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

 

Addictive tendencies associated with food and knowledge in developing countries

When consumers can no longer do without cassava, nsima/sadza, matoke, tomato, beans, peas, among other foods, it could be an indication that the consumers have become addicted. Such addictive tendencies may have little to do with the food being a staple or a necessity. The way profit-oriented seed companies and manufacturers promote their seeds or finished products in most developing countries is designed to encourage such addiction. There is a narrow distinction between tastes & preferences and addiction.

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A community is most likely to be addicted to a commodity that it ranks more highly as a necessity. It is not about income but the fact that people can no longer do without the particular food. In addition, commodities around which communities have become addicted within clusters of consumers become necessities which they cannot live without. Such commodities also become price inelastic. Any percentage increase in the price of the commodity will not translate to a greater decrease in demand because the commodity has become a staple.  Cost will not affect consumption because each household or community already eats a given volume or quantity. In the same vein, a percentage decrease in price will not result in more percentage increase in supply or consumption. For instance, a decrease in the price of maize meal will not cause consumers to eat more nsima/sadza merely because it has become cheaper.

 Implications of people consuming the same commodity for a long time

The longer the period people are exposed to certain food baskets, the more tastes and preferences are  developed and embedded.  The body adjusts and makes the food part of its system. To the extent the body can no longer do without a certain food like nsima/sadza, it becomes addicted to that food. Staple commodities often have clearly defined demand patterns in terms of volume. Any surplus over the defined demand is a waste. This is where gathering evidence becomes critical in terms of showing each commodity’s demand patterns and extent to which such a commodity has become a staple within each consumer class. Such evidence will prevent cases where surplus food goes to waste but open avenues for value addition and exporting.

Addictive food clusters need to be known because they also define food baskets for various niche market. Demand does not fluctuate so much irrespective of price. People will not eat more commodities because there is a new state of the art market. Investors and policy makers need to know these issues at a granular level because they influence potential investments. Such insights also reveal the stability of demand for particular commodities as well as stability of Return on Investment (ROI).

The contextual nature of food baskets

Contrary to the way policy makers in developing countries try to characterize and quantify the Poverty Datum Line, for instance US$600.00 per household, it is a myth to try and have one food basket for the entire nation. Different grassroots communities have their own addictive food components which they demand most of the time. For instance, people in high production zones may have their own food baskets in which addictive elements may constitute 70% of the food basket.  Anything that comes from outside becomes a luxury which they can do without.

Supply side addictive tendencies

While addictive tendencies tend to be more visible on the demand side, the same patterns apply on the supply side. For instance, key determinants that drive food production include knowledge and skills among food producers, available resources and climatic conditions. How these factors are used determines over-production or under-production. However, as farmers continue to produce over many years, their practices stop being about skills, resources, knowledge or climatic conditions but passion turned into addiction to particular practices. That is why it is difficult to wean some farmers from cotton production, coffee production, cocoa production, tomato production, maize production and tobacco production, among other commodities they have become addicted to producing.

Questions for policy makers and development agencies

To what extent are agricultural production practices being promoted in developing countries determined by farmers’ addiction to certain crops, livestock and other related production practices? What capacity is within the addicted farmers?  How are farmers under-utilizing or over-utilizing their capacity?  To what extent has agricultural knowledge in developing countries become locked in addictive tendencies along agricultural value chains? In some areas, specific commodities like maize no longer do well but farmers continue producing because they have become addicted to the knowledge associated with maize production so much that it is now difficult to unlearn and create space for new knowledge related to new crops and livestock. Examples of addictive processes including farming as a business and farm field school. There is also a bandwagon effect in production where some farmers just copy and imitate others quietly. Besides surprising the market, bandwagon producers disrupt the passion-driven producers.

Colonial influence

Some production and consumption patterns were largely influenced by colonialism. For instance, in Zimbabwe, the Land Apportionment Act of 1923 laid down the foundation of production practices by demarcating land according to natural regions, soils and land sizes, among other factors.  Knowledge for producing specific commodities like sugarcane, flowers, tea, coffee and tobacco became concentrated in areas where these commodities were said to be ideal. Knowledge about livestock production became concentrated in Matebeleland while cotton production knowledge was more in Gokwe and Muzarabani, among other dry regions. On the other hand, by producing and consuming maize, communities became addicted to maize.

However, production was also driven by directives where those with resources influenced the production of particular commodities like cotton, tobacco, sugar cane, coffee, maize, beef cattle, flowers, etc. This also became addictive from a skills perspective. That is why trying to change farmers’ mindsets has become a decades old challenge.  Most farmers have also become trapped in debt cycles through addiction to contract farming models. Even if they may have their own resources, many farmers cannot imagine achieving meaningful yields without a contract company. Another increasingly powerful addiction is to ICTs, especially mobile platforms like WhatsApp. Many young farmers no longer want to think for themselves or digest information before forwarding it around. More time is spent on mobile phones than on productive pursuits.

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

From number of beneficiaries to knowledge mobilization and use

In what probably signifies a new approach to achieving socio-economic development, a few policy makers and development agencies in developing countries are beginning to move from measuring success through the number of beneficiaries. Instead, they are reluctantly shifting to their focus to how the so-called beneficiaries mobilize and use knowledge associated with projects introduced in their communities.

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Attention is turning to several ways in which communities understand and use knowledge to increase their incomes and cope with challenges like climate variability and market failure. As part of forging a new deal with poor communities, financial institutions are also realizing the importance of understanding the potential of poor borrowers at a granular level. Otherwise, banks would continue ignoring poor people and continue giving money to those who do not really need it merely because they have collateral. There is increasing interest to know what knowledge exists in a particular community. What knowledge is coming into a community, what is going out and what is being shared to address socio-economic challenges?

Socio-economic-political knowledge

Many communities define economic knowledge through economic skills and livelihood activities such as commodity trading, retailing and converting natural resources into income. There are people who can use local resources like water, wood and land to produce excellent goods and services for the benefit of the entire community. On the other hand, social knowledge is about how community members make sense of their collective identity and preserve it. Also critical is political knowledge through which local people try to express, interpret and access their rights. This encompasses how local politics enhances community development and how community members deal with political conflicts. Political knowledge also extends to how communities deal with issues like domestic violence and managing collective resources.

Additional ways in which knowledge is understood at local level include age, gender, location, economic status, level of education, cultural background and exposure to other communities, among other parameters.  This means the knowledge landscape is experienced differently. Within each community are knowledge hubs and holders who include elders, chiefs, opinion leaders, artisans, spiritual leaders and others.  These share knowledge at various levels such as household, community and district.

From hand-outs to knowledge-driven development

One of the major reasons why development actors have remained obsessed with measuring success through the number of beneficiaries is that development support has for a long time been framed in social welfare terms characterized by hand-outs like food, clothes and small livestock.  These have to be actually counted before being given out for free. Giving hand-outs is about numbers like kilograms of maize meal, litres of cooking oil, etc.  When dealing with numbers, organizations are less concerned with return on investment (ROI) which is often difficult to measure. They are also not steered by sales or market share but budget allocation. Providing hundreds of tons of beans is considered more important than understanding whether recipients are going to eat the beans or not.

Development actors also provide infrastructural benefits in the form of supporting government efforts, for instance, in dam construction and rehabilitating irrigation schemes. These are also other forms of hand- outs that are not being expressed through ROI. An important question is the extent to which communities cope with climate change using their own knowledge to improve livelihoods using established infrastructure. Since it is all about numbers, how do communities utilize their knowledge to maximize outcomes from the investments made by development partners?

Rural communities should not continue to be connected with poverty in the material sense

Most development actors are working in rural areas because they think they want to reduce poverty in rural areas. But rural areas a lot of knowledge which make them rich in their own ways. Before introducing a project, it is becoming very important for development agencies like NGOs, government departments and the private sector to understand how each community deals with knowledge. Within all versions of community knowledge are champions and knowledge pockets built within communities by age, among other connectors. What connects widows is not belonging to the same community but the fact that they share similar circumstances, experiences and passion.

Focusing on community knowledge will ensure structures left when projects end are fully utilized.  Investment in dams, boreholes, irrigation schemes or rehabilitation of roads through food for assets is not a complete value chain. Instead of positioning themselves in ways that complete the value chain, most development agencies and government departments duplicate each other. When farmers produce more commodities from all these assets, lack of investment in market infrastructure like warehousing and cooling facilities creates more challenges than solutions.

In as much as investments by development agencies are social welfare, what part is knowledge?  How can beneficiaries convert infrastructure investments into knowledge hubs for socio-economic development?  It is no longer about the number of dams or irrigation schemes but the knowledge hubs for socio-economic development through infrastructure. It is also no longer about the number of people to benefit but knowledge to be generated through using the infrastructure and other resources like dams. In a changing climate, to what extent does knowledge and information on dams, boreholes and irrigation schemes assist communities in managing climate change?

Devolution of power should be about devolution of knowledge

Investment in knowledge will enable local people to convert their natural resources into value added products. A community may benefit more from increasing the number of champions who can gather knowledge and evidence on production, consumer tastes, preferences and consumption patterns than from more dams and irrigation schemes.  Every community should have structures built around knowledge experts embedded within diverse actors.  If weather stations are set up within communities, information should be interpreted at local level through local champions. Otherwise it is just a weather station with no links to local socio-economic development.

A community is just like a company with divisions or departments such as production, logistics, sales and marketing.  All these departments should be visualized in communities and conceptualized into soft skills.  Everybody has hard skills like production but soft skills and knowledge are scarce. Unfortunately, in most rural communities, knowledge remains trapped in silos with no clear pathways of knowledge sharing from rural to urban and regional levels. Without proper characterization of knowledge demand and supply pathways, it is easy to continue sending market information to livestock farmers when the farmers are taking livestock more as a store of value than a commodity to be sold any time.

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

More reasons for decolonizing banking systems in developing countries

While some developing economies are evolving rapidly, local banks are clutching onto colonial identities. For instance, in most African countries banking as a practice has kept colonial labels such as Commercial Bank, Merchant Bank and Building Society, among other categories whose meaning and differences are not clear to ordinary people. This identity crisis, with colonial origins, is visible to ordinary people who continue to raise questions like: What is a savings bank? What is a merchant bank?  Is a building society only concerned about housing?  If agricultural traders are merchants, why are they not getting financial support from existing merchant banks?

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Unmasking the dilemma in African financial systems

A major dilemma in most African countries is the prevalence of several financial institutions whose roles, responsibilities and differences are not clearly understood by ordinary people and potential borrowers.  Conversely, the financial sector has not done much to clarify and explain distinctions between diverse financial actors in ways that inform intended beneficiaries and potential clients.  Each financial institution continues to market its products and communicate its mandate separately. Financial authorities do not sufficiently share financial policies with different target groups, leading to many unanswered questions.  In most countries, major sources of finance include government through the fiscus, the reserve bank, different types of banks, development agencies like the UN system, international NGOs, Micro Finance Institutions (MFIs) as well as Internal Savings and Lending (ISALs), among others.

Unfortunately, there is no clear definition or explanation for potential entrepreneurs to make sense of all these institutions from a financial policy perspective. As if that is not enough, most African countries have not built pathways along which the financial sector can adequately inform socio-economic development. Boundaries and overlaps are not clear. For instance, government can finance farmers directly through input schemes instead of empowering an agricultural bank to do so. The reserve bank can also be seen financing some economic activities directly through its subsidiaries. Not to be outdone, UN agencies, international NGOs, the World Bank and MFIs are also often seen extending different forms of funding directly to diverse classes of beneficiaries. Besides lacking coherence, such interventions by several financial actors are not based on consistent pathways for financing growth patterns. Gaps and opportunities are often not clear.  Many financial institutions end up competing to give loans to formerly employed civil servants on the basis of a pay slip.  Traders and other economic actors with more authentic need for finance are denied finance due to absence of pay slips although their businesses are viable.

 Shifting mandates and the power of clear identities

Traditionally, banks were meant for safe-keeping money.  Depositors would take their money to the bank mainly for safe-keeping. Banking money was also an investment opportunity because depositors earned interest. Banks were also conduits for building official business performance transactions, for instance, through gathering records on sales. Such evidence of a business’ performance was part of a transaction  history that would later be used to get a loan since the records spoke for one’s business, showing how much your business was worth.

Clarifying financial categories and identities can enable strong synergies between financial institutions and active economic actors like Micro, Small and Medium Enterprises (MSMEs).  With proper definition and clustering it becomes possible to arrange financial facilities in line with each category. That way, smallholder farmers do not waste time applying for loans from financial institutions where chances of getting loans are close to zero. Traders and processors can be aligned with appropriate sources of finance.

Currently, African banks do not seem to have their own formulae for developing their SME departments. For instance, the difference between a bank’s SME department and an independent MFI is not clear. There should be a distinction or link between these institutions given the fact that a bank’s SME department and MFIs are often fishing from the same pond – try to serve the same clients offering similar services. On the other hand, development organizations that want to support SME growth through youth and women in agriculture seem to lack friendly channels for extending such facilities without attaching their facilities to formal banks’ conditions. Funds from development organizations targeting socio-economic development are forced to pass through formal banks where they attract all conditions for private funds. Once this happens, it is no longer development finance. Given that development finance comes at concessionary rates, banks do not often prioritize it, preferring their own expensive commercial funds. Since banks are for profit while development agencies are for development, it is a conflict of interest to expect profit-oriented banks to offer non-profit development finance.

Socio-economic transition and death of benefits

Over the past few decades, in countries like Zimbabwe, people have lost trust in banks because depositors can no longer earn interest from their deposits. Instead, interest earnings have been converted into bank charges, to the benefit of banks. There is no longer any incentive for depositors like MSMEs to bank their money in formal financial institutions.  On the other end, a performance history is no longer enough for a business to secure a loan as banks now emphasize other stringent conditions like collateral in the form of immovable property, which may not be related to the business at all. For instance, a house has no relationship with trading in agricultural commodities. The collapse of large corporates has also given birth to a robust SME sector that is detached from banks which no longer provide traditional benefits.

Banking as a practice and profession is dying a slow death and in its place a new fluid financial economy that responds to immediate cash needs has germinated. SMEs no longer see the need for their business performance evidence to be institutionalized in banks. MFIs have come in to fill that gap by starting to engage MSMEs from scratch, building transaction and business track records that enable active enterprises to get loans without having to produce bank statements. In addition, MFIs and MSMEs are forging their own business performance evidence through internal systems.  They have realized, they do not need to save or bank their money but money has to be kept within the enterprise so that loans are repaid as income is generated within the enterprise.

MFIs and MSMEs now innovating collaboratively

In the spirit of building relationships, MFIs have responded by adjusting interest rates in line with the rate of business in the MSME sector.  For instance they have structured repayment period to within a week to six months. This is in line with the speed of transactions among MSMEs which generate quick turnaround for loans. MFIs have also reduced bureaucracy by processing loans quickly unlike banks where it can take at least one to two months for a borrowers to get a loan. By the time such a loan is availed, opportunities and original intended purposes for the loan will have evaporated – leading to the burden of defaults.

MFIs are also warming up to the fact that innovation is no longer about business history but recognizing an innovative idea. Where banks use terms like green field as an excuse for not funding new business ideas, MFIs embrace green field ideas as opposed to supporting copycat businesses that are preferred by formal banks. New ideas or green fields are found within Communities of Practice (CoPs) such as informal markets. Instead of focusing on an individual enterprise, understanding the new economy is about assessing the potential of the entire business cluster or sector. Whereas banks are more interested in loan repayments with little attention to value added services, MFIs are providing additional benefits like training in entrepreneurship, financial literacy and business management. This enhances business performance and reduces default rates.

Unfortunately, policy makers are reluctant to recognize this new economy. Frustrated by the rigidity within formal banking systems, many bank executives are forming MFIs through which money from banks is being channeled to innovative business ideas. Insisting on financing already existing enterprises and traditional forms of collateral in an economy where over 60% of enterprises are dominated by women and youth is to completely miss the mark.  Supporting old businesses and ignoring active economic actors whose only limitation is lack of collateral in preference for financing businesses that have exhausted their economic runway and are on the verge of phasing out due to lack of innovation is failure to predict the future. Financiers that refuse to recognize and support green field businesses are blind to the importance of building a base for future socio-economic growth. Such decisions are also tantamount to unwillingness to tap into innovations by women, youths, MFIs, ISALs and others at grassroots who are critical sources of socio-economic business models free from colonial appendages.

Mobile money is accelerating the demise of traditional banking

Although the proliferation of mobile money is being celebrated in many African countries, it is creating more challenges than solutions for banks and ordinary people.  There is currently no clear justification for one to have a bank account and a mobile account. If SMEs can keep their money in a mobile wallet and transact anytime, what role does a bank account play? Why should someone transfer money from a bank account to a mobile wallet and what are the advantages of such actions?  Rather than creating a false sense of convenience, there should be one form of keeping money and transacting. SMEs are realizing that there is incentive for keeping the same money in the bank and in the mobile wallet. Costs of moving money between a bank account and a mobile wallet eat into the amount of money that should be circulating in the business.

Since banks no longer keep business performance records for clients, SMEs now keep their business records in their mobile phones. Banks are becoming increasingly irrelevant to the business needs of MSMEs. They urgently need to find ways of reviving their role in anchoring business growth patterns. The new economy is forming its own new roots different from the former colonial roots. It is building its own foundation starting from the micro levels anchored on MFIs which are part of the socio-economic context. Most SMEs and MFIs tend to be confined to their niches due to lack of resources. Supporting such institutions will spur more outreach. Where MFIs where only financing smallholder farmers, with the right pathways, they can start extending their tentacles to other business levels like processors, restaurants and others. As long as they remain micro, their clients will also remain micro.

Upward economic mobility

Traders are initiating upward mobility, growth and transition for most MSMEs.  It is the trader or buyer whose activities are pushing farmers to produce more as the market increases its capacity to trade.  That is why the market should finance production. When government and financial institutions start by financing agricultural production, they create gluts and mismatches between demand and supply – leading to frustrations among farmers. On the other hand, financing the market creates and broadens demand. Those who access finance through the market have entrepreneurial mindsets. That way the market becomes a screening process where levels of participation in the market determine how much an actor gets from US$100 000 circulating in the market.

Building a medium scale market requires a robust screening process that enables traders to be reliable  aggregators for processors and for exports. Most market traders have stories that can inform appropriate financial inclusion pathways. They can also be pacesetters in financial inclusion from the market. For instance, they can support building of contract models from the market since they are powerful off-takers whose role is not understood by the formal economy. In the new MSME-driven economy, deep knowledge goes beyond a series of facts or information compiled in a brochure by banks. Critical knowledge embraces economic actors’ true knowledge of their role and new business processes. Such knowledge leads to mastery of the entire business ecosystem. On the contrary, banks and other formal institutions continue to confuse knowledge sharing with road shows and conferences that are based on showing and telling. A road show trying to persuade traders to open bank accounts is a waste of resources without first understanding and articulating the concerns and needs of potential clients.

 

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