How can the predatory nature of development efforts be tamed?

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

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

Predatory rural finance

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

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

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

Harnessing multiple sources of evidence

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

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

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

 

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

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

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

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Of premature technology and information overload

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

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Long road to digital maturity

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

Fragmented value chains

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

ICTs and power imbalances

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

Need for nuanced reflection on what ICTs can and cannot do

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

Importance of defining a national digital vision and strategy

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

 

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

 

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

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

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

 

Two hopes for African Agriculture and rural development in 2019

The fact that countries which have moved toward middle-income status have started by transforming their agriculture sector is no longer debatable. Unfortunately, out of 54 countries in Africa, Ethiopia is mentioned as the only one on the path to meaningful agricultural transformation. The rest are still running from pillar to post, chasing different prescriptions. During one of the endless talk-shows in Africa, an official from the Africa Development Bank (ADB) recently lamented that his institution had spent more than US$2 billion in the last decade trying to set up agricultural commodity exchanges in Africa with no success. Besides such a scandal resulting from top down approaches, lack of genuine collaboration between government departments, development agencies and the private sector has impeded agricultural transformation in Africa.

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If 2019 is going to open a new progressive page for African agriculture and rural development, eMKambo has the following hopes:

  1. Governments and development agencies will revisit their faith in value chain models

Given the scale of food insecurity and youth unemployment in Africa, it is a myth that these challenges can be addressed through a few value chains. No matter how well-intentioned, the current crop of agribusinesses will not be able to create enough employment for the majority of Africans, even within 100 years. Most contract farming arrangements and inclusive business models across Africa are not just working with a narrow minority of farmers and economic actors. They also tend to be rapacious   initiatives where smallholder farmers are preyed upon in the name of inclusion. In spite of all the rhetoric, there is no way irrigation schemes in a rural areas can represent the success of inclusive agribusiness modelling. Given their location in dry areas, most irrigation schemes have been set up to supplement local food and income needs not to lift people out of poverty, create meaningful employment and drastically change lives.

Beginning 2019, governments and development agencies should wake up to the fact that modern commerce is not responsive enough to the immediate needs of smallholders and rural people. They should carefully and thoughtfully learn from holistic socio-economic approaches used by smallholder farmers and rural economic actors including youths and women. Models that can lift millions of people out of poverty are required. In all developing countries, more than 90 percent of farmers, youths, women and other economic actors are excluded from value chains and inclusive business models.

If formerly employed people can moonlight and engage in side-businesses to try and meet their needs, why should smallholder farmers with even fewer income sources be locked in value chains where they do not get enough to sustain themselves? Like everybody else, smallholder farmers and rural people survive through juggling scarce resources and experimenting with several opportunities ranging from rural and non-rural to agricultural and nonagricultural. They do not see value in being stuck in a few value chains when diverse options exist in informal markets which are increasingly becoming sources of dynamic employment opportunities and nutrition.

  1. Policy makers will harness interdependencies between formal and informal markets

The proliferation of informal markets in all African countries is a clear reflection of the extent to which income diversification is more important for farmers and rural people than locking them in modern value chains which do not provide sufficient income.  Instead of pursuing development agendas that promote  formal and global markets, in 2019 African policy makers should invest in understanding interdependencies between formal and informal markets. That is how they can know the diversity of smallholder livelihoods combining formal and informal, farm and off-farm, urban and rural activities. They will also become aware of the role of traditional institutions, social structures influenced by religion or kinship ties and neighborhood relationships in shaping resilient rural socio-economic norms. Trying to modernize agriculture through commodity exchanges and warehouse receipt systems without taking these issues into account will be a waste of resources.

Rather than condemning informal markets, progressive policy makers should try to understand why the majority of farmers, youths and women are preferring to work at the intersection of formality and informality. It is also important to examine how smallholder farmers and rural people are responding to rapid economic modernization whose effects are being felt at community level through the fluid relationship between villages and towns. Livelihoods are becoming complex combinations involving multiple informal arrangements where youth are seizing opportunities to move in and out of agriculture in response to fluid economic opportunities rather than be chained to value chains.

Development agencies and policy makers will also realize that contrary to the so-called rural-urban divide, there is increasing interweaving between rural and urban economies across Africa knitted with  extensive kinship ties that strengthen rural and urban distribution of opportunities. An important component of the economic mix is the exodus of youths from rural areas to cities and neighboring countries and back. For instance, thousands of youths migrate between Malawi, Zambia, Mozambique, Zimbabwe and South Africa during certain seasons of the year when agricultural production activities are low in their home areas. When policy makers study these patterns they will realize the power of remittances in agricultural and rural development. Instead of easy of doing business incentives targeting foreign investors, they should also be extended to innovative local people who keep rural economies vibrant and resilient.

 

 

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

Invisible trends and emerging good practices in African Agriculture – 1

Attempts to use African agriculture as a catalyst for economic revival and growth have focused mainly on mechanizing production and luring young people into farming. While there is nothing wrong with such efforts, lack of attention to other agricultural value chain nodes has seen new commodity brokers and traders quietly setting themselves for success through picking their spots in agricultural ecosystems, finding the right partners, and leveraging their competencies to rewrite rules of food demand and supply, almost unnoticed.

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The evolving role of open “informal” markets

Through its work in African food markets, eMKambo is witnessing the birth of new value chain actors who are inserting themselves in agricultural ecosystems, filling the gap between formal and informal niche markets. Such niche markets stretch from household, community, restaurants/eating places, food courts, supermarkets and hotels. Some households constitute a certain class with a defined food basket (something akin to pick and go).

Besides transforming the way consumers, financiers and entire national agricultural industries view food, these fast, dynamic and ICT-driven commodity brokers are also changing the role of big, dominant informal open markets like Mbare in Harare, Soweto in Lusaka Zambia, Lideta open air street market in  Addis Ababa , Lilongwe Central market, Makola market in Accra, Mercado Central Market in Maputo and many others. These big markets are now being forced to use their convening power to aggregate commodities from diverse production areas including from other neighboring countries.

Redefinition of commercial commodity broking

Where supermarkets used to obtain commodities from contract farming models and a few registered formal commodity brokers, the increasing diversification of consumer classes and food preferences is spawning diverse small niche food buyers and suppliers.  Consequently, the new competitive environment is making it expensive for registered commodity brokers to accurately make sense of the needs of diverse consumer classes. To a large extent, commercial commodity broking has been broken into individualized smaller commodity brokers who understand niche markets and consumer requirements.

In addition to a smaller and well-defined distribution pattern, these actors use appropriate packaging features as per customer requirements.  This new class of commodity brokers comprise individuals who are networked, passionate about food and knowledgeable about food and nutrition. They also play an advisory role and bring knowledge in food science, nursing, nutrition and others professions which enable people to have their food and health in their hands. These agile commodity brokers are also connected through religious circles, work places and have networks within a certain class of consumers in specific residential areas. Some of the consumer networks are being built through social media platforms like Whatsapp groups that bring together people with the same interests – providing an opportunity for enterprising commodity brokers to introduce business cases.

Resetting agricultural competitive landscapes

Connectivity, through ICTs, and ubiquitous transportation is accelerating activities of these commodity brokers and enabling them to challenge traditional value chains and vertical integration arrangements that have traditionally created barriers for small actors with limited resources. As these actors jockey to deliver distinctive propositions to diverse consumers and end users at scale, they are building strategic relationships rooted in a deep understanding of underlying client needs and delivering commodities in ways that cut across traditional silos. What was once a predominantly vertical model organized around few value chain actor classes and well-defined functions is being transformed horizontally to build greater alignment with the needs of diverse classes of consumers.

By creating new layers of productive action within formal and informal agricultural markets, these new agile commodity brokers are triggering demand patterns from consumers to inform production. For instance, they are now influencing demand for high value commodities like ginger, peppers, garlic, broccoli, strawberries, baby marrow and others. From an aggregation perspective, these actors are minimizing the need for durable physical structures as the commodity brokers to move around identifying needs and mobilizing commodities.

While aggregation centres remain important, more fundamental is a system of tracking consumer trends, tastes and preferences through fluid pathways.  This is where a knowledge broker and catalyst becomes critical in lifting farmers from the weeds so that they negotiate and structure their relationships with consumers and powerful value chain actors. The absence of a catalyst or knowledge broker sees farmers continue to produce cabbages and leafy vegetables when consumers need high value commodities. Very few farmers are aware that tastes and preferences are now influence demand more than volumes supplied to the market.

Space for new winners among farmers and commodity brokers

In order to keep up with the pace of change, farmers have to build strong relationships with dynamic commodity brokers who understand the demand side at a granular level. While different value chain actors are doing what they are good at, they are unknowingly preparing the ground for the rise of innovative insurgents that are either establishing more specialized niches or forging productive alliances with bigger players like processing companies. On the other hand, the market on its own is not able to inform farmers about changes in consumer preferences without agile informal commodity brokers.

In the current scenario, there is no need for several aggregation centres but few large ones like Mbare which act like one-stop shop, big enough to enjoy economies of scale.  The smaller the market, the higher the fixed costs. What is more appropriate now is a big aggregation centre and many fluid distributors who can take commodities from the aggregation centre like Mbare or Malaleni straight to end users. Creating many aggregators within the value chain increases costs and double handling.

Food vendors already have their own market while the new agile commodity brokers are serving the middle class consumer between the poor and the very rich. These middle class consumers do not want to buy from the supermarket but also don’t want to go to Mbare while preferring the freshness of commodities associated with Mbare. The new broker is also satisfying middle class needs and offering food as a service.  They are also creating new partnerships and ecosystems. As food market trends continue to gain momentum and become progressively inter-connected, an accurate reading of the market and its potential has never been so critical for farmers and other value chain actors.

Providing a new gear for financial inclusion

The new agile commodity broker is joining together all modes of payment, within African informal open markets that are largely cash economies. Fast and fluid commodity brokers can get money from the bank, invoice big or institutional buyers, buy in cash from the farmer or use mobile money when dealing with farmers and traders. Through fluid semi-informal activities, they scaffold inclusive financial models.  They are also linking with exports through adjusting local commodities to suit regional and export markets. In Mozambique, the famous traders called Muqueristas are adept at catalyzing regional trade.

 

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

Why linking farmers to the market is not enough

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

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The ‘myth’ surrounding farm gate price

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

Profit-oriented budgeting as instrument of negotiation

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

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

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

Benefits of fluid budgets that accommodate the changing economy

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

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

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

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

The significance of understanding different transaction modes

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

Why should financial institutions understand these market dynamics?

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

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

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

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

Questions that must be answered before poor countries import or export food

In the absence of evidence-based agricultural policy formulation and implementation, most developing countries always rush to import food without sufficiently understanding their national contexts. During gluts, farmers in areas where fruits are produced in abundance do not benefit from selling nationally compared to when there are shortages.  On the other hand, when the price of a commodity goes up due to shortages, we cannot conclude that farmers are getting good prices because such supply shortages may result from the seasonality of the commodity.

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As long as policy makers are not able to spread the supply of a particular commodity around the country, decisions to import that particular commodity will be uniformed. That is why market-oriented budgeting is critical in showing the best price for a farmer to break-even, indicating excess or shortages of different commodities. Unless we know the best price for an orange or tomato, it is difficult to see if farmers are incurring losses or earning profits. Equitable distribution of horticultural commodities across the country can show volumes during gluts and how much could be preserved to cover shortage periods.

Supply side considerations

On the supply side, there is definite need for evidence before deciding to import commodities. Important questions include: What volumes of commodities are being produced and consumed at household and community level and what surpluses are finding their way to the market?  To answer this question, farmers and value chain actors should keep basic records to show supply trends from different production corridors.

Most African countries are famous for producing a diverse range of commodities, mostly during different seasons. The commodities range from different types of livestock, crops such as small grains, legumes (beans, groundnuts, cowpeas, etc.,), fruits (exotic and indigenous), vegetables (exotic and indigenous), maize, wheat and non-consumables like cotton and tobacco. These commodities are produced on different land sizes from communal, resettlement, large scale to large estates.  A critical question is what role does each type of land play in producing food before a country decides to import or export food?  Unfortunately, it seems African countries have not invested in clearly aligning production systems to land sizes.  A large estate can be seen producing cabbages that should be produced in the backyards of peri-urban dwellers or gardens run by rural grandmothers.

In addition, each country has different agro-ecological regions that support the production capacity of various commodities. For instance, some regions are associated with horticulture while other are known for fruits and yet others famous for livestock. This categorization provides a broader picture showing the way supplies of different commodities can be organized. Some regions have high production capacity for specific commodities. Regions with lower production capacity for particular commodities are the demand targets, ensuring better returns locally. Once a commodity is in abundance, it does not have a market where it is produced abundantly. For instance, in Zimbabwe bananas do not have a market in Honde Valley.

Since most African agricultural production patterns are seasonal due to the natural characteristics of different commodities, no matter, the amount of research exerted, commodities like small grains cannot be grown during winter in East and Southern Africa.  Wild fruits, due to their natural characteristics, are always in and out of season. The availability of irrigation can see some commodities like green mealies being grown all-year round. The potential of irrigation to address seasonal availability of food is now well known but not fully exploited as countries feel more comfortable to import food at the slightest sign of food shortages.

Demand side imperatives

The majority of African countries are witnessing a growth in different socio-economic classes and this is driving changes in consumption patterns, tastes and preferences. These tastes and preferences can be further broken down according to age, gender, health consciousness literacy and location.  High mobility within the local population is also creating and expanding markets for different commodities. For instance, people who come from Chipinge district of Zimbabwe where they grew up eating yams called Madhumbe but now stay in Harare have created demand for Madhumbe in Harare. Those from Muzarabani district where they grew up eating Masawu and now live in Bulawayo have promoted the consumption of Masawu in Bulawayo, cultivating a new market for the commodity.

Another telling trend is rural urbanization. With urbanization spreading to rural areas across Africa, most facilities that used to be a preserve of cities are now found in most rural areas. Such facilities include electricity, transport networks, food processing enterprises, retail businesses and other services that are creating wage employment in rural areas.  Financial institutions like banks and micro finance institutions are also picking their spot in rural areas.  All these trends are influencing consumption patterns in rural areas. Given this shifting landscape, there is need for decision makers to answer these questions:

  1. What are the price trends in different markets? This should inform a comparative analysis between prices in different markets, for instance the price of banana in Mutare and Bulawayo versus sources like Honde Valley. Tracking prices and sources will show the highest and normal price of a commodity.
  2. What are the break-even prices for different commodities? If there was an alternative market, which commodities would fetch better prices or economically reasonable prices, assuming there are markets where prices tend to be high?  What is the benchmark that can be used to compare prices in different markets?  After removing all marketing-related costs, it is possible that a box of banana that costs $3 in Mutare, fetches $15 in Bulawayo.  Unless we know bench mark prices that can enable farmers to earn profit, sustain or grow their business, it is difficult to tell which price is good or bad.
  3. What is the effective demand for different commodities? This refers to consumers’ willingness versus ability to buy a commodity.  Demand is not just general but related to consumers’ ability to afford a commodity because they have income that enables them to obtain commodities in line with their tastes and preferences.
  4. Who are the customers for different commodities? We cannot say everyone is willing and able to afford an orange. That is why consumers are defined by class, gender, location, age, ethnicity, religion, income class and other factors.  Not everyone wants to consume small grains, even if they may have income to afford small grains. That is why consumers have to be carefully categorized in order to create a food basket for different classes of consumers.  It is not just about importing food without understanding consumers.  If you are going to import wheat or grapes, which consumer group are you targeting?  Otherwise, you can spend foreign currency importing commodities for a small class of consumers who can even afford to import their own food. In a poor country like Zimbabwe how many consumers are interested in the importation of wheat?

The power of understanding all year round distribution and consumption patterns

In the event of a commodity’s price going beyond the reach of specific consumers like poor people or a commodity being out of season, what are the close substitutes?  If orange prices go up, what fruits do consumers buy in order to get the same satisfaction for the same budget?  The right questions can see consumers mentioning alternative substitutes and reasons for their choices.  Unless we understand all year round distribution and consumption patterns of different commodities, we cannot make informed decisions regarding exporting or importing food. Would consumers consider processed or preserved products of the same commodities and get similar satisfaction?  Since there are times when mangoes are in a glut, if we dry or produce juice during those periods, would consumers get the same satisfaction if the processed products are availed during shortages?  Would biltong give consumers the same satisfaction they get from fresh beef?

Have we exhausted all distribution channels for particular commodities to a point of at least getting break-even prices that enable farmers to continue farming?  Without such evidence, the country can import for one region or city when other cities and regions have gluts of the same commodity.  Are imports coming in as a way of outcompeting relatively high local prices due to shortages or high local cost of production?  Imports from South African may simply be attracted into Zimbabwe by higher prices being offered for the same commodity in Zimbabwe compared to South Africa.  It could be a cost push factor.  Shortages can be an advantage to farmers who produce consistently because there are times when they incur losses due to gluts and should be allowed to recoup their costs during shortages.

The cost-benefit analysis of exporting

If a poor country has surplus and considering to export, it is important to assess the cost benefit analysis of export different food commodities. Without this action, the excitement of earning forex can create local shortages, triggering increases in the price of local commodities.  We can unknowingly export potatoes but compromise the quality of local food (people eating junk low quality food when the best food is being exported). This can also compromise nutrition as necessities become luxuries.  What gaps are we creating as we export?  Is the foreign currency earned being directly channeled back into agriculture in order to improve agricultural competitiveness?  How do farmers benefit from their proceeds if foreign currency goes to the national pool? Why are tobacco farmers earning export returns in local currency when forex should be used as a store of value for their enterprises?  If farmers want to import chemicals, fertilizer and other inputs, they should be able to do it directly through their farmers’ associations than the forex being given to companies to import inputs on farmers’ behalf. When such inputs lend, they are more expensive as the importing companies want to earn more by charging exorbitant prices, way beyond the capacity of farmers to buy.

An important second action is determining steps being taken to ensure commodities move from high production areas to low production areas before we rush to import.  Managing the national distribution of food can translate to best return on investment (ROI) and ensure we tackle issues like nutrition and food security that ultimately affect the national budget if not handled properly.  As we distribute food, we need to rationalize food availability through equitable wealth and nutrition distribution in the form of food.  It is not ideal to leave communities in Binga consuming fish, those in Honde Valley consuming bananas and those in Chivi just surviving on small grains.

Food can really be a smart way of distributing wealth through commodities. There are limits to which development interventions and models from outside can solve local challenges. In as much as development agencies can pour money into district or provincial resilience projects, natural and external factors like climate change may set boundaries and limits of what can be achieved. Setting up agribusiness hubs in high production areas and close to food insecure regions can be a better solution than forcing dry regions to produce small grains, rehabilitate boreholes and keep livestock. What are the processing and preservation measures in place to cater for times of shortage and import substitution? Have we exhausted all processing avenues before rushing to import?  What infrastructure development plans are in place to ensure production and supply is consistent? To what extent have we reached the maximum capacity of our dams and irrigation schemes to the point of importing onions, oranges and apples?

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

How the knowledge economy is inspiring new roles and responsibilities

Developing countries that remain stuck in colonial governance structures and forms of business are sleeping-walking into all kinds of crises. Some of the colonial forms of business still being practiced in most African countries include sole trader (traditional enterprises), companies, cooperatives and partnerships which function through mutual agreement to pool resources and skills together for mutual benefit.

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While all the above are profit-oriented organizations, on the other side are non-profit entities like NGOs and government departments like parastatals. Some parastatals have more of a national security function than profit motive, especially those responsible for electricity, water, food security and public transport like railway systems.  Borrowing from colonial times, parastatals have traditionally been set up to provide affordable services to the majority who would otherwise be unable to access services like electricity if such services were fully commercialized. Services like water, public transport and national food security are necessities which have to be affordable to the majority.

 

Where parastatals like Zimbabwe’s Agricultural and Rural Development Authority (ARDA) earn profit, the main idea is to indicate that government services are not entirely free so that the majority do not become too dependent on government when they could fend for themselves. However, government safety nets have traditionally come in to cater for genuine social welfare cases.

 

Defining knowledge needs for the new knowledge economy

In the new knowledge economy, the above institutional arrangements and enterprises have to be revisited so that they become relevant to the context of high unemployment among youth and women, for instance. Many smallholder farmers and SMEs are striving to join the mainstream economy. While some of these bottom of the pyramid actors are in the process of commercializing, they have distinct characteristics such as lack of access to information and knowledge necessary for development.  Who is going to generate and share vital knowledge with these actors so that they are able to start and run their businesses profitably?

 

The government and parastatals cannot do so because they are more of administrators whose main roles include providing a conducive operating environment. For instance, the role of extension officers is to teach farmers to produce. They are not business people or business experts. Many government departments are not profit-oriented but get 100% support from the fiscus. They are motivated by budget allocations as opposed to profitability and market share. On the other hand, although parastatals may have some levels of commercialization, their mandate is providing key national services like water, energy and ensuring food security, for example the Grain Marketing Board. Parastatals are profit-oriented to some extent but they are subsidized by financial injection from the government.

 

The private sector does its own private things and purely for profit. NGOs and international development agencies focus on vulnerable households mainly to boost social capital. For instance, most international organizations and NGOs are not profit-oriented but have 100% access to free funds from donors. In most rural districts, NGOs select wards that have more vulnerable households and try to work with a specific number like 100 000 households for three to five years. However, there is no organization focusing on wards that have economic potential so that they anchor local socio-economic development.

 

The missing knowledge broker

Given the way information and knowledge tends to be siloed within different actors and institutions, as mentioned above, there is definite need for a knowledge broker who can generate and share knowledge that will uplift  people at the bottom of the pyramid onto commercial pathways up to the private sector. This role can be fulfilled by a social entrepreneur, who is currently missing in many countries. As a knowledge broker, the social entrepreneur will not only lift marginalized people out of the weeds and show them their future but, will also provide services that are subsidized with profit-orientation at the end.

 

Information and knowledge support services from the social entrepreneur will target groups at different levels of commercialization so that they get into the mainstream economy. Most smallholder farmers and others at the bottom of the pyramid will not be able to pay for critical knowledge on their own. Support from the social entrepreneur will not be permanent but will be stopped when a significant portion of those targeted are able to do meet their information and knowledge needs sustainably.

 

Using a socio-economic vantage point

As a knowledge broker, the social entrepreneur can see critical information and opportunities on both social and economic sides. As a result, the social entrepreneur will focus on integrating marginalized actors into  economic pathways while parastatals provide subsidized national services. Many smallholder farmers and traders in Africa are tearing themselves away from working with private companies that do not provide social services.

 

Development organizations and governments should identify and support social enterprises to avoid looking around for aid each time there is a challenge and promoting dependency.  Banks should also be keen to work with social entrepreneurs because that is how they can create a new bankable clientele base. In countries like Zimbabwe, more than 70% of potential bank clients are now in the SME sector, 40% of whom have been spat out by company closures and no longer have pay slips. Twenty percent (20%) of SMEs comprise the young generation who have never opened a bank account but started business with mobile money.

 

Another group comprises smallholder farmers most of whom have never opened a bank account although some could have had post office savings accounts which closed a long time ago.  All these are getting their money in cash through the informal market.  For Zimbabwe, there is also another cluster comprising A1 and A2 farmers who got onto the land more than a decade ago but have never been able to access  finance from banks due to the contested land issue. Many A2 farmers are also struggling to make 99 year leases bankable.  All commodities produced by these farmers over the past years are not linked to banks.  In addition, more than 95% of SMEs have been discouraged from formalizing by prohibitive company registrations.

 

Importance of unlocking entrepreneurship knowledge

Information and knowledge critical for entrepreneurship remains locked in institutions which cannot guarantee they will benefit from releasing their knowledge to clients. This is where the social entrepreneur becomes fundamental in brokering knowledge and skills from SMEs who are not working with banks and do not yet see the benefit of sharing their information with banks. When SMEs do not work with banks, they do not see the need to let the bank know their sales records.

 

When government supports parastatals and government departments such a budget is not converted into profit but is just spending. The same applies with NGOs which spend money and ask for more resources through budgets. Unfortunately, there is no pathway for extending free funds to the private player who is pursuing a profit motive but has to be cushioned in order to continue serving the under-privileged farmers.  This gap means there is no incentive for a private player to work in private-public partnership models. As a result, private players in developing countries continue to struggle on their own, government departments continue doing their thing, the same applies to parastatals and development organizations. Development organizations only come to the private player when commodities that they supported  farmers to produce are now looking for a market. Ironically, the private player is expected to come and buy these commodities, some of questionable quality, using his/her own money and transport irrespective of cost-benefit-analysis.

 

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