A close look at informal agriculture markets across Africa shows they thrive on implicit knowledge that cannot be manipulated through software or codified into a manual. Cooperation is the default behaviour rather than competition. Robust information is shared even between actors who are supposed to be furious competitors. Peers are more influential than experts. That is why trying to impose standardized procedures and best practices often fails dismally.
The complexity and fluid nature of relationships in these markets requires much greater human interaction and sharing of implicit knowledge, which cannot easily be codified. Depending on the diversity of commodities flowing into the market, there is often need for novel and untested solutions and emergent practices as opposed to best practices.
The value of critical mass
In these markets, social learning is a critical part of agribusiness. As traders engage in collective activities, they forge vibrant communities of practice. However, the situation is different among farmers whose communities of practice are weaker due to irregular joint activities. For instance, during winter, there are much fewer field days compared to summer and that results in farmers not meeting regularly to share insights.
Financial institutions could create viable businesses by banking on the critical mass of activities rather than resorting to traditional notions of banking. Most communities of practice form around specific agricultural commodities where farmers and other actors engage around diverse agricultural topics. Due to its elasticity, each people’s market has a unique way of responding to laws of demand and supply, different from a formal market which often tries to twist demand to suit its pricing policy. The power of communities of practice is more visible through consumer resistance in response to sudden market shocks like abrupt price increases. These are some of the issues waiting to be understood by banks.
eMkambo Call Centre: 0771 859000-5/ 0716 331140-5 / 0739 866 343-6
Was this helpful?
0 / 0