While many contemporary development programs with regard to Sub-Saharan Africa’s pastoralists promote improved livestock marketing as a way out of poverty, they also fail to take into account the multi-functionality of livestock within these communities, and thus are doomed to failure. While livestock are a main source of income for the pastoralist household, they also serve a purpose as a store of wealth, food source, and status symbol. Furthermore, cattle and smallstock (sheep and goats) fulfill each function to a different degree. Since livestock are so multi-functional, marketing projects could better achieve their objectives if they had a more accurate picture of what motivates household livestock sale decisions.

The findings from the first phase of my fieldwork in rural Philippines and India identified the tendency for livestock purchases to be perceived as investments, maturing at different times over the course of the natural year. A piglet, for example, could be used as an investment – to be sold when adult for 2 or 3 times its original cost or as a cushion against shock – to be eaten as food or sold in times of need. Whereas it was rice or wheat that tended to be used as a store of wealth by the Filipino and Indian farmers, this paper demonstrates that rural Kenya pastoralists display the same behaviour, only changing the form of the stored wealth from grain to livestock.

We cannot look at any rural marketing strategies without first understanding household financial behaviour (or consumer behaviour as traditional marketers are wont to call it, though that can be misleading) and many of the traits so displayed offer a challenge to conventional business practices and market entry strategy.

Here’s a lovely paragraph from their research paper which echoes my findings, giving me confidence that my findings from the upcoming rural Kenyan fieldwork will only underscore the basic patterns of rural financial household management already seen elsewhere.

Given the emphasis placed on the multi-functionality of livestock in the literature, the implication is that households will treat livestock similarly to a savings account or stock portfolio and typically (and perhaps reluctantly) only sell livestock to cover cash shortfalls when certain necessary expenditures arise. Depending upon the household liquidity of livestock, animal sales may take place frequently to cover living expenditures or infrequently to cover lumpy expenses such as school fees, tuitions, and uniforms. Additionally, pastoralist households likely hold livestock as a buffer against future uncertainties and obligations that cannot be completely foreseen.

Lack of liquidity among rural households has often led those evaluating the so called “base of the pyramid” households to inaccurately assess purchasing power based on availability or spending patterns of cash money whereas in actuality cash money is rarely held onto and rapidly converted into tangible goods as a form of investment in a diversified portfolio.

If interested in comparisons, my second link above ‘findings’ is the final paper I’d submitted to the iBoP Asia project in 2009 on the ‘Prepaid Economy’ research.

Based on my fieldwork in Guangzhou, this paper attempts to explore the routes, profits, and reasons of the African traders in southern China through individual stories. It discusses the organization of the market as well as individual economic activities reflecting a globalization from below, where traders with relatively small capital become upwardly mobile by standing on the shoulders of the giants, or more directly, by selling their Herculean sandals out from under them, that is, by taking advantage of the infrastructural advancements made possible in the modern age of globalization, such as fast international transportation, convenient communication, mass manufacturing, brand recognition, for short term gains.
The trading activities of the Africans in Guangzhou represent an economic ―underworld, a world that is not only untraceable by customs or survey institutes, but is also rapidly proliferating throughout the developing world.
[...]
This paper … focuses on the informal economy in China. China’s position in the world system is ambiguous—while China is the world‘s second largest economy, it is also still a developing country; beyond this, it is relatively closed in terms of immigration policy.

photocredit: author

What struck me is that I cannot recall a time in the past decade that I have been observing these vendors when there were more of them. Call it a sign of the times, but every few hours another passes by the front of my house, shouting out what he or she is selling. In the morning its newspapers and fresh, hand-made tortillas. Around lunchtime is it fresh garden vegetables, epizote, bread and other kinds of unprepared food. There might be a tricycle for fruits and juices, another for tomatoes, onions and peppers, another for potatoes, beans and rice. By late afternoons they may pass by with fresh sweetbreads, steaming hot tamales, or corn on the cob.

A man with his tricycle grinding stone offers to sharpen machetes, knives, scissors, shovels, or any other sharp objects. A man with a blender (12V but it could as easily be pedal-powered) makes cups of shaved ice with sweet corn or coconut.

You can buy a tricycle brand-new, assembled, already painted in taxi colors of orange and white, and be ready to take a fare straight from hardware store to wherever they are going. The price of a new Chinese-built trike is 3200 pesos, about US$229.32 at today’s rates. The board that goes across the bars for a seat was salvaged from the trash at no cost, but perhaps some cushioned fabric is sewn over to help you through the potholes. Typically a fare pays 20 pesos ($1.43) for up to a 10-block ride.

I asked a tortilla vendor who plies a regular daily afternoon route how much he sells in an average day. “100 kilos” is what he said. His corn tortillas sell for a 3-peso mark-up over the tortilla factory (and there are three of them within a 5-block radius). So if he sells 100 kg, he makes 300 pesos per day, enough to pay for the tricycle in just under 11 days. Perhaps his wife has a masa roller and automated oven at home and he makes his own tortillas and the margin is even better.

Stopping by the largest of the tortilla factories in town — a one-room addition to a family home, which now employs three women from outside the family to turn corn meal masa into machine-stamped tortillas — I inquired how many tortillas they make in a typical day. “Ocho o nueve,” she said, meaning eight or nine metric tons — 8000 to 9000 kilos — and remember, this is just one of three within a short distance, and many people prefer to make their own at home. The entrepreneurial drive explores for available niches and fills them. Many of these factories supply restaurants and grocery stores. Retail home sales pass through bulk buyers at the tortilleria, like my local trike man, who do just fine with the small margin people are willing to pay for the convenience of not walking around the corner.

I noticed that my man sometimes gets lucky and lands a really big sale, however. Maybe someone is throwing a big party (and this happens often) and needs 20 kg. Or a tendajón finds itself short on a holiday weekend and buys 50 kg. His route is pretty small, just a few blocks, but if his son could run his trike in the mornings, or a second trike in the afternoon when he is making his rounds, perhaps he could extend his family’s range and double their earnings. Then again, as I’ve seen, he’s not interested in that, preferring to live quite adequately on 300 pesos per day ($21.50) in a town where the average unskilled worker makes even less than that. Or perhaps he has another job already and is just enlarging the family’s income by putting in a few extra hours while schmoozing with his neighbors.

For me, I’d rather save 3 pesos and ride my bike a couple blocks to the tortilleria, but that’s mainly because, being a writer, I need excuses to force myself out of my chair. As times have become tougher for average people, I’ve also noticed more homes along my bike route opening their front rooms to make tendejóns or comidas economicas. A comida economica provides a home-cooked meal with table service, giving the buyer a plate of whatever the family is making that day. A tendejón is an informal home store. It might have home-grown pigs, chickens or eggs for sale, or garden produce. It shares the same root word, tener (to have), as the more formal store or mini-mart (tienda), but whether for legal reasons or just wanting to keep it more neighborly, a tendejón is an unpredictable collection of wares in someone’s living room, next to their Christmas tree and fluorescent blinking statute of the Virgin of Guadelupe.

Between the tendejón and the tienda lie the more formal abarrotes, or package stores, which usually sell cold beer, insect repellent and junk food. These are usually under a residence or in an adjoining building to the family’s principal dwelling. There are one or more abarrotes, tendejóns and tiendas on nearly every block.

Tricyclos are a common sight in much of Yucatán Peninsula, as they are in Asia, Africa, South America and other parts of the two-thirds world. In the United States you mention a tricycle and people think of Monty Python or Laugh-In. In the global south they are multifunctional and ubiquitous. You see them as fishermen’s friends, beach-roving gear-buckets for surfers, portable crepe parlors, bellhop cabin service, and the poor man’s moving van.
 

Research has shown that the informal sector of ICT is a sector that has recently developed (since 2000). This sector has evolved to meet the specific needs of the ICT society. Coping mechanisms in this sector spend by taking into account the social and economic populations.

Taking into account these social realities is the basis innovations noted in the sector. These innovations (social innovation, organizational innovation, and marketing innovation) are a reflection of the Senegalese society and its organization. These innovations are based on values and thus Senegalese distributive logic versus the logic of profit prevails in the capitalist system. ~ from their abstract

They have found that the innovations observed among the informal ICT sector (covering all aspects of information and communication technology such as the repair and repurposing of old equipment, sales of new and refurbished including scratch cards and accessories etc) are those that have emerged in response to cultural and social needs inherent in Senegalese society and many of the core values of the businessmen reflect this localization.

A snippet from page 10:

In Senegal, the informal sector provides enormous potential and capacity for innovation that justifies his place in the Senegalese economy. The emphasis is on using knowledge rather than the production of knowledge. Innovation has always been viewed as a transgressive action individually or in groups to improve unsatisfactory situations, or at least solve problems.

However, innovation is not a simple problem solving but it contains within itself the seeds of creativity and originality, it acts on the margins of freedom of the actors when dealing with operations increasingly demanding control (CROS, 2007, 9). Any characteristic of the informal sector in Senegal who works in the “lack of structure”, but who is under enormous pressure and intense competition in the modern sector.

Innovation is meeting a need (real or potential), a market and workable solutions. It is important to link the needs to the requirements because the informal sector in Senegal follows the demand and adapts itself. It has a great capacity for innovation and responsiveness that the modern sector itself has not.

I have highlighted the sentences that stood out for me – while I had not been able to comprehensively address this topic as well as the authors have managed to do – it was back in the Autumn of 2010 that we’d conducted a field study among the jua kali workers in Kenya to take a closer look at innovation under conditions of scarcity among the informal manufacturers and fabricators based on the same logic.

That here, the informal sector’s responsiveness to customer needs was of a level entirely different to that of the formal industry – that their inventiveness and ingenuity was partly a demonstration of their ability to make and offer for sale exactly what their market wanted. There was little or no scope for errors in an environment of resource scarcity and irregular incomes. Products sold were incomes earned, a direct correlation that Konte and Ndong observed as well:

we try to show that the innovational act in this area is beyond the theories of innovation. Indeed, here the imaginative character of the actor is based on a sense of survival. With a highly developed competition, the human being must be creative and resourceful to get a place in the economic market.

While the PDF as a whole is a treasure trove on the informal ICT sector in Senegal and related literature, this last part from their sampling exercise did also stand out for me. It is the identification of the core values that helped increase their revenues, by the participants of the study, that is the informal ICT business owners:

Social values that contribute most to the increase in turnover of UPI are honesty (Jub ak ngor), courage (Diom), solidarity (ndimbaleunté) and hospitality (téranga). Indeed, the arguments advanced by respondents in the UPI to justify the choice of social values are numerous.

Honesty for these IPU (Informal Production Unit) respondents is the value that leads to success. It helps to establish trust, to secure and retain customers. An insured customer always comes back and you can even get other customers.

Courage is an essential value for a person who seeks a horizon. For them person must be selfless in order to survive in this business. It is not easy to get up early and be present every day for a long duration (12 years for some). Thus, only the courage and perseverance can help them to move forward.

Solidarity for them is a national value, Senegalese, because Senegalese feel affection for helping each other. It serves to reinforce the links in the sense that these UPI are family so everything happens in families. This solidarity is reflected in contributions, loans among themselves and participation in happy events as unfortunate. Furthermore, this solidarity allows IPU meets their limits by complementarily. Solidarity also fixes and maintains customers (make loans). This social value is often instilled in them their religious associations(Dahira).

Hospitality is value of any good Senegalese in their opinion; some of them had to receive it in their career. A welcome to the customer saves his confidence by putting them at ease and that sometimes happens with a smile, buying fruit drinks to customers. Therefore, a client welcomed, always returns.

Today I came across an even more exciting concept – the merger of a basic solar power kit to provide lighting and the prepaid mobile phone. Econet Wireless, the Mauritian telco has launched the Solar Home Power Station through its energy subsidiary Econet Solar.

The product contains a SIM card – the same as those used in cell phone handsets – which enables the device to communicate with the cellular network and in turn makes it possible for the customer to pre-paid for energy usage, in the same way that they currently pay for airtime on their cell phone.

Upfront costs are indeed a barrier for many who manage on irregular income streams from a variety of sources and the prepaid or pay as you go business model has successfully demonstrated its relevance and value to this great majority of the world’s population.

The only other downside as far as I can tell at this moment with the little information available is whether the customer will end up owning the product after some period of time or will it always be leased to them and activated only through perpetual payments?

Secondly, unlike a phone which still permits incoming calls when there is no cash for a top up, what use will this kit be if the family goes through a tough time where little cash may be available?

There are pros and cons to this model but imho it is only when such models are launched and tried over time that we will be able to evaluate which nuances need tweaking in order for such to work, unlike the airlines which never took off. The press release states the product will be trialed and then released commercially in early 2012.  One hopes that it will indeed be so…

It is only an eighth of a kilogramme packet of sugar, yet many Kenyans can barely afford it. This particular size of sugar has many references among residents of Nyanza Province, such as kobole, Kadogo and Sukari ndogo.

Jane Reuben makes between Sh200 – Sh300 profit daily from selling omena. Omena is an alternative source of protein for most residents.

Reuben said she buys the half kilogramme tin of omena at Sh50 since she cannot afford meat. “Back in the days, I would buy the two kilogramme tin and keep it in the house. I would occasionally buy goat meat or pork,” he noted. A two-kilogramme tin of omena costs about Sh200.

Reuben then buys kales (Sh50), paraffin (Sh10), cooking fat (Sh10), tealeaves (Sh10) and maize flour (Sh70 – 1kilogramme). After her shopping, Reuben is left with Sh100, which she saves for house rent. Her monthly rent is Sh3,000.

She said that most of the times she skips lunch as having three meals a day is impossible. “If I have to eat lunch, it is usually githeri for about Sh30,” she said. ~ Kenyans turn to ‘kadogo’ shopping, The Standard, Oct 2011

My thinking goes that if I were to ask the same set of questions as I did in Philippines and India (and as John Lumbe did for me remotely in Malawi) without any prompting, then if services like MPESA et al had indeed made any signficant social or economic impact in the ways people deal with and manage emergencies, loans and planning for large future expenses, it would emerge spontaneously in the answers given.

Now it looks as though I may just get my chance to follow through with this dream in at least two rural locations, early in the new year. Lets keep our fingers crossed.

His extremely easy to read and engrossing writing style rapidly took me through the stories of the enterprising individuals he met in Paraguay, China and Nigeria as well as covering the reflections of experts such as John Keith Hart, Roberto Unger and Martha Alter Chen. The urge to bake cookies emerged from the way he intertwined snippets from John Adams’ classic Wealth of Nations in and out of his narrative in order to give context to the economic thinking and theory of current day policy and systems.

What he has done with the publication and the subsequent publicity of this book is to shine a bright light on the economic engine that employs billions of people around the world, who aspire to make their dreams come true and create a better life for themselves and their children, in the most challenging circumstances and uncertain environments.

The topic has been covered extensively in such eminent locations as Foreign Policy, the Wall Street Journal and NPR.org – no small feat for a subject matter traditionally overlooked or considered a blight on the development economics landscape.  Neuwirth covers this aspect in the early chapters of the book and quotes Hart viz.,

Even Keith Hart has come to recognize the shortcomings of the phrase he coined. “The label ‘informal’ may be popular because it is negative,” he wrote in the paper delivered at a conference in 2004. “It says what people are not doing – not wearing conventional dress, not being regulated by the state – but it does not point to any active principles they may have for doing it. It is a passive and conservative concept that acknowledges a world outside the bureaucracy, but endows it with no positive identity.”

He goes on to propose a rebranding – system D – but acknowledges that is a cosmetic change. Words as labels tend to be constricting for this amorphous yet creative liminal space that is such a gray area between structure and chaos -  my own use of the label the prepaid economy has only captured the most popular business model of pay as you within this space but not the inherent potential and value that this activity provides among those conventionally known as the Base or Bottom of the Pyramid.

It is the fact that his book exists – firmly positioned in the context of economics, that too global economics, in this time of transition and upheaval when so called structured systems are themselves suspect of being the perpetrators of the problems facing the financial industry – that offers the greatest value to that which he calls System D. This, to me is the greatest value that his book will bring, if it is able to retain its prominence in the public sphere once the flurry of reviews and coverage is over.

It provides the layman – even economists are laymen, when it comes to the details of the daily grind for the lower income demographic across the developing world – with a glimpse of the why a System D must needs exist – particularly where there is systemic mistrust due to inadequate infrastructure, lack of a safety net and where systems don’t work at all, much less as imagined or  planned.

Neuwirth highlights a key point – this economy provides employment for anyone, with the lowest barriers to entry. Any market woman with enough shillings or rupees to buy one day’s inventory is automatically in business – compare this to a highly structured formal economy like Finland’s, where a recent culinary school graduate manning a coffee and cake kiosk at Katajanokkapuisto tells me that she is unable to offer more than a quesadilla, though there was demand for a wider variety of foodstuffs, simply because of the extensive barriers of rules, regulations and requirements by the city’s authorities.

If it makes the powers-that-be that set policy or make pronouncements on what is the one right way to economic development stop and consider whether a little loosening up might not benefit their own tightly corseted economies a little, then this book, with all its naivete and idealism would have done the job I want for it to do.

So, where do I feel Neuwirth is lacking? An example would be the throwaway line saying that something like a Maker Faire Africa could be done at regional and even global levels, making a difference for the inventors and makers emerging from their environments of scarcity. Oh yes, Mr Neuwirth, we want that to happen so badly, but as those of us who have tried to make this happen elsewhere have found, few organizations want to fund it or see the value in such activities.

Even while seeing the value and potential of this introduction to size, scale and scope – not to mention the sheer motive power – of this economic activity, it has been in these areas – the suggestions for what can be done, where Mr Neuwirth has revealed his lack of experience with the way the world and its decision makers view those at the BoP. A touch more work on the people themselves, their lives and the role that System D plays – with context of their socioeconomic strata, existing opportunities and the challenges posed by well meaning impact investments and NGO foundations would have given the book a grounding it currently lacks.

For these are all factors that influence each other – economic theory and development practice, BoP marketing and poverty alleviation, microfinance and the so called chaos of the bazaar. Still, if the Stealth of Nations paints this economy of ingenuity in a positive light and gives it credibility, it may perhaps begin to change the way these activities are viewed leading to efforts to bridge the deeper and not so digital divide between the developing and the developed world.

Street Vendor, Mombasa, Kenya (Photo credit: Niti Bhan)

Across the globe, 1.8 billion people — a quarter of the world’s population — work off the books each day. They are paid in cash for the goods they sell and the services they provide, and due to their ubiquity, there’s a word for these merchants in nearly every language. As Robert Neuwirth reports, in French colonies, they’re known  as débrouillards — self-starters, entrepreneurs, all outside the bureaucratic system. They might be vendors selling revolutionary goods in Egypt’s Tahrir Square, Nigerians selling mobile phones, or the guy down the street hawking flowers on the corner. Whoever they are, they work in the world’s fastest-growing economy: System D.

As Neuwirth writes, System D, slang for “l’economie de la débrouillardise,” is the crucial blackmarket, providing opportunities where the regulated global economy has failed. Its value is estimated at roughly $10 trillion, meaning, as Neuwirth points out, that, “If System D were an independent nation, united in a single political structure  — call it the the United Street Sellers Republic (USSR) or, perhaps, Bazaaristan —  it would be an economic superpower, the second largest economy in the world.” The Organization for Economic Co-operation and Development (OECD) predicts that two-thirds of the world’s workers will be employed in System D as soon as 2020. ~ Via Foreign Policy magazine