Yes, African food traders have better techniques than PhD graduates in Economics

Academics like economists rely on authors and literature based on research conducted within a given time frame. Such literature has no room for adjustments as new events and knowledge emerge.  For instance, Keynesians economics was based on theories of John Maynard Keynes whose research revolved around the laws of supply and demand, among other principles of economics. Since the research was done decades ago and in specific contexts, such knowledge lacked fluidness that would have kept it fresh. To that end, studying economics has become more about memorizing old economic principles yet in real life people should be equipped with real time knowledge to respond to events as they happen.

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How informal markets are different

Unlike academic corridors in which economists thrive, African informal markets are open spaces where knowledge is shared as events unfold. These markets are always solving problems as they emerge and build more solutions continuously. For example, when a food commodity is in short supply traders do not just increase the price. Instead, they break bulk so that many consumers at least get a smaller share.  Another response is shortening the market out-reach such that commodities that would normally travel 400 km from the main market like Mbare in Harare to Bulawayo reduce their outreach without increasing prices.  Consumers also respond by going for substitutes, supplements and complementary commodities. In glut situations the market broadens the outreach to far-flung areas.  All these are different kinds of solutions not found in the economics text books. More importantly, in informal markets knowledge is collectively mobilized to generate solutions in ways that a whole faculty of commerce at any university cannot do through reading economics textbooks. Sadly, when economists rely on text books written by individual authors, more than 40 percent of the content in those books comprises the author’s personal opinions or thinking as opposed to collective wisdom of the mass market.

The power of experiential learning

Academics like economists also lack experiential learning without which they cannot be able to figure out how mass markets decide it is time to increase commodity prices. On the other hand, traders are acutely aware that they do not live in isolation like academics in their ivory towers. To that end, traders and informal markets know the users and uses of their knowledge. They treasure an ecosystem of knowledge sharers made up of consumers who pass on knowledge to traders who also pass it on to farmers and the cycle continues. This sharing of knowledge within an ecosystem purifies knowledge into a fluid package unlike textbooks where knowledge is closed and frozen such that there is no room to add fresh content.

Economists who read the same textbooks end up thinking and behaving like one person. While a class of 40 economists thinks the same, an ecosystem of traders in informal markets taps into diverse thoughts and experiences. To a large extent, projections by traders in the market are based on experience not figures. They know how different commodities and consumers behave at different periods of the year and that informs their projections for the next 3 – 6 months.  Experiences and knowledge from the market has taught traders to do moderate projections (not too long or too short) that fit within production cycles of particular crops (2 – 3 months).

Policy makers’ projections are rarely based on thorough evidence

Contrary to traders in African food markets, budgetary projections by African policy makers who rely on imported knowledge are barely informed by events in the market.  When the finance minister prepares a 12 month budget, what historical information informs that budget?  What consumption patterns and economic dynamics like expenditure patterns during the year inform the budget?  Absence of thorough evidence contributes to over-spending.

Ideally, the budget for the ministry of agriculture should speak to seasons and production cycles. For instance, the ministry cannot pretend that farmers demand the same amount of extension support consistently throughout the year. It is possible that the amount and intensity of extension support in winter is lower than in summer given that African agriculture is largely rain-fed. The budget should reflect all these different cycles or activities like planting, harvesting and marketing.

Most government policies do not have specific users and uses. It is important to ask who will use the agricultural policy. Who will be excluded or advantaged?  Who will benefit from an export policy or financial inclusion policy? Where are the pain points for different actors?  Why should we even be talking about rural finance as if rural areas have a distinct economy separate from an urban economy?  Who loses from government’s free inputs program?  Obviously, agro-dealers bear the market-distorting impact of free inputs.

Diversity as a source of knowledge

Diversity of demographics in mass markets also presents a lot of favorable dynamism in terms of knowledge. Found in mass markets are the youth, women, the old, the literate with wisdom, the illiterate with plenty of experience and wisdom as well as many others who bring commodity-specific and task-specific expertise.  Conversely, if you are in university, reading the same books, the thinking is the same and you cannot develop new knowledge.  Economists speak the same language, lawyers the same and engineers the same. While their knowledge is considered “pure”, it is redundant and closed in ivory towers.

As shown by informal markets, the power of many numbers explains why they traders have better techniques. Where many people come together for a shared initiative, they generate better solutions than a few graduates no matter the number of books they have read. Informal markets have a solid pathway from famers – traders – vendors – consumers through a strong information exchange ecosystem. They borrow from indigenous knowledge systems which had pathways through which knowledge was generated and pathways inherited.

Dependence on imported knowledge is the main reason why have African policy makers have remained detached from reality to the extent of expecting an individual minister Mthuli Ncube to come up with sound economic solutions from Cambridge University where he studied.  It is very clear that African academic policy makers are failing to contextualize and simplify imported knowledge. More importantly, academics should ask themselves: Who is going to be the consumer of our knowledge products? If knowledge generation is not informed by the consumer or the market, there will be a serious mismatch. The industry is not employing many PhD graduates due to this mismatch. As African countries strive to revive and strengthen industrialization, to what extent are universities informed about the needs of different industrial sectors, some of which have completely collapsed?

How responsive are institutions of higher learning?

If they really want to be relevant, academics should create space and time to hear what is really needed.  For instance, following land reform in Zimbabwe, how are universities generating a new type of agricultural economist who can connect with new land use patterns?  The food basket has also increased from 10 to 80 commodities and indigenous wild fruits have entered commercial markets. Some crops that did not use to come to the market are now dominant market fixtures. How are universities as knowledge institutions responding to these new ecosystems?

It is lamentable that formally educated Africans cannot understand or contribute to the indigenous economy because at the heart of formal education is a colonial extractive agenda. For instance, in the agriculture sector, the mudhumeni type of extension was introduced as a conduit to impart imported knowledge to farmers. While there were more extension officers than agronomists as specialists, the former white commercial farmers in Zimbabwe and other parts of East and Southern Africa valued  agronomists who specialized on specific crops.  To the extent almost every African farming community has diverse crops, livestock, wild fruits, exotic fruits, natural forests, a single extension officer in is not able to mediate knowledge needs and fill all the gaps.

By holding onto imported knowledge, African institutions of higher learning are not generating relevant knowledge for the Bottom of the Pyramid. In fact they are betraying millions of parents who are spending their hard earned income getting their children to absorb irrelevant imported knowledge. If you generate your own knowledge you should be able to find alternatives and solutions. Conversely, imported knowledge ends somewhere and forces you to go back and consult the original suppliers. For instance, if a combine harvester breaks down, Africans always go back where it came from because they cannot manufacture spare parts.

Who has determined that a university course should be three years?

One of the reasons why academic curricular has become too detached from local contexts is that it relies so much on stale literature which is not fresh knowledge.  African policy makers should not buy the false belief that economics is an international subject which can be used as one size fits all. Economics is certainly different from country to country and region to region. Who has determined that a university course should be three years? Africans have agreed to measure knowledge according to absorptive capacity yet learning in African economies is a process with natural graduation pathways seen through products  and emerging areas of excellence along the way.  You would see that someone is now an expert in thatching roofs, weaving baskets and taming livestock through products.  We cannot assume that a class of 200 economists should all be economists within three years.  We have used academic measures by resorting to tests and assignments.   Our African economies works through experiences of the user not tests. The learning is seen in how the user uses knowledge.

Those who spend three years in university cannot even interpret their knowledge, let alone apply it. Academics reduce knowledge to classroom learning when it should largely be more research-focused. In fact, it should be 30% classroom and 70% refining in the field and not just be about tests. Academics should spend more time in the field and reduce reading and depending on bibliography where if you write a short bibliography you do not pass because you are said to have not read many books.

Context-specific dissertations

Dissertations should not just focus on one topic as if that is the essence of the whole course.  Research should be longitudinal and experiential such that students should start documenting and turning their research into actual solutions from the first year at university so that upon graduation the student is already a specialist. Graduation pathways should be guided by the context such that someone can decide to drop off at some stage and go to work while others continue.  Those studying agricultural engineering should be working with artisans at Siyaso refining knowledge and what is working or not.

The whole notion of attachment is currently too cosmetic and meaningless. It is more like an event covering 6 – 12 months. If African institutions of higher learning cared about generating solutions, they would see that devoting 6 – 12 months of a four year course to practical engagement is a drop in the ocean of real contextual knowledge.  Other faculties should learn from the medical field which is more solutions-focused in that trainee nurses and doctors are always seen in hospital practicing what they are learning. Most medical schools and schools of nursing are also located at hospitals.

In the same vein, why should the faculty of agricultural economics or engineering be at the university campus when it should be where solutions are needed?   Also missing is a seamless transition between agricultural colleges and universities. Ideally, colleges should be extensions of universities and communities the way schools have form 1 to 6. For instance, in Zimbabwe Chibero agricultural college  should be linked to University of Zimbabwe or any other university in such a way that some university courses are actually studied at Chibero college. Students who want to drop off and focus on farming as an enterprise should do so while others continue from Chibero to university without any barriers like current silos where universities think they generate superior knowledge when they are less relevant than colleges.

African countries have unfortunately imported a superiority complex associated with imported knowledge into institutions of higher learning.  We have not adapted natural learning which is more indigenous and very important process which you can’t read from a book.  We have not built ecosystems of learning from our agricultural markets and SMEs where you get all aspects of knowledge and entrepreneurship.  As if that is not enough, Africans are using too much imaginary learning and not equipping children to learn from their context. Why should children in rural Binga and Chireya learn about the Central Business District (CBD) and how are they expected to use that knowledge? Africa still have abundant natural resources, human capital, IKS as well as strong relationships that constitute most of our solutions but policy makers still think external finance that comes with conditions is our salvation.

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

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

Mobile: 0772 137 717/ 0774 430 309/ 0712 737 430

The value of domesticating the Consumer Price Index and other imports

The fundamental role of agriculture and SMEs in many developing countries should by now have seen local economists inventing better ways of capturing and expressing economic conditions and inflation. It is clear that imported concepts like Consumer Price Index and Producer Price Index developed in the North cannot adequately represent economic dynamics in agriculture-driven low income countries.

charles dhewa

For instance, it is no longer debatable that African agriculture requires a dynamic pricing index which takes into account different production zones, seasonality, diverse transportation methods and many other factors. Farmers in different production zones cannot have the same prices for maize and other commodities. For example, farmers producing soya bean and maize in sandy soils use more inputs like fertilizer than those in heavy clay soils. It means these farmers have different costs of production. On the flip side, farmers in sandy soils may use less diesel than those in heavier soils. Distances to market should also be factored in so that farmers in particular areas can know the type and size of transport they can hire cost-effectively. Such information is also critical for transporters, processors and financiers.

Market dynamics

Like most industries, every informal mass market in developing countries has an invisible cartel of price experts who set prices of commodities based on historical trends (not codified) and commodity supplies into the market which give signals of the volumes in farming areas. However, cartels in mass markets do not often know or care about the cost of production enough to consider such costs in setting prices.

Circumstances under which farmers need real-time pricing intelligence vary and include cases where a buyer suddenly shows up on-farm ready to buy the commodity. In such cases the farmer wants to verify some prices with eMKambo and other institutions in big urban markets like Mbare in Harare before making a decision to accept a price being offered by the buyer. In some cases, a farmer may have quietly brought his/her commodities to the city using public transport or his/her own transport and now has to verify market pricesbefore taking the commodity to the market or entertaining buyers. All these circumstances need accurate real-time information.  Historical information is not helpful.  That is why eMKambo has advanced in setting up a dynamic pricing index taking into account production costs and market dynamics.

Beneficiaries from a dynamic price index

Besides traders, beneficiaries of price information include consumers and vendors who need to leave their homes with enough money.  If customers and vendors understand the price, they are able to budget correctly and buy more to the benefit of traders. Commodities also move fast in the market when customers and buyers come prepared.  Negotiation time in the market is reduced as the marketing process becomes very fast. Traders from other markets who often come to buy from markets in capital cities become aware of how much money to bring for hoarding commodities as well as the size of transport to be used.  If a buyer from Masvingo hears that the price of cabbage has gone down from $3 to $2/head he will adjust his budget to accommodate other commodities needed by customers.

Ultimately, transparent price information benefits every value chain actor. Farmers deserve to know how much the trader is going to make on their sweat and how much is taken by other costs like transport, loading, packaging and others. Price transparency through a price index reduces abnormal profiteering by traders at the expense of the farmer. If vendors get tomatoes from Mbare at $17/crate, how much do they charge their consumers in high density areas?

Why this is important

In spite of accounting for more than 70% of the food, economists in developing countries have totally ignored inflation in the mass market, preferring to focus on inflation in relation to basic commodity food basket. Yet it is important to figure out the percentage increase in the price of inputs and transport to the market so that farmers can know if market prices have changes in correspondence to input costs.  Many farmers incur losses because this issue has not been clearly articulated. Using figures, farmers can see how lack of resonance between input costs and market prices is leading them to incur 30% losses.

It is critical to track inflation around the agricultural commodity basket different from the CPI for basic staples like cooking oil and sugar.  Formal companies are recording and doing their costing and are using such details to collude in fixing prices of basic commodities. But there is no such thing for farmers who should be assisted in mastering market-related budgeting.  Farmers are mostly affected by external factors beyond their control and these include cost of inputs, labor, fuel, water, equipment and many others.

Beyond improving quality and economies of scale as well as benefitting from shortages in the market, farmers do not have control over most external factors. In the market, farmers are given a price even if their costs of production and transporting have gone up by 20%.  They are pushed within a certain price range. The price index will give farmers bargaining power and can be able to see that is the production price is going up by 5%, prices offered by the market should be adjusted upwards weekly. Farmers can also know how increases in the price of petrol contributes to increases in commodity prices in the market.

A system should be put in place to reveal some of these issues and impact on the market or consumers.  Inflation around food markets is very important because it assist farmers to plan and make projections. A farmer who harvests crops when inflation is going up by 20% and earns $100, the following month the farmer will earn less than $90. To remain with $100 the farmer has to charge $110. If the farmer sees the price of inputs going up by 5% monthly and expect to buy inputs in three months, the inflation will be 15% and the farmer will not be able to afford inputs.

How consumers are affected by absence of a Price Index

Prices in the mass market are rarely not cost-driven or cost-based but depend on arbitrary decisions.  People just decide how to sell without a clear basis in ways that anchor future increase or decrease of prices based on supply.  For instance, the cost of producing a cabbage head is 60c – 70c of which the bigger component (15c-20c) is the cost of seedlings.  A farmer who decides to price at $1.50 – $2/head on-farm is doing so on what basis?  How did s/he arrive at the price?  Why should a producer increase prices by a 200% mark up?  What is the standard used for setting mark-ups in the agricultural industry?  When a trader gets cabbages @ $2 and sells @ $3 – $3.50, this drives inflation.  Everyone makes a decision on the highest prices. The farmer is not making decisions on costs and the trader is also marking up arbitrarily. They are all guessing and that means the consumer is not charged fairly. Such decision-making is an inflation driver in the whole country.

Supply and demand is over-shadowing costing principles as determinants of arriving at costs.  How can we use costing as the main determinant? Disorganized supply and demand causes all these challenges.  Traders and farmers should know the base price irrespective of supply.  That is why for tomatoes it is important to play with the number of fruits and not sell using kilograms. All parties should control the extent to which prices can fall before everybody begins to incur losses. This important process and analysis should be conducted at food systems level as opposed to isolated individual farmer level.  Banks and other financial institutions can use the price index to track and manage Non-Performing Loans.

 

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

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

Mobile: 0772 137 717/ 0774 430 309/ 0712 737 430

 

How can the predatory nature of development efforts be tamed?

Many rural communities in low income countries are fed up with the predatory nature of external development initiatives. According to the WordWeb dictionary, a predatory animal is one that lives by catching and preying on other animals. Predatory tendencies also include living by or victimizing others for personal gain. When development agencies move into rural areas, local communities often have no reason to suspect that such agencies have a predatory agenda. Suspicions start rising when development agencies continue to recycle the same ideas under different names when rural people who continue to wallow in poverty in spite of millions spent in their name by development agencies.

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Any development agency that has spent more than three years in one community has become a predator by becoming part of the local community furniture. A simple comparison between rural communities that have been working with NGOs for years and those that have not been working with NGOs reveals marked differences in terms of autonomy and self-determination. Very few communities have transformed from subsistence to commercial agriculture through development interventions. Instead, it is communities that rely on their own resources such as remittances that have a sustained presence in agricultural markets. Those supported by NGOs often stop producing surplus commodities for the market as soon as a development project comes to an end. To the extent development agencies use rural communities to get money and not fully develop those communities, such predatory tendencies are worse than money laundering. Unknown to development agencies is that rural people desire the good houses, health and nutrition associated with cities.

Predatory rural finance

Predatory patterns are more prevalent in rural finance initiatives. While it is said funding targeted at improving rural finance has increase, the majority of rural people remain outside formal financial ecosystems.  In fact, the majority of rural dwellers associate banks and other financial institutions with exclusion rather than inclusion. Many smallholder farmers, traders and rural entrepreneurs have nasty experiences with financial institutions. Some of the financial inclusion models have been introduced as contract farming arrangements where farmers receive inputs and other support services instead of real money.

Innocence and decency has proven fatal for most borrowers as they soon realize that private companies contractors working in cahoots with financial institutions and development agencies will have calculated their gains using tools whose underlying parameters are not made visible to farmers.  “When you think you have done what is needed, you are asked to provide more information. After signing off every document, most promises are not met and you are compelled to supplement agricultural activities with your other income sources.” The above lamentation is now common across Africa.

In several conferences and workshops, commitments to avail finance that can catalyze other sources of finance at the local level have been announced and documented for decades. There are even dozens of books and university courses on rural finance but on the ground the situation has remained the same. Local innovations like village savings and lending associations are not adequately used to anchor and stimulate local economies. Instead, such bedrocks of self-reliance and resilience are being cannibalized into mobile money through ICTs. This does not improve financial circulation in the local economy as  most of the money is drawn away to big cities, leaving the local economy resorting to traditional barter systems.

Harnessing multiple sources of evidence

If development agencies and financial institutions shunned predatory tendencies, they would be able to assist local communities in generating more income and better lives from local resources. They would realize that there is a difference between charity and transforming local communities through agriculture. They would also not waste money on policy making because they would know that policies can only go so far because they are tied to political regimes. No matter how brilliant a policy document is, a new political regime would dumb it and creates its own policies. They would learn from experiences in Mozambique where a development agency that thought mobile money was the solution was surprised. A local mobile network operator in Mozambique had even distributed 5000 mobile phones for free to a local community hoping people would automatically embrace mobile technology for financial inclusion. It soon became clear that local people preferred visiting the market and chatting to each other than just communicating through short message service, Whatsapp or calling over the phone.  Many people also changed sim cards frequently such that they could not be reachable.

Evidence should come from different scenarios and not be aligned with decision-makers’ needs. For instance, while millions of dollars have gone towards addressing post-harvest losses in Africa, food losses are said to be as high as 20% in developed countries, mainly in the form of food that is thrown away into bins and not eaten. This means all people, whether in developed or developing countries need a new attitude towards food. Perhaps the whole world does not have a food production problem but a food handling challenge. Solutions may not just be about policies but changing the way everyone looks at food through institutions, financial means and other positive practices. Post-harvest technologies are never enough because new challenges keep emerging.  Every action must be sustainable.

By treating smallholder farmers and rural people as victims or beneficiaries, most development interventions miss local people’s roles as active economic actors in their own right. Rural people are not just waiting for donations but busy analyzing their options, managing risks and making their own decisions even in the face of information asymmetries and unfavorable policies. When ordinary people finally realize that they have been preyed upon by government departments, financial institutions and development agencies, it becomes difficult to get new ideas accepted. There are limits to living by preying on unsuspecting farmers and rural people.

 

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

Of premature technology and information overload

Hundreds of mobile applications and technology platforms are launched in Africa almost every day, thanks to the promise of digital-fueled progress. Unfortunately most of the platforms (including those owned by famous mobile network providers) are trotted onto the market prematurely before sufficient pre-testing. There is also confusion between a platform, a portal, a Whatsapp group and a mere website. Instead of generating new insights badly needed for socio-economic development in many African countries, the proliferation of platforms is leading to unbearable information overload.

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Long road to digital maturity

In spite of the hype surrounding platforms, technology hubs and hackathons, these are not yet able to deliver the kind of world-class digital transformation that can fuel productivity and economic growth in developing countries. For instance, digital technology is far from addressing the aspirations, concerns and fears of farmers and entrepreneurs in remote areas. Farmers in marginal communities can only imagine how digital technology can test their soils and water without them taking samples to the capital city where laboratories are concentrated. The same applies to livestock farmers who are still travelling long distances to district or provincial towns in order to get livestock movement permits in the event of selling or buying cattle. Unless digitization addresses some of these practical pain points, it doesn’t matter how many mobile network boosters are set up in rural areas or how many farmers are using mobile phones.

Fragmented value chains

Some of the main reasons for low levels of digitization in African agriculture revolve around the fragmentation of diverse value chains as demonstrated by how individual farmers, traders and other actors focus on discrete commodities. Additional enduring challenges include the long cycles of agricultural experimentation, poor connectivity in rural areas as well as complex ecosystems affected by weather—genetics, nutrition, water availability, soil composition and seasonality, among others. Digital technology development is yet to crack these intricate issues and as a result, the majority of marginalized people are yet to find advantages associated with digital technology. In fact, they remain consumers of external information than producers of local content.

ICTs and power imbalances

Those promoting ICTs are doing do so without considering power imbalances that underpin different socio-cultural contexts and could be increased through ICTs. If farmers and traders become digitally connected, it doesn’t mean knowledge gaps are closed because knowledge is influenced by deeper issues than cannot be addressed by ICTs. For instance, converting information and knowledge depends on people’s capacity to understand, interpret and absorb information that is flowing to them through social media and related processes. Information receivers must possess some cognitive filtering and structuring mechanism to sort out relevant information from irrelevant information. To the extent most farmers and rural people have a deficit in these skills, they accept whatever is sent to them through WhatsApp groups that are mushrooming everywhere.  That is why fake news is now an epidemic.

Need for nuanced reflection on what ICTs can and cannot do

While African governments and development agencies have embraced ICTs and digitization as a catalyst for development, there is need for a more nuanced reflection on the possibility that a focus on ICTs could be preventing broader discussions on authentic local challenges which cannot be solved through ICTs. The increasing faith in ICTs like mobile phones, mobile applications and the internet is an extension of the historical tendency by development agencies to privilege technology transfer as a solution to poverty. Yet in reality, developing countries have several social, political, economic and cultural barriers that cannot be solved by digitization and ICTs. In fact, there is evidence showing that ICTs are exacerbating inequalities in some communities, towns and countries as well between rural and urban areas.

Importance of defining a national digital vision and strategy

It is possible that if deployed properly, digitization can improve the quality of life for citizens by fostering greater civic participation, providing access to information, and offering new tools for health and education. Software entrepreneurs can also present solutions to complex public-policy problems, such as the creation of drought alerts through push notifications on mobile phones. However, successful national digital transformation depends on having a clear vision and defined goals, and then setting priorities. For governments, this means intimately linking digital to public-policy objectives and viewing it as a lever for achieving them. To establish a clear link between its digital vision and public value, each government should consider revisiting the country’s ICT Strategy and aligning it with the country’s current and future needs and priorities. If that is not done, the majority of people will not see the value of ICTs.

 

https://oxfamblogs.org/fp2p/why-we-finally-need-to-face-up-to-information-fatigue-in-2019-and-3-ways-to-do-it/

 

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 linking farmers to the market is not enough

In spite of millions of dollars that have gone into market linkage initiatives in developing countries over the past few years, farmers still struggle to sell their commodities profitably. Post-harvest losses have not gone down, gluts continue to alternate with shortages and relationships between farmers and processors have not improved. This suggests market linkages is half the story unless the entire agricultural ecosystem including financial liquidity in different markets is fully understood.

emkambo

The ‘myth’ surrounding farm gate price

One of the critical issues that has not been solved through market linkages is the difference between farm gate price and market price. This is not only vexing smallholder farmers but some of the most sophisticated commercial farmers often struggle to determine their farm gate price in ways that ensure profitability. The notion of farm gate price does not seem to exist in most smallholder farming communities because each farmer may have a different price depending on distance to the main road and local markets, among other factors. Many farmers who call eMKambo asking for prices of different commodities use feedback from such enquiries to try and set their own prices.  This implies farm gate prices are not readily available but externally-determined in ways that expose farmers to manipulation.

Profit-oriented budgeting as instrument of negotiation

Disputes surrounding contracts between farmers and contract companies stem from the fact that contractors have most of the information for accurate decisions making. For instance, they know their profit margins while farmers are not privy to most of these details.  Ideally, market linkage interventions should ensure farmers have their own negotiation instruments which they pull out when negotiating contracts with private companies. Since most farmers do not have information on up-markets and the entire agricultural ecosystem, this fuels their suspicion that whoever comes to buy from them is going to make a killing through abnormal profits.

In an unregulated market, middlemen cannot resist the temptation to take advantage of uniformed farmers. There is need for a partnership model in which profit-sharing models are embedded, clarifying information about formal and informal markets. The open market tends to be more transparent than other markets because everyone can see what is going on. If the price is unviable farmers cannot force a trader to take more than 20 crates of tomatoes.

All contracts should have enough flexibility that takes into account market variations. The time lag between signing a contract and marketing should be carefully factored in. This issue can be legislated to accommodate price variations. For instance, it can be set at between 10 – 30% such that if the market goes down, farmers can receive 10% bonus and if it goes up, farmers can receive 30% bonus. This arrangement should also consider other external factors like inflation, costs of inputs during production and other variable costs. For instance, the cost of labor can suddenly increase and affect the original contract.

Benefits of fluid budgets that accommodate the changing economy

At the moment, it is not known how much a farmer should put in to make a profit in potato production from different production zones.  Budgets should not be generic but tied to specific niche markets like processors, food chain stores or informal markets. Some buyers end up offering low prices due to costs incurred along the value chain.  All elements of production should be put together and scenarios provided, taking into account different elements. For instance, farmers should look at options in case they see viability in providing their own transport, packaging and different sources of labor.

In almost all African countries, crop budgets are set per hectare without looking at other elements that are sources of differentiation. Budgets should be fluid to accommodate the changing economy.  For instance, fuel and electricity costs keep changing and this should be factored in. On the other hand, farmers who do not use electricity to irrigate have different costs from those who do and that translates to different profit levels.

A system of managing, tracking and updating production budgets for different contexts is important. The return on investment (ROI) in each production zone should be clear. Currently, there are no elements or mechanisms for price negotiation or control in horticulture, taking into account issues like distance, road networks and other factors. In Zimbabwe, a budget for Mazowe and that for Nyanga cannot be the same if the commodity end up sold in one market like Mbare in Harare.  However, Nyanga may have superior climate like good soil and technology for potatoes compared to Mazowe, such that even if Mazowe can be closer to the market, Nyanga farmers can still compete and be profitable.  Nyanga may require different inputs from Mazowe in ways that make both places profitable in different ways.

Farmers should be empowered to evaluate information and knowledge for correct decision making. The breadth and depth of existing knowledge networks from production areas to diverse markets should provide a stronger social safety net for farmers. Different markets can provide dependable information nodes and networks where it is possible to know demand patterns of various commodities. Consumers, farmers, transporters, small scale processors, caterers and other actors would not be flocking to informal open markets if these markets were not dependable.

The significance of understanding different transaction modes

Beyond market linkages, classifying niche markets can enable farmers to make sense of different  transaction modes. While the open market tends to prefer cash, different transaction modes have their advantages and disadvantages. A buyer who pays farmers after 30 days gives consumers time to buy. It takes 30 days for traders and retailers to pull income from different consumers and put a little mark-up. The time lag between selling and consumption has to be understood by farmers, most of whom want to be paid immediately and pass on all risks associated with the slow movement of commodities to traders.  The trader ends up waiting for consumers to buy before returning to farmers for repeat purchases.

Why should financial institutions understand these market dynamics?

Financial institutions need to understand these dynamics if they are to remain relevant in agile agricultural ecosystems. For instance, they need to know that aggregators or traders who buy agricultural commodities from diverse farmers and supply in bulk also require long-term finance so that they can sustainably satisfy different niche markets. Such long-term financing should have a component of exploration. A trader should be able to use that money for market research like visiting regional and international markets to find out gaps and needs. Unfortunately, at the moment, most financial packages in Africa do not have a component of exploration and capacity building. The assumption is that the borrower has already done research using his or her own resources yet circumstances are rapidly changing such that continuous evidence gathering will benefit every actor.

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

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

Mobile numbers: 0772 137 717/ 0774 430309/ 0771 859000-5/ 0716 331140-5 / 0739 866 343-6

The seasonal appetite for knowledge demand and use in developing countries

It is not only revenue streams that tend to be seasonal for farmers in developing countries. The demand and use of knowledge also follow seasonal patterns. From leaking market sheds in Mbare market of Harare and makeshift stalls in Mitundu market of Lilongwe to landslides in the land of a thousand hills (Rwanda), Africa is an entirely different continent in the rainy season compared to winter. Just-in-time knowledge is critical in dealing with these situations as opposed to just-in-case knowledge.

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During the rainy season, most African rural areas are completely inaccessible due to poor road networks and broken bridges. Some roads are turned into rivers as terrains fail to deal with sudden downpours. All these issues negatively affect the demand and supply of food. When farmers and traders are not able to bring food to the market on time, nutrition and incomes among poor consumers are compromised.

 

One engineer per 10 000 people

While some of the common expressions in development include one medical doctor per 1000 patients and one extension officer per 2000 farmers, engineering is one important profession that is not talked about in the same way. This is in spite of the fact that natural resources management at local level is definitely a mix of art and engineering. There have not been noticeable efforts to domesticate engineering into home-grown solutions. Rather than waiting for engineers to come and build bridges, roads and water sources, engineering knowledge should be distilled in such a way that local people can do some of the basic tasks  like diverting water for later use and averting soil degradation. Water harvesting is not enough without the associated engineering knowledge.

 

How do communities know what they know?

People can see the value of engineering and other forms of knowledge if they see it having tangible value in local settings and situations like muddy roads and water-logged fields. This is often when people call up knowledge they could have been filing away during winter. They do not know what they know until desperate situations like flooding in markets and fields demands deep and probing answers. Rainy seasons in much of Africa demand different types of knowledge and other resources. Vehicle break downs are common and some rivers are full for days, cutting entire villages from other parts of the country.

 

Desperate situations induced by the rainy season compel communities not to wait for knowledge or lessons to be volunteered by engineers local people have to go out and seek knowledge. Ideas and lessons compiled into manuals during winter may be found wanting during the rainy seasons, forcing communities to improvise and depend on their previous experiences.

 

The power of scheduling knowledge generation

Food losses tend to be high in summer compared to winter in many African countries due to challenges related to dealing with excessive rainfall. Instead of waiting until the rainfall season presents enormous problems, governments and development agencies should consider empowering communities to proactively seek and identify relevant knowledge on a continuous basis. When knowledge identification and sharing is scheduled, success and failure become components of every activity in ways that avoid big mistakes. Knowledge generation and sharing becomes a clear expectation for the entire community, forcing the community to monitor if the collective expectation is being met. This process also uncovers the knowledge that nobody knows they know, until they start discussing and solving real problems like poor water drainage and land degradation.

 

Ultimately, communities can begin to discover what they know, do not know and half-baked knowledge through answering questions like:

 

  • What are our major local challenges during the rainy season?
  • What are our local “hot issues” in summer compared to winter?
  • What knowledge would help us respond to conditions during different seasons?

 

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

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

Mobile numbers: 0772 137 717/ 0774 430309/ 0771 859000-5/ 0716 331140-5 / 0739 866 343-6

Reducing the gap between formal and informal economies

Narrowing the gap between formal and informal economies remains a big challenge for many African countries. Instead of increasing interdependence between the two economies, in countries like Zimbabwe, the gap between the two economies seems to be widening. As if that is not enough, academia, politics and financial institutions remain detached from society and the informal economy.  For instance, while more than 70 percent of active economic actors are now in the informal economy, this economy lacks finance and enabling policies. The shrinking formal economy continues to be controlled by colonial systems and constraints yet it still gets most of the resources from government and financial institutions.

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Dominant characteristics of the formal and informal economies

The two economies can be defined by the type of actors who dominate in each of them as shown below:

 

Formal economy Informal economy
Financial institutions – banks.

Contracting companies.

Manufacturing and processing companies.

Food chain stores – supermarkets.

Government institutions like hospitals.

International NGOs on the development side.

 

Micro Finance Institutions

SMEs.

Smallholder farmers.

Informal market traders.

Local transporters.

Community- Based Organizations (CBOs).

 

The above classification clearly defines two economies. While the informal sector constitutes the bigger part of the economy, there are proper pathways for supporting it. Whoever is trying to assist the informal economy faces the same challenges faced by informal actors.

Challenges emanating from colonial systems

As long as developing countries continue to hold onto colonial systems and forms of business, closing the gap between the formal and informal economy towards a hybrid economy will take many years. The following are some of the colonial systems that have to be revisited and contextualized:

  1. Formality continues to be defined by registration with government institutions such as the registrar of companies or with an appropriate department if one wants to operate a Private Voluntary Organization, a Micro Finance Institution or a bank. In a dynamic world economy, formality should not be defined by prohibitive and tedious registration processes. If registration was everything, shelf companies would be doing productive work.
  1. Emphasis on referrals should be re-examined – For instance, asking a loan applicant to get a letter from a previous client or employer is a very old fashioned requirement in a dynamic and fluid economy. It does not make sense to ask someone to get a letter from a former employer because where the employee was doing very well, the employer will certainly not be keen to endorse loss of talent to competitors in the form of knowledge and expertise.
  1. Collateral – It is now evident that although they lack colonial forms of collateral, actors in the informal economy continue to drive the new economy. The knowledge economy demands new forms of collateral. Insisting on traditional forms of collateral is meant to favor actors in the formal economy who have run out of ideas but continue to receive financial support.
  1. Long application and approval processes – There is often no guarantee that loan applicants who go through time-consuming loan application and approval processes will get the funds. The application form is used as the only tool with no consideration for building relationships and trust as part of laying the business foundation upon which funding can then be extended. Everyone is given the same application tools irrespective of different business cycles, knowledge, ambition levels and vision for the future.
  1. Selective quality and standards – Everyone now knows that quality is important in a competitive world. However, where you get a high quality product there are definitely second and third grades. Unfortunately, formal contractors tend to ignore the other grades in preference for first grade as if it is possible for a farmer or SME to produce first grade only. When formal buyers do not provide alternative markets for lower grades, smallholder farmers end up refusing to work with formal buyers but creating their own market (informal) where all grades have a market.
  1. Prohibitive measurements – By stating that they start buying from 30 tons of groundnuts upwards, formal buyers create barriers to entry for smallholder farmers who cannot manage to supply such volumes individually. This requirement creates barriers to internal trade to the advantage of big formal actors who can easily get money from the bank to the disadvantage of small actors who remain marginalized.
  1. Payment modes – Sellers to formal companies are not given choices like payment in part cash. In what is tantamount to a take it or leave it scenario, formal companies insist on bank transfer as part of their policy.
  1. Payment terms – The payment terms are determined by formal buyers whose policy can stipulate that payment is done after 14 days. Even if your commodity is bought by consumers before you leave the supermarket or processing company, you will receive your payment after 14 days.

From business proposals to business cases

In the formal economy, there is still emphasis on proposals, business plans and financial projections irrespective of the fluid and dynamic nature of the modern economy. Unfortunately, by the time you present financials for funding the situation will have completely changed and that means financials for the previous two years may be meaningless is such an environment. It makes more sense to focus on business cases and adapt as things unfold than try to present a proposal complete with cash projections when what’s written on paper changes before the ink has dried.  Creating new legislation and laws which do not exist at the moment will go a long way in increasing overlaps between formal and informal economies.

Easy of doing business

Before considering creating an easy of doing business environment for external investors, it is critical for policy makers in developing countries to enable easy of doing business for internal actors. Bureaucratic systems that are part of the formal colonial economy will not be able catch up with fast and fluid economic fundamentals. That is why formal economic actors are having to rely on prohibitive government policy in order to compete with the informal actors.

 

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

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

Mobile numbers: 0772 137 717/ 0774 430309/ 0771 859000-5/ 0716 331140-5 / 0739 866

Differentiating specialization from monocultural knowledge pathways

While monoculture is mostly understood as the cultivation of a single crop on a farm, area or country, the other half of its definition is the dominance of a single culture, worldview, mindset, set of tools as well as one way of gathering and sharing knowledge. Farmers who think success comes from producing one commodity all the time are addicted to monoculture. The same applies to academies who think formal education is the only source of truth. Fortunately, digital technology is not just disrupting monoculture but increasing ways through which knowledge can be generated, shared and made sensible.

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There is nothing wrong with farmers and knowledge workers specializing as long as they know who else is specializing. Unfortunately, due to information asymmetry, many African farmers and academics specialize blindly and end up losing potential income and relevance. They are not aware that each market for commodities and knowledge has a dedicated demand for a particular commodity and knowledge asset in terms of how the consumer budget is shared among different commodities. That is why it is important for farmers and traders to know other market players as well as the market’s absorptive capacity.

Knowing the market’s absorptive capacity enables farmers, traders and other actors to determine volumes that can ensure good Return on Investment (ROI) and clearly identify producers who can meet the ROI capacity. Farmers who specialize are usually passionate and have invested their time in producing the best cabbages, potatoes, tomatoes, cattle, milk, apples and other commodities. See-saw production and supply patterns, common in most open markets, is caused by price chasers and band-wagoners who just follow and imitate what the specializing farmers do.

Difference between specialization and monoculture

Specialization is where a farmer puts more resources in a commodity in order to produce and supply the market consistently. Other commodities act as a buffer in the event of uncertainties that can face a specialized commodity. The good thing is that for each farmer there is some element of specialization although the difference is in the degree of specialization. Critical questions include: To what extent does the producer dedicate resources to one or two crops? Some allocate 75% of their resources to one or two crops. Others dedicate 50% to specialized crops while the other 50% goes to complementary crops.

On the other hand, external factors like climatic conditions often force farmers and communities to specialize – translating to a community perspective on specialization. In this case, emphasis is not just on skills or knowledge in producing particular commodities or understanding market prices but adaptation of  particular commodities to particular areas. This is how one agro-ecological area become known for fruits while another becomes famous for small grains or livestock.

The merits of specialization and balancing act

Farmers who specialize tend to enjoy economies of scale and are able to capture a greater part of the market share as well as increase their bargaining power. Specialization is also critical for recognition in the market. Those who specialize create their own niche market that they will serve consistently.  It is not viable to be in the market for a short period and out of the market for longer periods. To address this challenge, farmers can specialize on one or two commodities for the purpose of participating in the market regularly and creating a market niche that can sustain their enterprises. However, in trying to balance different agricultural commodities, farmers have to ensure resources put in alternative commodities are enough to revive the specialized commodity by covering gaps like temporary gluts.

Alternative commodities should sustain the production of specialized commodities in the event of temporary gluts and price distortions. Alternative commodities should not be produced in high volumes to the point where if their prices fall on the market, much of the resources to cover them end up coming  from specialized commodities.  For instance, if you specialize in potato and onion production, you need a plot of cabbage as a fallback position. Any fall in cabbage prices on the market should not result in losses that will eat into a greater percentage of the profit that you should have earned in potato and onion production. Profit from cabbage should be big enough to cover losses that can be incurred by temporary price falls in potatoes and onions.

To maintain presence in the market, farmers should specialize on two or three commodities, definitely not more than four if they are to sustain participation in a dynamic market. Other commodities should support the main commodities that the farmer is known for in the market. The road for specialized commodities should be smooth. It is the role of alternative commodities to build bridges for specialized commodities and smoothen their flow against price fluctuations. This will also enable farmers to maintain presence in the market and generate income from specialization.

Building a case for specialization at community level

In developing countries, specialization should be done at community level as opposed to individual level due different levels of resource endowments at individual household level. For both communities and individuals, the percentage of resources allocated to specialized agricultural commodities can differ since one household may focus on subsistence while the other may want to embrace commercialization of particular commodities. Farmers with other sources of income like remittances may not prioritize subsistence production but try to go commercial.  For a poor family, the greater percentage (90% of $500) of resources can go towards specialized commodities to ensure a strong source of livelihood and food security.  On the other hand, those with alternative sources of income can devote 75% of a greater amount of resources (75% of $5000) towards commercialization of specialized commodities because they want to maintain market participation.

The more farmers produce as a community, the more bargaining power they acquire. Specialization also reveals a community’s knowledge such that gaps and surpluses can be known. After consolidating the knowledge, it becomes possible to arrange it in layers so that beginners can know where to start while experts do not have to waste time delving into what they already know. Without knowledge assessments and layering, development actors end up bringing knowledge that will not be absorbed or used.

At national level, developing countries should coordinate production and all value chain actors to ensure consistent supply and best ROI. Important questions include: What are the substitutes when potatoes flood the market? Which other commodities can be produced in line with available resources?  Which are the major drivers of nutrition?  Monoculture is very dangerous because farmers do not have anything to lean on in the event of market failure at global and regional levels. That is why many African farmers tend to be tied to unfavorable contracts which are more like debt traps. Most export crops like tobacco have reached their ceiling in terms of absorptive capacity and do not have a local market. If the international market collapses all the advantages are wiped off. In a competitive world, it is important for developing countries to focus on commodities for which they can develop market options.

Specializing on commodities equals specialized knowledge

Specializing on commodities is tantamount to specializing on knowledge.  A key advantage of specializing on knowledge is that it translates to high quality of commodities. Jumping from one commodity to another does not guarantee specialization of knowledge and low quality knowledge leads to low quality commodities. That is why clearly identifying and characterizing actors is very important. Farmers have to know each other and coordinate in order to avoid flooding of commodities.  In African informal markets, traders who have been specializing on specific commodities like tomatoes, green pepper and cucumber are known. Others are known for fruits, potatoes, cabbages, sugar beans, poultry, eggs, fish, small grains and many other commodities. In the same vein, farmers should try to be known for two to three commodities that can balance each other or share similarities.

Farmers who try to jump from pearl millet to cabbage end up stretching their knowledge because the two commodities are not closely related.  That is why data collection has to be fluid and not wait for crop and livestock assessments that happen once a year.  When a specialized commodity collapses on the international market, it leaves a knowledge vacuum and creates expectation challenges. Developing countries should avoid specializing on commodities whose market they do not control, for example coffee, cocoa, cotton, flowers and tobacco. On the minerals side, it is dangerous to specialize on gold or platinum whose prices are set and manipulated in western and global markets.

 

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

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

Mobile numbers: 0772 137 717/ 0774 430309/ 0771 859000-5/ 0716 331140-5 / 0739 866 343-6

Nine nuances that define indigenous commerce

Although many people associate commerce with modernization, it is as old as the hills. To the extent, commerce refers to the exchange of goods and services, it has existed in many indigenous communities for generations. Indigenous commerce is home-grown commerce tied to the origin of specific communities. While academics may want to limit the notion of commerce to business parameters, indigenous commerce embraces social, legal, economic and technological, among several elements influence a community’s survival.

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At the core of indigenous commerce is knowledge sharing and building of Communities of Practice (CoPs) at the grassroots. Visible and noticeable expressions of indigenous commerce in many developing countries are Micro, Small and Medium enterprises (MSMEs).  While some scholars and researchers insist on calling it the informal or invisible economy, indigenous commerce has several nuances that distinguish it from formal commerce with colonial roots.

Major characteristics of indigenous commerce

 

  1. Indigenous commerce is driven by open source knowledge sharing – It has its own unique knowledge sharing pathways, different from formal commerce taught in schools and colleges. Within indigenous commerce, knowledge is shared through hands-on practice, experience, passion, trust, relationships and networks. At no point will you hear actors in indigenous commerce saying, “I am looking for a commerce lecturer.” The entire indigenous commerce ecosystem is organized for social, political, economic and technological contribution to socio-economic progress. Indigenous commerce has diverse actors such as youths (some conversant with technology), retrenches experienced in metal fabrication and other skills, women good at marketing and food preparation, transporters, loaders, advisors, governance committees and those good in conflict resolution. It is an institution whose practices cut across gender, age, skills base and home-origin.

 

  1. Indigenous commerce entrepreneurs start and run their businesses sustainably due to passion. It is not about availability of free resources but passion and experience gained over years. Knowledge is passed-on as part of an in-built form of inheritance. Family units anchor indigenous commerce. The first priority in starting a business is creating employment for family members, who may not be initially paid a salary but provide labor so that the household is able to meet basic needs. Going to the father’s or mother’s market stall is like going to the field. The family members contribute individual skills like record keeping and bring their own networks.

 

  1. Within CoPs or clusters, entrepreneurs do not work as competitors. Instead, peers try to complement each other in delivering products and services to customers. In order to reduce the cost of sourcing and using knowledge, enterprises are clustered in such a way that one business benefits from the other. Ultimately, the actors are able to build a positive reputation collectively such that their business cluster becomes known for consistent products and services.

 

  1. Agility and flexibility in meeting market requirements. Production processes are not rigid like those of large formal companies. Indigenous commerce entrepreneurs quickly adjust to meet customer preferences, tastes and requirements. That is why they have all sorts of measurements. They do not measure all products in kilograms or monetary terms. They can use cups, baskets, crates, one by one counting, punnets, plastic bags and many others – all meant to respond to different customers. They have become awareness that without meeting the needs of customers there is no business.  That is why they try to respond to different levels of buying power.

 

  1. Indigenous commerce is based on fast and fluid decision-making. Entrepreneurs are not hamstrung by too much bureaucracy. Prices are adjusted quickly in response to market dynamics. Giving a discount or credit is a fast decision. The faster the decision making, the faster results are obtained.  On the other hand, the formal economy takes long to make decisions and, sometimes by the time a decision is reached signals would have changed and opportunities would have evaporated while threats will have gone under in ways that render the business vulnerable to lurking shocks.

 

  1. Fluid stocking – Most SMEs do not have warehouses. They know that putting commodities in rigid warehouses can tie down money and other resources in stocks. When resources are kept idle for some time, they attract serious opportunity costs. Based on fluid knowledge driven by solid networks, indigenous commerce entrepreneurs know what they want, when and in what quantities. Orders do not spend much time in the market because commodities flow as per demand requirements. They also know their stocking levels. If information asymmetry is minimized, this fluidity should influence production processes. Daily indicators from the market provide early warnings in terms of what needs to be produced, when and in what quantities, thus controlling gluts and shortages.

 

  1. Patriotism – The majority of people who start MSMEs become so attached to their businesses to the point of not looking for jobs anywhere or crossing the border in search of employment. Most are owners attached to their own enterprises and fear of failure is very high, compared to if they were just employees. They understand the dynamics of the micro economy and want to see the business grow because it is a source of livelihood. Deep individual commitment to their business’ survival translates to at contributes to national economic stabilization.

 

  1. Products and services do not require much foreign currency. This is an economy driven by local resources. Indigenous knowledge is full of improvisation as well as optimum use of available resources and knowledge. It is also characterized by flexible payment methods. Whereas in formal commerce money is the only mode of payment, indigenous commerce uses several modes of payment.  Commodities can be easily exchanged and one can pay labor services with commodities. The absence of money does not impede trading. People continue to attach different versions of value to their commodities, for instance, maize could easily be exchanged with chicken.  It does not just work in monetary terms.  Indigenous commerce also emphasizes an ecosystem of actors and commodities or services.  On the other hand, formal commerce promotes linear movement of goods and services: Producer – manufacturer – wholesaler – retailer – consumer.

 

  1. Meeting the needs of low income households – In terms of their target market, most MSMEs target the greater low to medium income population. What they are providing are necessities. For instance, more than 70% of the food commodities that pass through indigenous commerce are necessities, needed by the majority of the population. These actors understand their markets and preferences. In order to meet the needs of different income levels, they tend to maintain their positions in the ecosystem. Traders are traders, farmers are farmers while transporters are transporters. This is how they are perfecting their roles in the ecosystem in ways that simplify resource mobilization. Such habits and practices are different from formal companies which try dominate the entire value chain by becoming producers, processors, wholesalers and retailers, leaving no room for other actors who can do some tasks better.

 

The importance of recognizing indigenous commerce

Developing countries that have started recognizing indigenous commerce are not only beginning to witness a broadening of their tax base, but started using indigenous commerce to grow their economies from the bottom. However, what is now clear is that indigenous commerce requires different financial models based on authentic characteristics that are certainly different from the western-biased formal economy. For a long time, these indigenous commerce characteristics have been driving MSMEs entrepreneurship as collateral.  Individual corporates cannot be more important than the solidarity of the entire indigenous commerce ecosystem. To what extent can formal financial institutions use the existing indigenous commerce characteristics as collateral?  Due to the fluidity of indigenous commerce, it is no longer sensible to use immovable property like buildings as collateral.  The fluid nature of indigenous commerce in response to various niche markets also means there is no longer need for mass production. Volumes are just produced as per market needs and commodities are sent where they are needed. These issues should be taken into account if modern financial institutions are to forge a new deal with society.

 

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

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

Mobile numbers: 0772 137 717/ 0774 430309/ 0771 859000-5/ 0716 331140-5 / 0739 866 343-6

 

When will developing countries stop importing knowledge?

It is lamentable that, in spite of setting up hundreds of universities and research institutes, developing countries continue to import knowledge.  For instance, African countries are not just importing equipment and finished products from the West and East but also importing knowledge in the form of prescriptions on how to use those imports. Each imported piece of machinery comes with a manual demonstrating how to use it, not how to build it from scratch.  When an African country imports agricultural machinery from China or Germany, it is importing knowledge that it cannot control because the hidden formulae and intricate processes used to produce the machinery remains in China and Germany. What accompanies the machinery to Africa are manuals and, to some extent, engineers whose main role is to set up and manage assembly plants in Africa.

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There is an imbalance between the knowledge developing countries import in the form of products and services and what they export in the form of raw materials. The current balance of payment challenge does not just result from the importation of physical products but the fact that developing countries continue to import knowledge which they cannot control. Matching the amount of raw materials and human capital exported from Africa with knowledge and products imported into Africa shows a negative balance in favor of where knowledge and finished products are coming from. A country that imports finished products often lacks knowledge to produce those products locally. However, with knowledge, a country can mobilize resources to product diverse products.

Surfacing invisible commodities and related knowledge

Research institutes and universities in developing countries are squandering opportunities to generate and adapt agricultural knowledge in ways that respond to local needs. Food commodities that are being ignored by these knowledge workers include pearl millet, rapoko, indigenous rice, guinea fowls, indigenous chickens, turkeys, ducks and rabbits, to mention just a few. The majority of universities and researchers want to be associated with hybrids whose knowledge is largely imported. There has not been consistent efforts to produce diverse by-products like confectionery and breakfast cereals from indigenous small grains, for instance. These commodities still remain on the sidelines with a few NGOs trying to promote them through annual food fairs. There is no meaningful commercialization to ensure farmers earn better income from these important commodities with consumers accessing better nutrition.

 Missing the advantages

Formal and predictable markets for indigenous commodities are taking years to mature and become mainstream.  This is worsened by lack of branded by-products from these commodities that are mostly indigenous and have indigenous roots.  These commodities are also losing space and significance in the market despite several advantages that include:

  • In a changing climate, indigenous and local commodities represent resilience.
  • Being closer to natural and organic identities, these commodities are associated with good nutrition and healthy eating.
  • Their cost of production is low because they are relatively cheap to produce. You do not need foreign currency to produce guinea fowls, road runners, pearl millet or Murunjurunju
  • Since they can be produced without chemicals like growth hormones that can cause side effects to consumers, they are considered safe food by many health conscious consumers.
  • There is a huge untapped market in the form of the young generation who grew up not eating this food and are ready to taste these commodities.

Colonial hangover

The old generation of Africans grew up under a colonial food system where diets were prescribed and forced from formal work places and cities to ordinary households. Most settler farmers who controlled agricultural production leaned on hybrids because they did not understand indigenous crops and livestock. These farmers produced much of the maize, wheat and other hybrid commodities that fed urban processing industries where many indigenous people sought employment and ended up consuming what was cooked in canteens at their work places. This led to forced demand for products, for instance, in the form of food hampers and meals designed for hospitals and other public institutions. Supermarkets were also stocked with processed food produced by big commercial farmers, linked to colonial seed companies and researchers.

To a large extent, there was collusion along the entire food chain at the expense of indigenous food. Technology and knowledge for producing maize, wheat and other exotic foods was imported.  Research in exotic chickens, beef and horticulture was also imported.  The West has closed formulae for the products exported to developing countries.  For instance, Brahman cattle eat stock feed from processing companies linked to seed companies.  Indigenous chicken eat small grains but African countries have not developed companies that produce small grains stock feed and seed companies that specialize in small grains seed.

Lack of knowledge development

Indigenous knowledge surrounding indigenous food is still passed on either by observation or word of mouth because local universities and researchers have not bothered to develop strong research pathways around it. Demand for our indigenous food like small grains and indigenous vegetables is not yet fully influenced by tastes and preferences but by circumstances like health. People start eating small grains in response to recommendations by the doctor or health institutions. This is more of forced demand.  Many consumers who produce and eat finger millet in urban plots are doing so due to recommendations from their medical doctor.

Religion is also playing an unfortunate role in reducing the potential demand for indigenous foods like rabbits, pigs and ducks whose consumption is forbidden by some religious sects.  Some indigenous foods are negatively associated with African culture. For instance, people who love finger millet are regarded as being possessed by spirit media, which some religions frown upon.  The same reasons are being used to deny African medicinal herbs space on the market, to the advantage of Eastern and Western medicinal herbs. While Zumbani and other traditional herbs have, for generations, been known to treat certain human ailments, the moment a traditional medical practitioner touches them, the herb is stigmatized.

Preventing the slow death of Indigenous Knowledge Systems

Indigenous Knowledge Systems are dying as developing countries continue to depend more on outside knowledge which is too risky because poor countries cannot control push-cost inflation for knowledge they do not fully know and own. Every country that imports fertilizer or chemicals is importing formulae/knowledge which it cannot control.  Local research institutes and universities have failed to develop indigenous fertilizer combining animal manure, ant hills and leaves from different trees (Murakwani).  The contents of slurry from several biogas projects are not being carefully and consistently studied to mass produce local fertilizer.  What would it take for local universities and research institutes to convert animal manure into formulable products like one bucket of manure equivalent to a certain number of crops in the field?

Instead of undertaking thorough livestock research and development, Western educated Africans are busy condemning indigenous cattle and goat breeds in terms of size yet these animals have more sustainable  characteristics for a rapidly a changing climate. African countries are being encouraged to embrace exotic breeds and processes like Artificial Insemination (AI) which are too scientific and not relevant to local contexts. Also being promoted are feedlots in which cattle are fed imported grasses and chemical additives. Why are local research institutes and universities not researching and improving on local grasses and pastures?  A lot of money is going towards research but researchers are waiting for the natural processes to develop pastures and leaving animals to make their own choices in terms of good grasses that could be nutritious for them. There is no reason why researchers are not being informed by livestock choices to select and research on the best pastures with medicinal or nutritional properties for different types of livestock. Such initiatives could lead to setting up of plantations of natural thorny bushes and grasses that are good for livestock, the same way some indigenous fruit trees are being domesticated.

 Persistent loss of intellectual property

Many developing countries are losing their intellectual property in various ways as the West is quickly patenting Indigenous Knowledge Systems. Several medicinal and food products in the world have originated from African economies but the West and China are quick at gathering and processing information and knowledge to their advantage as well as rush to create brands and patents. While Marijuana, which grows very well in a few African countries, is being smoked under illegal conditions, its medicinal properties are gaining prominence in the West and very soon they will commercialize it before local research institutes and universities have acquired the most useful knowledge in producing related medicines.  Once they export it without adding value, as is the case with cocoa, tobacco and others, producing countries will start buying back medicines from their Marijuana at exorbitant prices.

Mechanisms have to be put in place so that if indigenous knowledge is institutionalized in universities and research institutes, it has to have end users who can turn it into goods and services on demand.  Some local people have been trading indigenous commodities for more than 30 years. They have cultivated their own invisible markets together with related knowledge, passed on from one generation to the other.  Unfortunately such knowledge is not documented into conventional curricular.  The majority of people who continuously produce and trade indigenous foods have valuable undocumented entrepreneurial skills. Research institutions and universities that capture and embed all this knowledge will enable their countries to save billions of dollars and change the lives of the majority.

 Translating literacy into goods and services

Countries like Zimbabwe are failing to convert their more than 90 percent literacy rate into knowledge that can be exported in the form of goods and services toward improving the nation’s balance of payment. The country is importing knowledge in the form of products with prescriptions, formulae and structures, with no idea of where the answers were arrived at.  For instance, the country’s health system is taking medicinal products prescribed from outside yet some of the diseases are contextual and need indigenous knowledge systems. By not paying attention to what matters, developing countries are letting indigenous knowledge systems and indigenous foods head for extinction at a time climate change is worsening. The main reason is that most developing countries are biased towards importing knowledge and goods.

With everyone trying to import, the global market on which some countries are fond of relying on will soon have nowhere to go since they have shunned their source of distinctiveness by destroying their local food systems. Countries that ignore their local foods can easily become 100 percent food importers. Why should youths in dry regions be supported to grow tomatoes instead of indigenous chickens suitable for their area and require low start-up capital? Given the diversity of local commodities, it is sad to see copycat projects where young people go for the same type of enterprises, leading to loss of income through gluts. Why should a country’s Grain Millers Association focus only on maize and wheat when it should broaden its scope to cover all grains such as pearl millet, indigenous rice, sorghum, finger millet, sesame and others?

 

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