Asking and answering fundamental questions through informal markets

Street markets or roadside food markets have remained a permanent feature in most developing countries. The fact that these markets continue to flourish alongside emerging shopping malls shows they occupy a unique position in commercial activities.  Informal markets were previously designed for disadvantaged, low income households with ad hoc incomes who were considered not able to buy from supermarkets and formal value chains.  However, spending years in the informal business has seen some of the traders and vendor upgrading their standards to cater for diverse consumer classes. Consequently, informal markets are now part of a business growth path comprising food chain stores, hotels, restaurants and formal institutions.  In order to stay in this game, traders and farmer have been compelled to acquire a certain level of tertiary knowledge, resources and entrepreneurial skills.

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On the other hand, this evolution in markets has brought its own challenges in many African countries where agriculture continues to be the backbone of the economy. The formerly employed and pensioners with reliable sources of income have been attracted to moonlight in informal markets, pushing out poor and low income traders in whose name informal markets were originally set up. Instead of being a domain for the poor, informal markets are now for every business-minded individual. Most of these markets have become part of solid business value chains able to ensure consistency in supply as opposed to ad hoc participation in the market.

Solidifying the aggregation role of informal markets

African food markets are no longer just seasonal events where farmers come to the market according to seasons.  Middle class farmers who have embraced farming as a business are now found in the market consistently since they have built niche markets that have to be continuously served. In order to consolidate its aggregation role, each informal market now requires resources to be able to ensure necessities like potatoes, vegetables, eggs, fish and other commodities are always available.

As niches become highly competitive, ad hoc traders and market participants are being pushed closer to the supply side like road side markets in farming areas and village markets. In these areas, ad hoc traders become small aggregators with just enough resources for pulling a few resources from farming areas.  Once in a while, marginal traders can go to big urban markets where they buy a basket of banana and a crate of tomatoes for selling in local markets where these commodities are not produced.

Need for middle class markets

With urban informal markets becoming part of regular value chains, the need for middle class markets, different from supermarkets or food chain stores has become more urgent in many African cities. New land uses, accompanied by investment in agricultural value chains by different classes of actors, are producing more commodities than can be handled by supermarkets and informal markets traditionally meant for the poor. This has seen many of the commodities overflowing into street sales, some sold from stationery vehicles and makeshift market stalls. Middle class markets from which food chain stores, processors and even exporters can get commodities consistently represent the future of agriculture in developing countries.

Almost everyone now knows how to produce commodities but very few know how to deal with perishables once they have been harvested. Neither are many producers able to anticipate the speed at which consumers consume and come back to buy or re-order.  Ministers, members of parliament, bankers, lawyers, accountants, university professors and other professionals interested in agriculture are all competing in producing and selling agricultural commodities through informal markets when they should invest in building a middle class market of their own.  How can a whole minister compete to sell cabbages in the same informal market with grandmothers struggling to feed orphans?

Need for careful characterization of markets 

In addition to congestion in most informal markets, there is limited differentiation in terms grading and quality. For instance, the prices of a box of tomatoes can range from $1 to $8 in the same informal market yet such a market should be for low income consumers and traders. A trader who sells fruits for $1, another  one who sets a price by counting the number of fruits in a pile and yet another one who sells for $10 for the same commodity quantity, are all found in one market.  While this is good for diversity, it inhibits definition of business boundaries.  Absence of proper clustering means you cannot separate classes or good products from bad products.

Clear characterization and classification can support the evolution of a middle class industry and ensure the definition of Micro, Small, Medium and Large does not just remain on paper.  Different classes should be in specific locations – building layers of one enterprises on another. Where these classes are all in one space, micro and small enterprises end up being over-shadowed by medium and large actors.  It should not just be about numbers of actors in one category but different capacities.  Some commodities can have differently entrepreneurial capacity, quality, standards, formality like registration and markets. For instance, those in processing industries may not want to see commodities being delivered in baskets.

Appeal to a broad section of the middle class

There is need for middle class traders, saving the up-market and farmers like pensioners with high capacity to produce more volumes. For most pensioners, farming is the next career step so they should have appropriate markets. Most pensioners have resources and need a market that can ensure good return on investment (ROI). Some have built networks in government institutions, hotels and even foreign markets. For instance former ambassadors in foreign countries need a market that acts as a holding centre before they connect and ship commodities to their networks in foreign countries. They cannot use informal markets or their farms as holding centres.

Agribusiness is no longer for the uneducated or illiterate. It is now export- focused and a career path for many people. With high literacy levels, it means a lot of ethical considerations like licensing, book keeping and other formal requirements are critical. Unfortunately, governance approaches in developing countries still focus controlling than enabling the growth of local informal economies. Public expenditure is also not taking these markets into account. Collecting and sharing evidence can assist in positioning informal markets for public expenditure. Government input programs tend to absorb a lot of the public expenditure but incentivize corporate industries. Informal markets are different from shopping mall-driven models where people are working long hours for low wages.  On what terms are smallholder farmers in developing countries participating in contract farming models and value chains?  In most cases they are just providing land, cheap labor and pushed into debt cycles for the sake of obtaining inputs. An integral part of informal food markets is the capacity of people to mobilize and exchange food commodities, informed by an intuitive cultural value of food.

 

charles@knowledgetransafrica.com  / charles@emkambo.co.zw / info@knowledgetransafrica.com

Website: www.emkambo.co.zw / www.knowledgetransafrica.com

eMkambo Call Centre: 0771 859000-5/ 0716 331140-5 / 0739 866 343-6

Why calls for proposals are not ideal for African agriculture and rural development

Over the past few years, calls for proposals have become the main instrument used by development organisations to support agriculture and rural development initiatives in African countries. Besides setting the agenda, this approach has also become a way for development organisations to freely harvest ideas. There is also a lot of double dipping in calls for proposals with bidders recycling proposals to fit particular calls.  For most calls for proposals, evaluators are people from outside the country who do not understand the context or the business of the applicants.  This means the main result is a desk appraisal rather than physical appraisal where the evaluators engage in face to face dialogue with applicants as well as with other actors who are currently working with the applicants, for instance farmers, processors and traders, who should be used as references in appraising proposals.  It doesn’t make sense to base funding conclusions and decisions on written documents when development is about people not documents.  Again, calls for proposals processes tend to be very long – proposals writing, baseline, validation of value chains, identification of beneficiaries, training, etc.  This process can take a whole season and can interfere with communities’ on-going activities.

Projects under calls for proposals do not easily adjust to calamities like drought.  Where a budget is for training farmers in farming as a business, such training will still go ahead even if there is a looming drought in the community.  Due to the circular game of setting and responding to targets, the same resources cannot be re-allocated to immediate livelihood activities that may be more important to the community.  In agricultural communities, everyone has a sense of belonging. Therefore resources have to be properly aligned and informed by the interests of community members.  Unfortunately, most projects implemented via calls for proposals hide important information. For instance, the community is not told how much has been allocated to what activity and how much is being spent for what purpose. Communities are excluded from resource allocation decisions.

The calls for proposals approach has resulted in many disjointed projects which do not speak to each other. African countries badly need funding approaches that support interventions that have struggled with their own challenges and have promise for resilience. In response to the calls for proposal approach, we now have full time specialists in proposal writing who are paid even if the proposal doesn’t succeed.  These proposal writers write on behalf of communities they barely understand.  That is why most projects face challenges during implementation.  Most monitoring and evaluation tools used are not context-specific.  For instance, one programme can cover six districts in three different provinces with the same implementation strategy and same monitoring and evaluation tools as if the districts have the same dynamics.  For an agriculture project, monitoring and evaluation tools for farmers close to the market should be different from those who are far from the market. Farmers close to urban markets can get cash for their commodities while those in remote areas can end up resorting to barter trade due to cash shortages in remote areas (exchanging goats with groundnuts or clothes; vegetables with salt, etc.).  Monitoring and evaluation tools by most of the calls for proposals projects do not take these differences into account but use the same baseline (income from beginning to end of project). A tool for farmers trading in cash should be different from those using barter trade.

eMkambo

Although they are critical value chain actors, traders and agro-dealers don’t get support from calls for proposals

Most the calls for proposals projects are also fond of supporting a few disconnected agricultural value chains. They can support farmers ignoring traders, agro-dealers and processors who are critical parts of the value chain. If households receive cash for work under a donor supported programme but the local agro-dealer has no seed, these households will go and buy seed in urban areas where they leave cash which was supposed to be locked in the local community.

What are some of the alternative funding approaches?

Rather than continue using calls for proposals as funding mechanisms in African countries, development partners should explore other methods such as crowd funding. A few of these approaches are being explored by a few development organisations.  Using a crowd funding strategy, initiatives can be funded based on their competitive edges.  Rather than competing through a documentation process, applicants can post their innovative ideas which can be objectively vetted and funded.  This can be different from the calls for proposals approach where applicants end up trying to squeeze their ideas to fit a given budget.  Assumptions used to limit the budget to $100 000 per project under calls for proposals are not based on full understanding of context.  The crowd funding approach will be ideal for funding emerging ideas unlike the calls for proposals approach which has no room for the way ideas and innovations naturally emerge.

Given that most projects under calls for proposals are implemented in two to three years, such a stint is too short to claim any positive impact. That is why we need collaboration between NGOs and the private sector for smooth transition of interventions from a non-profit angle to a for-profit, commercial and sustainable path.  Lack of proper hand over take over between sectors results in too much reinvention of wheels in between white elephants.  Under a crowd funding strategy supporting agriculture development, agro-dealers, traders and processors can receive subsidised grants so that they are able to buy commodities from local communities to ensure market readiness.  In most cases, unwillingness to support these actors by programmes under calls for proposals leads to suppressed prices when farmers produce more than traders, processors or the market can take.  Farmers lose at the end.  If you support bean production in one community like Chipinge but don’t support local agro-dealers traders, there will be a glut of beans in the district because the market has no capacity to absorb the commodities.

Through a crowd funding approach, a community can identify its own potential interventions as well as actors such as farmers, agro-dealers, traders, processors and food chain stores. A needs- based programme can be designed from community to provincial levels.  Local businesses like agro-dealers and food chain stores can be funded to support local farmers. This inclusive strategy can move communities out of poverty in a more sustainable way than calls for proposals most of which are being implemented by international organisations with branches in developing countries. How can an organisation be in a community for more than ten years and still be unable to come up with sustainable solutions but still continue accessing funding through calls for proposals?

The crowd funding strategy can be extended to empowering Community – Based Organisation (CBO) most of which are being side-lined or swallowed by outside organisations through projects under calls for proposals.  A number of CBOs still exist but focus on social projects like HIV & AIDS.  These CBOs should be capacitated and funded so that they can work effectively with the local private sector.  A useful intervention should start with CBO needs informing resource mobilisation with some resources re-directed and targeted at particular community activities.

With many African governments calling for resource sharing among mobile service providers and other actors in the same sector, there should be a method of reinforcing resource sharing among development organisations in ways that help communities.  We still see different organisations driving different vehicles into the same community.  One is focusing on agriculture, another on water and sanitation and yet another on HIV & AIDs.  This is wasting community time and denying them the dignity and self-esteem that comes from surmounting their own challenges.

More information:

Charles@knowledgetransafrica.com / charles@emkambo.co.zw

Clever@knowledgetransafrica.com / clever@emkambo.co.zw

tafadzwa@knowledgetransafrica.com / tafadzwa@emkambo.co.zw

tenjiwe@knowledgetransafrica.com / tenjiwe@emkambo.co.zw

farai@knowledgetransafrica.com / farai@emkambo.co.zw

simbarashe@knowledgetransafrica.com / simbarashe@emkambo.co.zw

tembie@knowledgetransafrica.com / thembi@emkambo.co.zw

tariromk@knowledgetransafrica.com / tariro@emkambo.co.zw

Laizah@knowledgetransafrica.com / laizah@emkambo.co.zw

Website: www.emkambo.co.zw / www.knowledgetransafrica.com

 

eMkambo Call Centre:

0771 859000-5

0716 331140-5 / 0739 866 343-6

How can we use evidence to translate awareness into new agricultural practice?

More than 20 African countries were represented at a rural and agricultural finance conference held in Harare, Zimbabwe from 10 to 12 June 2015. A fundamental question that grabbed all participants is: How can we use existing knowledge to improve rural and agricultural financing? Tons of publications and suggestions have been produced and continue to be produced on issues affecting African agriculture. Everyone knows that agriculture is central to African economies yet the sector receives less finance from banks. About 500 million smallholder farming families (more than 2 billion people) rely on agricultural production. About 75% of the population in Africa reside in rural areas and depend on agriculture for their livelihoods. In the SADC region, agriculture contributes between 4% and 27% of GDP and approximately 13% of overall export earnings in the member countries. It is estimated that the continent’s agricultural output could more than triple from USD 280 billion to USD 880 billion by 2030 if farmers were able to access finance they need to expand both the quality and quantity of their produce. Yet even in countries where non – performing loans are below 10%, financial institutions are reluctant to finance agriculture. In the face of existing evidence, why can’t we find solutions to obvious challenges?

Fighting perceptions with evidence

Since there seems to be a perception problem around rural and agricultural financing, how do we use evidence to correct all these perceptions? It looks like all the knowledge in Africa is not helping us in solving some of these key challenges. While social media is supposed to make the invisible more visible, at individual level we seem to be drowning in too much information such that we can’t assist each other. Building awareness has to be complemented with exploration of alternatives. For how long are we going to continue answering research questions with more research?

One of the myths uncovered during the Harare conference is the perception that rural communities do not save money. The power of rural communities to save is revealed by how they continue participating in agriculture markets. Participants concurred that fixing the market is an alternative route to ensuring rural and agricultural financing in African countries. While formal banks tend to move money from communities or markets to the stock market, community savings groups have smart ways of locking money in the communities leading to growth.

 

 

Evidence from the market

All participants in the conference concurred about the supreme role of agriculture markets in stimulating and sustaining rural and agriculture finance. The analysis below is a solid testimony to the power of agriculture markets:

Mbare, Harare wholesale market analysis – April 2015

A total of twelve agricultural commodities were supplied to Mbare wholesale market during the month of April 2015 generating an estimated revenue (ER) of $ 1,475,657.00 an increase from March’s figure of $ 987,460.00 by 49.43%.

Table 1: E R by Produce type, tonnage and percentage share of total ER

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Graph 1: produce supplied in tons.

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Table 2: E R by province

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Chart 1: E R share by province

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Table 3: Estimated Revenue (E R) by district

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All the districts mentioned above would not have received such respective incomes if there was no market. More farmers and rural people can benefit if markets are improved.

 

More information:

Charles@knowledgetransafrica.com / charles@emkambo.co.zw

Clever@knowledgetransafrica.com / clever@emkambo.co.zw

tafadzwa@knowledgetransafrica.com / tafadzwa@emkambo.co.zw

tenjiwe@knowledgetransafrica.com / tenjiwe@emkambo.co.zw

farai@knowledgetransafrica.com / farai@emkambo.co.zw

wilson@knowledgetransafrica.com / wilson@emkambo.co.zw

tembie@knowledgetransafrica.com / thembi@emkambo.co.zw

tariromk@knowledgetransafrica.com / tariro@emkambo.co.zw

Laizah@knowledgetransafrica.com / laizah@emkambo.co.zw

Website: www.emkambo.co.zw / www.knowledgetransafrica.com

 

eMkambo Call Centre:

0771 859000-5

0716 331140-5

0739 866 343-6

How ‘informal’ agriculture markets generate and distribute power!

If you have become accustomed to think of power in terms of electricity or political power, evidence from the people’s market indicate you should think again. ‘Informal’ agriculture markets have remarkable ways of dealing with power. The market has become smart at distributing power among value chain actors such that no single agricultural value chain actor holds power forever.

1Power of the people’s market

Farmers hold power around production, use of land, inputs as well as ownership of livestock among other assets. Without these assets, the market will stop functioning. To that end, farmers have power to determine life in the market. On the other hand, by informing farmers about market expectations as well as sorting and aggregating commodities, traders have power to determine the value of farmers’ agricultural commodities. Through creative interaction and relationship building, traders and farmers do not just exchange commodities and money but power.

Not to be outdone in the power game are transporters. Transporters determine whether commodities will arrive on the market on time and in a fresh state. They also influence packaging. The size and number of crates of tomatoes a farmer can bring to the market depends on available transportation. However, some agricultural commodities influence transport choices. Commodities like peas certainly demand cold chain while some bulk commodities like potatoes coming from Nyanga to Masvingo or Harare can’t be viably transported in anything smaller than 10 -30 ton trucks. Still, other high value crops require careful handling, small trucks and specific ways of packaging.

Inputs providers and agro-dealers also have power to distribute inputs and influence production. This power is drawn from producers and the market. Without inputs there is no food on the market. The market also distributes power between local authorities (Harare City Council, Bulawayo City Council, Mutare City Council, Masvingo City Council, etc) and market committees. Local authorities have power to allocate market infrastructure while committees have power to organise traders and regulate the movement of commodities. The committees draw power from local authorities and vice versa.

Of course, we can’t ignore consumer power. Any market shock (positive or negative) reveals the power of consumers. A positive increase in consumer incomes translates to an increase in demand for commodities and sales on the market. Consumer tastes and consumption patterns can influence supply trends significantly. eMkambo has seen an improvement in the taste of small grains and nutritional awareness driving consumer demand for these commodities. At any given time, if consumer incomes increase, there is an effect on the operations of the market and value of commodities. The market often performs well during the festive season when civil servants receive their bonuses. As a result, the market draws bonus income to a central place and distributes it to other value chain actors. Transporters, vendors and those involved in packaging end up smiling all the way home.

In the market, power also travels from people to commodities and vice versa. Like people and institutions, some agriculture commodities and markets set the tempo and pace of the market. On the other hand, some commodities just follow the leader. In most markets such as Mbare, Bulawayo, Masvingo and Mutare, the tomato tends to be a leader because it is involved in the preparation of every food. If the tomato misbehaves or becomes scarce, other commodities like cabbages and fruits are affected not because they are of poor quality but merely because the leader is not behaving normally. The tomato can influence the performance of sugar beans in ways that ordinary farmers can’t understand. This power is also transferred to value chain actors so much that the economic performance of a potato on the market empowers potato farmers, traders, transporters, processors and input suppliers. Potato seed producers whose crop performs better on the market end up enjoying more seed sales when consumers testify to the superiority of their variety.

To sum it up: The market is at the centre of power generation and distribution vertically and horizontally, depending on value chain actors. Horizontal power sharing is with the market institution and other actors like traders while the vertical connection is with processors and policy makers. Downward integration is with transporters, agro-dealers and producers. All these power dynamics reinforce vertical and horizontal power integration within the market, contributing to sustainable markets.

So what?
Unless you have evidence in terms of figures, you can’t qualify the amount of power, produce or business generated from the market along the value chain towards economic development. The power of each commodity speaks to its position in national food reserves. Maize is not as powerful as other commodities like potatoes and thus should not be over-rated. Agriculture-based economic drivers can only be supported with evidence and statistics, especially from the market which is the ultimate barometer. The power of an agricultural commodity to be an economic driver can been seen by its numbers on the market. There is no doubt that potatoes and oranges are economic drivers in Nyanga and Mazowe districts of Zimbabwe respectively. Livestock is a key economic driver in Gwanda and Matobo districts of Zimbabwe. Numbers in the chart below illustrate the power of different commodity classes in the market.

Chart 1: Expected Revenue (E R ) per produce class in Mbare Farmers Market – January 2015

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Monitoring and Evaluation (M&E) approaches by agriculture-related development organizations and financial institutions should strive to develop indicators from the market. Pertinent questions should include: How much volume of commodities from beneficiaries were traded on the market and how much income was generated by beneficiaries during the project life? Financial institutions should also be interested in a question like: Out of the US$300 million extended to the agriculture sector, how much volume of commodities was traded? It’s highly misleading to measure hectares of commodities financed because a lot happens between production and marketing with some of the losses difficult to account for. If the banking sector extended US$300 million to farmers, how much percentage of sales did this money generate?

Currently, most M&E approaches have no indicators from the market. Instead of baseline questions including a question on how much each household generates from sales of agricultural produce, conventional questions focus on: (a) own capital/savings, (b) loans from the bank, (c) from relatives or remittances. There is an assumption that poor people don’t need a market. Yet if you ask farmers you realize how far they have used their own means to start projects or uplift their status. If you ask rural people how they have acquired a plough or a scotch-cart, it is common to hear the answer being: “ I sold my cattle or my crops during a good season”. If you say to a rural woman: “How did you end up owning plates and pots among other cooking utensils?, the answer can be: “I sold my vegetables, goats, chicken and other things”. If you want to find out how they acquired clothes, the answer can be barter trade involving agricultural commodities such as chickens and groundnuts.

While in many districts of Zimbabwe development partners emphasize goats, sorghum and other commodities as economic drivers, the market shows 50% of the income that goes to Buhera is drawn from wild fruits like Mawuyu (baobab fruit), for instance. This shows Mawuyu is becoming a powerful economic driver. In addition, you don’t hear the role of Masawu in development interventions targeting Muzarabani and other areas where Masawu fruit is abundant yet the market shows the fruit’s exciting performance. Interventions that move people from subsistence to commercial levels have to be anchored on the market. The market can be a powerful baseline for each district or community and points to levels of resilience as well as sustainability strategies.

Lack of focus on market intelligence has resulted in financial institutions failing to make a mark in rural areas. Banks should focus on supporting commodities and farmers not farmers alone. If you want to effectively support farmers from Mutoko, the market can give you entry points to sustainable interventions. Don’t just focus on resources like land, water, labour, transport, etc. All these are important but not on their own because when farmers produce but fail to market, there is no improved livelihood. That is why in most communities, there is poverty in the midst of important natural resources. The market has power to draw commodities and people together in ways that minimize costs. Through the market, financial institutions can extend loans to farmers in groups which can easily manage each other.

More information:
Charles@knowledgetransafrica.com / charles@emkambo.co.zw
Clever@knowledgetransafrica.com / clever@emkambo.co.zw
tafadzwa@knowledgetransafrica.com / tafadzwa@emkambo.co.zw
tenjiwe@knowledgetransafrica.com / tenjiwe@emkambo.co.zw
farai@knowledgetransafrica.com / farai@emkambo.co.zw
wilson@knowledgetransafrica.com / wilson@emkambo.co.zw
tembie@knowledgetransafrica.com / thembi@emkambo.co.zw
tariromk@knowledgetransafrica.com / tariro@emkambo.co.zw
Laizah@knowledgetransafrica.com / laizah@emkambo.co.zw
Website: www.emkambo.co.zw / www.knowledgetransafrica.com

eMkambo Call Centre:
0771 859000-5
0716 331140-5
0739 866 343-6

How every commodity counts in informal agriculture markets !!

In case you always wonder why eMKambo is in the habit of documenting every agriculture commodity in the market no matter how small, there are many reasons. Every commodity including wild fruits performs an important function in the market. Traders and farmers are now aware that if you see tomato prices remaining stagnant, there is a fruit causing havoc. Consumers come to the market with a balanced nutrition mindset. Each consumer budget covers vegetables and fruits. When a consumer gets to the market and suddenly finds Masawu fruit in season, she decides to buy less tomatoes to accommodate Masawu for her customers and family back in her residential area. This means Masawu starts competing with tomatoes for the dollar, leading to less demand for tomatoes, driving down tomato prices.

Consumer choices have a huge bearing on how commodities compete. For every US$100 000 circulating in the market, consumers collectively spend $60 000 on vegetables and $40 000 on fruits. An increase in the price of tomatoes can shift US$10 000 from the fruit budget, meaning US$70 000 will buy the same quantity of vegetables while fruits will start competing for US$30 000 instead of US$40 000. Every farmer should keep an eagle eye on fruits because their introduction into the market may mean less income for a tomato producer. It is no longer about focusing on your commodity only but holistically reading trends on the market.

Complementary commodities: Another fascinating market phenomenon is the notion of complementary commodities. A shortage of tomatoes on the market means the price goes up. But tomatoes go into the consumer basket with cabbages and other crops for the same budget. When the price of tomatoes goes up, a consumer sacrifices the cabbage because the tomato has many uses. This means a cabbage farmer gets less money and the price of cabbages goes down, not because there is a glut of cabbages but rather an increase in the price of tomatoes.

Necessities and luxuries in the market: Some commodities are considered luxuries, for example, carrots, fresh peas, beans and butternuts as well as some fruits. An increase in the price of a necessity like tomato translates to less expenditure on luxuries as consumers’ direct resources to necessities. A shortage in one commodity, especially a necessity, will result in the demand for luxuries going down. Picture this: A vendor brings US$20 to buy two boxes of tomatoes at US$5 each and a crate of bananas at US$10. If she finds the price of tomatoes to have doubled to $10 per box, she will forgo a crate of bananas and still buy two boxes of tomatoes at $20. This results in the fall of the price of bananas. Tomato is a necessity while banana is a luxury for many households and consumers.

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Nutritional balance: A fall in commodity prices on the market sometimes enhances the nutritional balance of households. While a change in the food basket of a household can affect the competitiveness of commodities, for instance, where a household switches from tomatoes to fruits resulting in less competitiveness of tomato business, consumers enjoy nutritional diversity. A fall in the price of some basic necessities like tomato increases the nutritional balance as the same budget can now buy more other commodities like fruits.

Mbare wholesale market analysis.

The month of January 2015 saw 30 farmers and 117 traders in Mbare Wholesale Agriculture market trading ten commodities worth $ 793,902.06. Although this was a decline from the December figure by 12.45 %, it is still significant given that the majority of farmers were paying attention to field crops. The rainy season tends to present challenges in moving commodities to the market from remote areas due to bad roads and losses caused by rain. The traditional “January disease” partly explains a decrease in the volume of cash in the market. However, a quarter of the commodities were exchanged through barter deals which traders and farmers use to fill gaps left by less cash in circulation.

Produce type, tonnage and percentage share of total Expected Revenue (ER)

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Potato price trend

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The price of potatoes per ton remained constant from December 2014 to January 2015 due to the liquidity crunch against constant supply, among other factors.

Estimated revenue by produce type

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Produce supplied in tons

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Expected Revenue (ER) by Province

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Manicaland province was ahead of the pack, thanks to potato supply, followed by Mashonaland Central. In spite of distance and a less favorable agricultural environment, Masvingo threw powerful punches.

Expected Revenue (E R) by district

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It is interesting to see Bikita, Mwenezi and Gutu in this league. The impact of various agriculture production initiatives by development partners in these districts is beginning to bear fruits.

More information:

Charles@knowledgetransafrica.com / charles@emkambo.co.zw

Clever@knowledgetransafrica.com / clever@emkambo.co.zw

tafadzwa@knowledgetransafrica.com / tafadzwa@emkambo.co.zw

tenjiwe@knowledgetransafrica.com / tenjiwe@emkambo.co.zw

farai@knowledgetransafrica.com / farai@emkambo.co.zw

zvifadzo@knowledgetransafrica.com / zvifadzo@emkambo.co.zw

tariromk@knowledgetransafrica.com / tariro@emkambo.co.zw

Laizah@knowledgetransafrica.com / laizah@emkambo.co.zw

Website: www.emkambo.co.zw / www.knowledgetransafrica.com

eMkambo Call Centre:

0771 859000-5

0716 331140-5

0739866343-6

Surfacing the transformative power of Indigenous Commerce

As a knowledge entrepreneur in Zimbabwe’s agriculture sector, eMKambo (www.emkambo.co.zw / www.knowledgetransafrica.com ) has found itself dancing between two worlds. We don’t have a real name for such a dance but it’s definitely not Kongonya. It is what we have chosen to call Indigenous Commerce. It is a combination of formal and informal economic activities and worldviews. Not entirely formal or completely informal. Depending on commodities being exchanged, it is sometimes 75% informal and 25% formal. From this observation you can see that thinking in terms of clear boundaries between the formal and informal economies is a myth and highly naive. The indigenous commerce space represents a healthy fusion of formal and informal economies.

Principles of Indigenous Commerce
As a practice, Indigenous Commerce has a set of principles and values which include: Barter Trade; Trust & Relationship Building; and, Local Knowledge Pathways.

Barter Trade – It is clear to everyone that you can’t find sufficient United States dollars or South African Rands in every corner of Zimbabwe. Yet agriculture commodities continue to flow from those areas to urban people’s markets which now control 60% of the food traded in the country. Given cash shortages, the bulk of this food travels on the rails of barter deals and embedded relationships. Barter deals are at the centre of how the value of agriculture commodities is exchanged from farmers to traders and finally to consumers. Some direct relationships between farmers and final end-users are also anchored on elements of barter trade. Besides addressing cash shortages, barter shortens the transaction process. Through barter deals, a commodity looks for another commodity that matches its value within the market, for example, a crate of tomatoes for a bucket of groundnuts or three buckets of maize for a goat.

Trust and Relationship Building – Through Indigenous Commerce, farmers and traders know that the quality of your relationships determines the depth and amount of opportunities you get. Relationship building starts with the value an individual attaches to his or her commodity. Whoever buys that commodity should pay an equivalent of the trust and value the seller has on his/her commodity. The seller’s trust in his/her commodity is transferred to the buyer. From the other end, consumers and traders transfer their expectations to the producer. In this way, Indigenous Commerce is able to match values and expectations from both ends. The situation is different in an entirely formal agriculture economic mindset where a farmer is encouraged to calculate his profit or price before going to the market and when s/he faces competition in the market, s/he remains stuck in those figures, leading to enormous frustration. For instance, a farmer can say, “I want 25% profit even when the situation doesn’t accept that figure”.

Most traders specializing in tomatoes, potatoes, goats, eggs, chicken or butternuts have built a niche market based on relationships and trust. Although this knowledge is not documented, it informs them how to stock or re-stock (re-order levels) at different times. While formal companies and NGOs tend to draw static suppliers’ lists, a trader’s list of suppliers is woven with relationships. Relationships explain why someone continues to specialize in groundnuts for decades even if there are opportunities in high value commodities like cabbages or butternuts.

In one way or another, farmers, customers and traders go further to discuss how they are related through totems, e.g., Moyo or Shumba. People who are sensitive about totems tend to buy from those with whom they share surnames – Mhofu to Chihera. There is also something about place of origin, e.g a trader from Masvingo’s pen name in the market can be Masvingo which means people from Masvingo may want to give him first preference. Before talking about money, farmers and traders talk about relationships and places of origin. Sometimes accent can help such that if a consumer identifies with the accent of a trader, s/he may be swayed to buy from that particular trade, for instance, Wasu to Wasu.

Local Knowledge Pathways – When acquiring commodities, traders use their personal knowledge and instincts to determine volumes that can be bought by their consumers. They don’t rely too much on cash flow projections but resort to their instincts and knowledge of business. In the words of one trader: “If you don’t know how to do a cash flow, don’t try because you will fool yourself into believing you are making a profit when you are not.”

On- the- job apprenticeship is a fundamental component of Indigenous Commerce. Most tomato traders were once tomato farmers who have perfected their art through learning from production up to the market. Conversely, in the formal economic frame, formal qualifications are considered more important than practical wisdom gained through action. Someone can enrol at University to study agronomy even if s/he grew up in urban areas with no exposure to practical farming. It becomes worse when this person becomes a policy maker when s/he doesn’t have practical agriculture wisdom. A trader who grew up farming can be a better policy maker than this person. Zimbabwean businesses and parastatals are collapsing because they do not take some of these issues into account.

The majority of traders in the people’s market have inherited their businesses from their parents and are now practically teaching their children how to run these businesses. One of the values these children are acquiring is how to give a discount. They now know that when a customer buys tomatoes worth more than a dollar you give a discount in the form of one extra tomato. This Mbasera principle common in indigenous commerce is a form of discount prevalent in all people’s markets. A customer who buys 10 oranges for a dollar and gets one extra as Mbasera to make them 11 has a10% discount, meaning he buys orange for less than one rand. Mbasera as a way of thanking originates from Indigenous Commerce.

While the formal economic mindset wants to see evidence of businesses growing in a certain direction, Indigenous Commerce emphasizes both growth and sustainability as well as meeting social needs. Modern investment analysts have not been trained to see how an indigenous business is growing. For instance, they have no capacity to value investments in social things like education. A trader practicing Indigenous Commerce can finance two children up to university, making an investment worth more than US$20 000. Returns can be seen through the children’s well-being. A trader can make this investment for decades but, in the eyes of modern commerce, his/her business is not growing since it can’t be measured through number of employees and physical assets.

Indigenous Commerce has sustained itself for years because knowledge sharing is open and free unlike in modern commerce where private companies in the same line of business can have entirely different fortunes. While one company is folding, another one in same line of business is thriving. This problem is caused by unwillingness to share knowledge and success secrets. Due to robust knowledge sharing, you don’t see a whole Indigenous Commerce industry collapsing like what has happened to Zimbabwe’s manufacturing sector. A strong knowledge sharing culture based on trust and relationships enables Indigenous Commerce to absorb severe economic shocks. What one trader knows the other doesn’t know. However, success comes from combining what they all know. What is not known has been completely discarded. Traders don’t just do things to impress formal financial institutions and their associated ways of validating knowledge just for the sake of trying to obtain a loan. The formal economy’s emphasis on receipts, company registrations, PAYE and other blockages is a big sign that nobody trusts anybody in the formal economy. Therefore it can’t function alone.
In Indigenous Commerce, knowledge is returned with knowledge. No use of cash to buy knowledge. Everyone learns from others resulting in a rich knowledge ecosystem which does not involve monetary compensation or formal training. Indigenous commerce fosters authentic Communities of Practice where everyone is interested in the continued existence of knowledge as a common resource. Creative judgement is based on storytelling.

Towards a collective view of nutrition
The strength and inspiration of Indigenous Commerce doesn’t just end with practical knowledge but also extends to a collective view of food and nutrition. The following visual shows a sympathetic and reflective way of understanding food in the people’s market.

eMKambo