In at least half of the countries, women are not protected legally from domestic violence.

Growth Effects of Gender and Income Inequality

Given that income inequality in the region is a concern and that gender inequality is among the highest in the world, this analysis addresses whether these inequalities affect economic performance in the region. This follows the approach taken in IMF 2015 to decompose the differences in average real GDP growth per capita in the WAEMU and the two groups of African and Asian benchmark countries, which have experienced about 2½ and 3½ percentage points higher real GDP growth compared with the WAEMU in the past decade.

WAEMU’s real GDP growth per capita could significantly benefit from realistically implementable decreases in gender and income inequality (Figure 9.10). In addition to large effects on growth from overall educational and infrastructure gaps, income and gender inequality can explain about 0.5 percentage point of the WAEMU’s real GDP per capita income shortfall compared with the Asian benchmark group. The effect for a reduction of gender inequality and legal inequality to the level observed in the fast-growing five ASEAN countries (Indonesia, Malaysia, Philippines, Thailand, Vietnam) alone could boost real GDP per capita rates by 1 percentage point.

Figure 9.10.WAEMU’s Growth Differential with Benchmark Countries

Sources: IMF, World Economic Outlook database; PRS Group; World Bank, World Development Indicators database; and IMF staff estimates.

Notes: ASEAN = Association of Southeast Asian Nations. ASEAN-5 = Indonesia, Malaysia, Philippines, Thailand, and Vietnam.

Income and gender inequality have significantly contributed to the growth shortfall of all WAEMU countries relative to benchmark groups, but the magnitudes of these effects varies (Figure 9.11). For instance, in Burkina Faso, income and gender inequality have been lower than in benchmark groups, which has positively affected growth in Burkina Faso vis-à-vis the benchmarks. In Mali and Niger, which have a high share of the population living in poverty, income inequality is relatively low. However, gender inequality is high in both absolute and relative terms. In particular, in Mali, a reduction of gender inequality and an increase of legal equality between men and women to the levels observed in the ASEAN-5 alone could have resulted in a boost of the growth rate of real GDP per capita of 1¼ percentage points.

Figure 9.11.Differential Effects of Closing the Gaps in Income and Gender Inequality

Sources: IMF, World Economic Outlook database; PRS Group; World Bank, World Development Indicators database; and IMF staff estimates.

Notes: ASEAN = Association of Southeast Asian Nations. ASEAN-5 = Indonesia, Malaysia, Philippines, Thailand, and Vietnam.

The analysis confirms existing policy priorities. Decreasing income inequality and gender inequality may be desirable not only as a political preference or from a human rights perspective but also because of the potentially significant gains in real GPD per capita. The large potential growth gains suggest that policy moves should be implemented in a shorter timeframe. In addition, the decomposition exercise confirms that earlier policy priorities, such as boosting the region’s infrastructure, increasing the level of schooling (including through more education for girls), and improving the institutional environment could be associated with stronger growth in the region.

Conclusions and Policy Recommendations

Lower income inequality and lower gender inequality could boost real GDP growth per capita in the WAEMU. Gender inequality of outcomes and opportunities is very high in the region, and policies to mitigate these inequalities are promising. In particular, closing gender gaps in education would not only stimulate growth from a more efficient allocation of resources but would also increase total education in the region, further boosting growth. The region could benefit from boosting infrastructure and human capital and strengthening institutions.

The following policies could help reduce income inequality and gender inequality (Gonzales and others 2015a, 2015b; IMF 2015; Elborgh-Woytek and others 2013; World Bank 2011):

  • Remove legal inequalities between men and women. For example, Namibia equalized property rights for married women and granted women the right to sign a contract, head a household, pursue a profession, open a bank account, and initiate legal proceedings without their husband’s permission in 1996. In the decade that followed, Namibia experienced a 10 percentage point increase in its female labor force participation rate. Lower gender gaps in female labor force participation, in turn, have also been associated with lower income inequality.

  • Foster education. This could not only increase productivity through a more efficient allocation of resources but also boost overall education levels, a prerequisite for sustained growth.

  • Boost infrastructure, including through improving access to water and increased electrification of the region. This could not only boost growth directly but could also free women’s time to go to school and join the labor market since girls and women are in most cases the main providers of household work.

  • Reduce the regressivity of fiscal spending and taxes. In particular, replace across-the-board subsidies with well-targeted social transfer schemes.

  • Foster financial inclusion, including for women.

In promoting policies to reduce gender and income inequality, these recommendations pose no normative judgment on any countries’ social and religious norms but instead argue for a level playing field for all agents in the economy to have an opportunity to explore their economic potential if they so choose.

References

    Elborgh-Woytek, K., M.Newiak, K.Kochhar, S.Fabrizio, K.Kpodar, P.Wingender, B.Clements, and G.Schwartz. 2013. “Women, Work, and the Economy: Macroeconomic Gains from Gender Equity.IMF Staff Discussion Note 13/10. International Monetary Fund, Washington.

    Gonzales, C., S.Jain-Chandra, K.Kochhar, and M.Newiak. 2015a. “Fair Play: More Equal Laws Boost Female Labor Force Participation.IMF Staff Discussion Note 15/02. International Monetary Fund, Washington.

    Gonzales, C., S.Jain-Chandra, K.Kochhar, M.Newiak, and T.Zeinullayev. 2015b. “Catalyst for Change: Empowering Women and Tackling Income Inequality.IMF Staff Discussion Note 15/20. International Monetary Fund, Washington.

    International Monetary Fund (IMF). 2015. “Inequality and Economic Outcomes in Sub-Saharan Africa.” In Regional Economic Outlook: Sub-Saharan Africa.Washington, April.

    Solt, Frederick. 2016. “The Standardized World Income Inequality Database.Social Science Quarterly97. SWIID Version 5.1, July2016.

    World Bank. 2011. World Development Report 2012: Gender.World Bank, Washington.

    World Bank. 2015. Women, Business and the Law.World Bank. Washington

Benin, Burkina Faso, Côte d’Ivoire, Guinea Bissau, Mali, Niger, Senegal, and Togo.

African benchmark countries are Ghana, Kenya, Lesotho, Rwanda, and Tanzania. Asian benchmark countries are Bangladesh, Cambodia India, Lao P.D.R., Nepal, and Vietnam.

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