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?


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.  / /

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



Using informal markets to shape a developing country’s knowledge agenda

The world over, many resources are spent on conferences, agricultural shows and summits like the recent Forum on China-Africa Cooperation (FOCAC) held in the first week of September 2018 in China. However, what happens before and after these events is more important. On the other hand, while funders and development agencies continue to determine socio-economic research agendas in most developing countries, grassroots communities of practice and informal markets are becoming fundamental sources of practical research ideas.


Addressing under-representation in research

Researchers keen to broaden their knowledge of natural products have to visit informal markets where natural and wild food products are often found.  Such foods are often not found formal centres of commerce such as supermarkets. In a rapidly changing climate, research that does not extend its inquiry to natural and wild products generates lopsided solutions. Careful attention to what happens in local communities and informal markets can reveal issues that are under-represented in traditional research. It can also assist in assessing existing knowledge and translate it in ways that governments and local authorities can use to develop and implement policies.

Since government departments and development agencies do not have all the needed skills, knowledge, expertise and resources, leveraging the strengths of local communities and the private sector is critical. Unfortunately, policy making in most developing countries is based on passive documents and reports that are difficult to translate into a practical and usable body of knowledge. Changing consumer and health needs, growing public expectations, and ambitious new socio-economic goals are raising the bar for decision making institutions and systems to produce better outcomes and socio-economic value.

To address knowledge gaps, what is needed are high-quality knowledge systems that harness advantages in each given context. This means co-creating knowledge that is valued and trusted by local people as they respond to changing needs and situations.  Too much information is meaningless if it does not inform better decisions and improved standard of living.  To this end, researchers who want to improve the quality of their outcomes should not just rely on textbooks or peers but embrace alternative sources of experience and expertise.

 Knowledge quality assurance system

Just as there are institutions and processes responsible for enforcing the quality of goods, products and services in each country, there should be a dynamic quality assurance system for all forms of knowledge critical in driving a knowledge economy. This is different from the examination board which focuses mainly on certification within formal education systems. Without high quality practical knowledge and wisdom, a poor country will take several decades to transition into a middle income economy. A critical role of a national knowledge quality guarantee mechanism is building and specifying different levels of competences and experiences that citizens can access and anticipate.

Sources of better questions

African researchers can benefit from informal markets that are becoming sources of better questions which lead to better answers, which in turn lead to better conversations. Informal markets tend to be incubators of conversational wisdom in ways that enhance humanity, skills and awareness. Being human means farmers, traders, consumers and other actors share meaningful insights and connect on a more human level. This enables actors to talk more about their passions, what they love about their work, and what will make their work more meaningful. Being skilled means they go into conversations with head, heart and gut. They become more willing to share feedback, think about critical questions they would like answered, and ensure every conversation is a dialogue rather than a debate or monologue. Better conversations contribute to better quality of commodities in the market, better agricultural practices, better entrepreneurship and better socio-economic outcomes.

Raising and sustaining awareness

Through conversations in the market, some farmers become aware of new commodities they never thought existed and could grow in their community. Sharing what they notice in the market, telling stories and voicing their opinions builds the confidence of value chain actors to become true to their values and what is important to them. This can be a source of meaningful inquiry for researchers, leading to improved business outcomes, better ideas and practical solutions. Formal education is meaningless if researchers are not able to translate their research results into better socio-economic outcomes. In order to be considered credible knowledge brokers, researchers have to be coherent.

Major challenges faced by researchers in collecting and analyzing data range from information gaps to information overload to legal restrictions on data gathering.  In a world increasingly exposed to political extremes, fake news and disinformation, it is becoming increasingly critical to ensure agricultural markets get proper attention and expertise. Access to innovative capabilities in communities of practice such as informal markets has never been so important. Informal markets are good at harnessing every participant’s collective strength. Where formal institutions conduct research in silos, informal markets are more holistic in harnessing diverse worldviews from farmers, traders, consumers, transporters and many other actors.  / /

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

Nine types of agricultural-related entrepreneurs in developing countries

eMKambo has invested time and effort in understanding and classifying different archetypes of entrepreneurs in developing countries. While this effort has focused mainly on agriculture-related entrepreneurship, it has also embraced diverse socio-economic sectors. Unless, development actors, policy makers and financial institutions characterize economic actors in line with their different roles, it will remain difficult to assess and achieve socio-economic impact.


  1. Family unit (household)

The primary motive for a family unit or household to start an enterprise is to meet basic requirements or supplement and widen sources of income. For instance, a farming household can get into non-farming income generating projects like retailing. Farming may not be a business on its own unless it produces surplus to supplement other needs like school fees, health needs, transport and others. It is not a profitable venture but subsidizes other sources of income. The majority of micro enterprises in rural and urban are in this category.  They start small enterprises to supplement income and meet basic needs.


  1. School leavers and the young generation

Unemployment is a major push factor for this category. The only choice for school leavers and youths in most developing countries is to start a small business. This is not often motivated by a career path but by the need for self-reliance. A young person or school leaver say to himself/herself, “I can’t just be idle, so let me find something to do.” These entrepreneurs are not driven by passion but by circumstances where business is a stop-gap measure while looking for formal employment. Some youths end up being pushed by social factors like marriage which force them to work in order to take care of a family. There is often no proper process of building these entrepreneurs since they are just thrust into a situation.


Most of the youths in this cluster do not have innovations in terms of their own business ideas but copy what others are already doing. They copy through trial and error with no specific market and entrepreneurial skills.  This group, pushed into business by factors outside individuals’ control, should be carefully targeted with funding and capacity building initiatives. Instead of taking business as a stop-gap measure, they need to understand the entire economy. However, due to inexperience and lack of innovation it is often difficult for this group to get funding from banks. They do not start business by choice and it is not a career path for them. They are often standing with one leg and have not firmed up their business ideas – no vision for the enterprise.


  1. Retrenchees

These are pushed into business because their income sources have suddenly ended.  “What else can I do now that I am no longer formally employed?” Some do not have relevant skills in farming because they grew up in the city.  However a positive thing is that some have earned retrenchment packages around which they can be trained to start businesses. On the other hand, they are still looking for formal employment. Since their entrepreneurial skills have not been fully honed, they just have skills related to their former employer. This forces them to consider starting businesses in line with the former employers.  For instance, a former welder can buy his own welding machine and start doing what he used to do at his former employer. A former employee in a packaged goods retail shop can become a trader of the same goods through a tuck shop.


People in this group get into a trade in which they have inherent skills, potential markets and market requirements in terms of standards. Those with skills in producing door frames or agricultural tools know the requirements of the market. This group needs different types of support.  The main challenge is that their businesses are more skills-driven than market-driven. For those who may have abundant skills, the sector might already be saturated, leaving no room for extra skills toward demonstrating impact.


  1. Employed moonlighters

This category gets into business to complement wage income.  A positive thing is that they have a reliable source of income. What they need is a side complementary business for a major source of income. However, their main setback is that they are not taking business as a career path and can stop any time if the going gets tough. Their forays into entrepreneurship is not driven by passion. Commitment is not 100% – it is just an alternative undertaking. Even if the business does well, the owner is detached and at no point can s/he leave formal employment to focus on the business. They don’t have enough confidence in the enterprise and continue to consider wage employment as a sustainable source of livelihood. In most cases the business is not run by the owner but by employees, relatives or the spouse. In terms of planning and control the owner’s role is minimal since s/he is detached. This group has increased in many African countries like Kenya, Malawi, Tanzania, Uganda, Zambia and Zimbabwe in the past two decades.


  1. Entrepreneurs motivated by availability of resources in the form of pension and borrowing powers

This group comprises people with many forms of collateral requirements such as buildings and old boys club networks in the banking circles. They can walk in a bank and easily get a loan. Unfortunately, most people in this cluster are not driven by entrepreneurial desire but access to resources. This group often lacks important entrepreneurial skills and business development capacity. Many politicians and senior citizens are in this category. Some end up confusing symbolic power with power to execute a business and obtain markets. Due to easy access to money, they can borrow from one bank to repay a loan taken from another bank.


  1. External resource-driven category

This cluster is driven by availability of resources from government or development agencies. Such resources could be in the form of a women’s bank or youth fund, among others. Some development agencies can avail resources through affirmative strategies, targeting specific marginalized groups like women, youth and the disabled. When government sets up a women’s bank, more women can go to get loans not because they have good business ideas but because the facility is available. The fact that a youth fund has been availed, might see many youths applying for loans even if potential businesses are already congested. Where an NGO targets resources at vulnerable households, community champions with a sustainable role may be disqualified because support is for orphans, child-head households or youths.


  1. Passion-driven but lacking resources

These could be youths keen to start businesses as career paths.  Some agricultural graduates can be keen to get into commercial agriculture while engineering graduates may want to set up a motor mechanics workshop. This group is driven by passion, knowledge and skills but might lack experience, exposure and resources.  They can actually have more commitment. In many African countries, this group is being frustrated by lack of support.


  1. Those who decide to leave formal employment to start businesses

This rare group comprises people who feel they have contributed enough for their employer’s growth and should move on to more opportunities with potential for growth. Their advantage is that they have knowledge, skills and are driven by passion. They also know what the market wants. This group could be classified as ‘rebels’.  Those in the food processing industry can go and set up their food processing factory or restaurant. They can easily take away markets from former employers. Although this might be considered conflict of interest, they have a solid foundation from which to start. Their genesis could be businesses where the owner is detached and not able to fully exploit opportunities. They can cause the former employer to close down due to too much reliance on employees who decide to go and reproduce the business in other forms.


  1. Family businesses

These are cases where business owners decide to wean their children by giving them business branches or outlets to run as part of building self-reliance. For instance, an agro-dealer can give part of his business to his children.  This kind of inheritance-driven business can also be push-factor driven to run away from dependence towards self-reliance. It’s not like the children are proactive since they may not be driven by passion and career path. However, those who embrace the opportunity can flourish.


Beyond MSMEs

The above clustering shows it is not enough to describe businesses as MSMEs without going deeper to unpack different nuances at a granular level. In all these clusters, some enterprises are on the social impact side while others are on the economic impact. Social impact has an element of sustainability. As part of financial inclusion, the social impact group should be considered for development finance. Unfortunately, development finance does not look at social enterprise as a source of scale. In most developing countries, more than 60 % of businesses are social enterprises. They are a critical part of a hybrid economy with both formal and informal elements. However, their major strength is that their businesses are sources of livelihood and there is no way they will want such businesses to collapse.  They just want to earn an extra dollar for meeting basic needs like health and school fees. While they may not grow faster, they continue thriving for years, meeting critical needs like educational fees.  / /

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

The character-building role of African ‘informal’ economies

People who co-exist with Kombi drivers in Zimbabwe, Matatu drivers in Nairobi’s traffic jammed roads, boda-boda motorcyclists in Kampala and similar situations in African cities have always wondered if those drivers are from the same mother. This is due to their character which is exactly the same. ‘Informal’ traders and MSMEs also share the same character which makes customers wonder whether they went to the same school.  If formal education systems had a long lasting influence on people’s character, economists who attended the same university and read the same books would have the same character.


African ‘informal’ economies and character building

The above examples demonstrate the extent to which fluid and ‘informal’ business ecosystems shape people’s character more than external factors like money or formal education. These markets are able to build the character of farmers, traders, transporters, consumers and other value chain actors in ways that formal training institutions like colleges or universities cannot do. They are an open knowledge sharing institution where various ways of learning include observing, lurking and experimenting. This kind of knowledge acquisition and sharing does not always happen in formal settings. By teaching farmers and traders how they should show up, ‘informal’ markets are able to creatively build and shape the character of economic actors.

In a highly competitive world, character is becoming more important than talent or skill. While skills can easily be acquired, a dynamic character is difficult to acquire. Many farmers and farmer leaders can succeed at producing agricultural commodities but fail to perform in the market. While development agencies, government extension departments and private sector contractors spend money and time trying to develop farmer skills through farming as a business and other approaches, most of these efforts fall short in building the character of farmers and traders. In the ‘informal’ and increasingly digital knowledge economy, the most important thing about leadership is character, followed by talent and skill. This is mainly because informal economies are driven more by trust and relationships than by rules and regulations. Formal institutions like banks which operate based on guidelines and policies need to revisit their business models to embrace trust and relationships as critical pillars of lending.

Relationship between character and entrepreneurship

Evidence from African ‘informal’ economies indicate success in entrepreneurship is now more about character and critical thinking as opposed to talent, strength or skill. If talent was everything, economies with highly talented people would be self-sufficient. We are not saying countries should stop investing in identifying and cultivating talent. Character is becoming central to entrepreneurship.  As part of character building, informal economies compel aspiring and growth-oriented entrepreneurs to seek the highest good of others, speak the truth in ways that are useful to others and lead in ways that meet the needs of other actors and customers. They also obtain expertise in noticing strength in others and show generosity by using their talents to advantage others.  All these attributes are not obtained from formal schools and textbooks but from the business ecosystem. Instead, formal educational institutions promote competition rather than collaboration for the greater good of all.

Modern fast moving economies are about consistency in behavior, supply and participation in the market. To be successful, farmers and traders have to provide predictable signals to market demands. Consumers must know how farmers respond before they do anything. That means farmers have to show up in ways that seek the highest good of consumers and competitors. Character is not about talent or skill but consistency in behavior and predictable responses. A farmer’s character scores over talent in the long-run and helps in building his/her enterprise as a brand to be trusted for planned expansion and growth.

The market and consumers have to be rewarded from time to time with openness and fairness. Character is also easily tied to equity or justice so much that consumers will start associating a predictable farmer’s commodity with a unique, value-added lifestyle.  Through participating in ‘informal’ economic ecosystems, Kombi drivers, Matatu drivers, boda-boda motor cyclists, food vendors, traders and others actors have become aware that things that make them remarkable go beyond talent to the practice of humility and love.

Broadening the notion of formality

The way African ‘informal’ markets are evolving into hybrid economies, signals the need for policy makers and economic actors to broaden the definition of formality from paper work to how businesses and socio-economic ecosystems are structured or organized. Formality should no longer be limited to legal requirements like company registration or tax clearance.  Food ecosystems and MSMEs do not require too much formality as long as traders and other actors produce commodities safely and as fast as consumers need them. Besides, most people’s markets in developing countries are formal in their own ways. Otherwise they would have stopped functioning a long time ago.  They have their own employees, time to open and close, use cash transaction and digital technology. All these practices exemplify formalism.  It should not just be about fixed aboard and certificate of registration that unintentionally end up punishing innovation at the expense of enabling growth.

 Individual character versus ecosystem character

Financial institutions have to realize that public engagement and financial inclusion is sustained by trust and relationships. Insisting on collateral and enforcing strict repayment processes has less power and sustainable meaning than trust and relationships. In business clusters like SME clusters, the character of the cluster is more significant than the character of individual SMEs. As shown through the case of Kombi drivers and Matatu drivers, for SMEs, the competitive environment and relationships control and influence the character of actors in the market. Everyone policies everyone so that the entire market ecosystem is not tarnished to the point of losing customers.  On the contrary, banks continue to ignore the entire ecosystem preferring to deal with individuals whose actions are apparently influenced by the ecosystem.

Formality should not be a basis for lending because it has nothing to do with a business’s growth pattern or the business owner’s character.  Rarely do the majority of customers inquire about registration in order to buy a commodity. The relationship between enterprises is more powerful than the need for formality. Otherwise shelf companies would be the ones doing more business than self-organized informal actors who focus more on delivering value than satisfying legal business requirements.  We are not advocating for the complete removal of legal processes and identities but the major question is: Which is more important legal identity or capacity to satisfy customers? If registration and legal requirements were more fundamental, consumers would insist on seeing a company registration from every farmer or producer before buying commodities.

Character and propensity of a business to grow should be major determinants in a financial institution’s decisions to extend loans. This will ensure micro and medium scale actors with capacity and room to grow are not denied funding in preference of large corporates who many continue to be prioritized for credit when their growth has reached a ceiling. Compared to formal institutions, in ‘informal’ economies knowledge feels much more alive and social, rather than just coming from a textbook or organizational manual. Traders and farmers benefit immensely from observing collaboration in action. Understanding the entire economic ecosystem can enable financial institutions, development agencies and policy makers to excel at planning, scaling and extending their influence as well as satisfying unmet needs some of which are hidden in plain sight.  / /

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

Nudging universities in developing countries to harness community based inquiry

Contrary to prevailing formal approaches, knowledge sharing in most rural African communities is embedded in the way people work. For instance, knowledge sharing happens as farmers select seed or choose livestock breeds.  It also happens as they milk cows, plant crops, weed, harvest, store and market.  They do not stop and say, “Now let us share knowledge”.  They do not take agriculture as an event but a messy process.  That is why policy makers, development agencies and other formal institutions have to be continuously reminded to understand how rural people use knowledge assets in answering their needs.


The role of colleges and universities in rural development is yet to be clearly articulated. These important knowledge filters and gatekeepers have not yet adequately awakened to this reality. Instead of creating pathways for students to learn from local communities, universities continue to encourage students, especially those going on more than ten months internship, to look for placement in formal institutions like parastatals and corporates. Unfortunately there is not much to learn from these institutions because practical knowledge and innovations have migrated to informal ecosystems like SMEs owned by people who used to work in formal institutions.  This is the situation in many African countries.

 Using informal networks and markets to inspire new knowledge interpretations

As if the above is not enough, the digitally-informed dynamic and hybrid economy is now increasing the demand for technological, social and emotional skills that cannot be found in most formal institutions.  For universities, informal networks and SMEs as knowledge markets provide opportunities for new theory development and knowledge interpretation based on real-time practical experiences. Academics and universities that tap into this resource can overcome the inertia of conventional tools, processes and learning habits that are not matching the pace at which people are innovating in response to the market.

Learning institutions like universities are being forced to rethink their businesses models and imagine how they can develop and put appropriate tools in ordinary people’s hands for better decisions.  Instead of waiting for society to demand data or information on ad hoc basis, universities should put their approaches, methods and tools into daily activities and processes of farmers, consumers, traders and other value chain actors.

The current dominant research techniques used by universities in developing countries take a narrow view of what constitutes quality evidence or knowledge.  This is ignoring and undervaluing unique local solutions to unique community problems. While scientific merit is necessary, it is not sufficient. Universities and other formal learning institutions should acknowledge the crucial role of alternative knowledge generators and users such as farmers, artisans and traders, among others whose knowledge has gained local legitimacy over time. Research should no longer be just for academic purposes.

The role of universities in building community knowledge retention strategies

A low hanging fruit for universities in developing countries is empowering local communities to retain and re-use knowledge so that they fully participate in the knowledge economy.  What is often considered the brain drain from rural to urban African cities leads to rural communities failing to function due to progressive loss of intellectual capital to cities. Universities can assist communities in building knowledge management systems which can retain and disperse expert knowledge within the entire community.  Such knowledge can also be absorbed by the young generation in ways that make it available when needed unlike would be the case if such knowledge is held by a few individual experts.

A university-driven community knowledge retention strategy can embrace the following steps:

  1. Analyzing the risk of knowledge loss in a community through the death of elders or migration of local experts to cities. Through student research projects, universities can develop methods for identifying where and how risks of community knowledge loss are greatest. A system can be put in place for doing this on a regular basis.  For instance, such a system can track knowledge loss along specific value chains like livestock production, crop production and food processing.
  2. Identifying and engaging community knowledge experts and convincing them of the importance of knowledge retention as well as associated risks of not retaining knowledge. Once knowledge management practices are embedded and retention is routine, this step becomes more efficient. Universities can assign intellectual facilitators to work with local community knowledge experts.
  3. Scoping and planning the retention process. This involves identifying topics that are unique to different community knowledge experts. Working with experts, universities can map out knowledge topics known by different experts and prioritize them for retention or transfer.
  4. Setting up a knowledge retention framework and ecosystem – This can be a series of activities to make sure critical knowledge is transferred to the young generation, it is documented in guidance, stories, procedures, checklists and university training or learning material.
  5. Documenting and structuring community knowledge. In addition to much knowledge being transferred directly to young people by elders through various means, some can be recorded in audio, video and text. Evaluation reports produced by several NGOs working in particular communities can be part of this resource. Universities can synthesize this material into usable forms or knowledge assets that can be included into university curricular, making it fluid.
  6. Embedding the documented knowledge within the community and university knowledge bases. A knowledge ecosystem that seamlessly connects communities to universities as fluid and interdependent knowledge sources and users is a very important output. For instance, bringing together university students studying pharmacy or medicine and community herbalists can inspire collaborative drug discovery towards expanding pharmaceutical ecosystems that are currently too narrow for the diverse health needs of developing countries. On the agriculture side, economists, extension officers, veterinary officers and other knowledge brokers can begin to be rewarded on the basis of how many farmers absorb and re-use knowledge shared as opposed to just counting the extension officer to farmer ratio and using that as a basis for providing incentives.

Addressing fragmentation of knowledge

Although development organizations and government departments know and interact with each other, agricultural and rural development initiatives in many Africa countries remain fragmented. By harnessing community-based inquiry, universities can re-define their core business in ways that influence development policy and benefit communities directly. Community knowledge platforms such as informal markets can be the most effective ways to accelerate learning and strengthen coordination in agriculture and rural development. Through focused and concerted efforts, actions of farmers, traders, health practitioners, consumers, teachers, extension officers, veterinary surgeons and other community actors can be byproducts of deeper connections and shared learning between universities and local communities.

If seriously motivated by acquiring new knowledge that makes a difference, universities, lecturers and their students should look for learning opportunities in local communities instead of flocking to cities where formal institutions cannot produce dynamic knowledge that inspires positive change and progress. Technology is breaking and scattering knowledge from many value chains in ways that formal organizations like universities cannot adequately master. Without effectiveness and well thought out knowledge management frameworks, universities and formal institutions will struggle to initiate and sustain meaningful engagement with the public, especially parents who are paying university fees hoping to get good returns on their investments.  / /

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

Asking and answering fundamental questions through informal markets

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


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

Solidifying the aggregation role of informal markets

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

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

Need for middle class markets

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

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

Need for careful characterization of markets 

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

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

Appeal to a broad section of the middle class

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

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

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

Stimulating more value by tracking what is happening

Tracking local activities and keeping daily updates does not just enable communities to practice what they preach. It also helps them to increase awareness and value for the wider society. When farming and fishing communities are able to track local activities, they build their own capacity to analyze what is going on and identify next steps towards positive outcomes. The ability to analyze what is happening at local levels clarifies the nature and size of the local economy and surfaces progressive ideas.


Pattern recognition

Inability to track activities limits the capacity of many communities in developing countries to know how to improve. Once they are able to track their work, they will know about their situation, behavior and prune future plans. Another key benefit of consistently tracking what is happening is heightened awareness, leading to pattern recognition. For instance, communities that track their production and consumption practices long enough are able to limit damaging practices like land degradation and maximize positive practices like water harvesting. Community intentions and opportunities become more tangible when tracked, leading to positive reinforcement. This does not just speed up change but enable communities to move from old agricultural models to new digitally-enabled ones. Unfortunately, in most African communities there is no one responsible for tracking collective incomes and expenditures.

Tracking can also reveal circumstances under which focusing on local activities can be too small to be viable and how an international focus can be too disconnected to local reality due to diverse interests.  It is through tracking changes in the local environment that communities can embark on activities that enable them to get local rivers flowing again and create a local movement to improve natural resources management. Without tracking, it can be easy for farmers and other value chain actors to focus on crops and forget grass, livestock and wildlife. The contribution of each farming community to national food supply can also be made visible through tracking volumes, seasons and other critical factors. For instance, in Zimbabwe, tracking commodity supplies into informal agricultural markets has made it possible for eMKambo ( to persistently notice that more than 70% of commodities flowing into informal markets come from communal areas, except potatoes, oranges, bananas and cabbages which require bigger pieces of land for profitability.

The power of tracking agricultural production corridors through agricultural markets


The charts (above) show that Manicaland province has remained a major source and supplier of sugar beans into Mbare, Harare maket over the past three years (50%), followed by Mashonaland East (26%), then Mashonland Central (18%) and lastly Mashonaland Central (6%).  More evidence shows that this trend has been driven by investments in irrigation facilities by government and development partners in Manicaland as well as suitable climatic conditions. The trends also reveal the potential of sugar bean to be  a key agro-economic driver that can influence rural industrialization in Manicaland province.

Assimilating local experiences into mainstream views

Tracking and gatherig local evidence can empower farming communities to influence change and get their worldviews assimilated into mainstream national decision-making processes. This can happen if these communities have skilled people who can recognize and capture strategic opportunities. A community that tracks its activities can establish a stronger foundation for scaffolding growth and set achievable ambitions. New grounds for interpreting local knowledge can be inspired through persistent tracking and updating local evidence.  Some of the most important insights that can be generated include existing food supply networks, driving forces, adaptability of food systems to dynamic environments and relationships between food and identity.  / /

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