How Agriculture markets are a combination of Art and Science
The science of marketing agricultural commodities is easy, straight forward and tangible. It can be taught in a classroom or through a textbook or manual. But sadly, the science without the art often falls flat on its face. It is hollow and needs the artistic part. In the majority of thriving African agricultural markets, farmers and traders have an artistic way of demonstrating practical wisdom and this enables them to take appropriate action when facing unique circumstances. Some farmers and traders seem to have been born with a marketing inner sense while others acquire this through considerable amounts of hard work. Many agricultural organisations or programmes do not realise that farmers and traders are real people with feelings, knowledge, hopes and fears. There are times when no amount of one way communication will change people’s habits if other desires and ambitions are not addressed.
This level of awareness has seen ZB Bank partnering with eMKambo in implementing a market-based loan facility targeting 15 000 traders in Zimbabwe by December 2015. Under this facility, eMKambo has become an agent for ZB Bank in more than 20 agriculture markets. The agency banking model that has been embraced by ZB Bank follows are realisation that the bank needs to be more intimately closer to its clients. It is an entirely new business model where a bank has to fully know its clients including their types of business, business cycles as well as daily decisions. Under this model, ZB Bank has embraced the kind of flexibility necessary to understand informal agriculture markets which are now holding more than 60% of agriculture commodities in Zimbabwe daily.
In this partnership, representing the artistic side of agriculture marketing, eMKambo’s main intermediary roles include gathering and consolidating knowledge around niche markets for ZB Bank market loans. Agriculture markets are a different clientele that has to be profiled in order to be clearly understood not just as individual traders but as part of the whole market. Information about an individual farmer or trader is meaningless without information about the whole market in terms of size, commodities, actors, coping mechanisms, challenges and many other parameters. Conventional banking tools and approaches will not be adequate in provide accurate visibility into the market, hence the need for an intermediary like eMKambo.
This agency banking model is bringing banking services closer to the market so that deposits, withdrawals and savings are done right at the market. While ZB Bank’s main roles include availing affordable loans, eMKambo roles include:
- Identifying business growth cycles.
- Building the capacity of traders and farmers.
- Market advisory services and providing a comfort zone for banks who have traditionally considered informal markets and farmers too risk.
- Providing a market-based credit rating system.
- Aggregating the whole market as an institution.
Seventy per cent of people working in informal agriculture markets survive entirely on the market. As an intermediary or knowledge broker, eMKambo understands both the bank and the market. Usually a broker comes in where there has been bad blood between two parties. Traditionally, traders have said banks don’t want to extend loans to them while banks have said traders are not organised. The broker builds a common ground and tries to broaden points of intersection. That role goes beyond just creating a database but fully understanding all the dynamics.
Market data gathered and processed into knowledge by eMKambo does not only provide acute insights into the size and market dynamics but also enhances relationships that are becoming the main form of collateral. While each trader and farmer may know about their commodities, eMKambo has knowledge about both the individual trader/farmer and the market. These insights are very important in determining success and collective impact. In the market, farmers and traders are connected to their peers in social networks and communities of practice that thrive on trusted knowledge-sharing practices.
The agency banking model is a departure from command and control which has characterised traditional banking for centuries. Informal agriculture markets show that in the networking era, reputation is more important if one is to compete. In this case, eMKambo is a network weaver, connecting ZB Bank with traders, farmers, traders, consumers and transporters to make the network stronger. It ensures all relationships are exercised through influence, persuasion and trust. Through gathering real-time market intelligence, eMKambo ensures fluid information and knowledge flows easily among actors, refining and anchoring learning processes. Below is an example of the intelligence that is anchoring informal markets as a business ecosystem.
Brief analysis of Mbare Agricultural Wholesale Market: January to June 2015
The first six month of 2015 saw a total of 19 products being sold in the wholesale market generating an estimated revenue of $ 7,773,060.17 from around Zimbabwe. A few imports also tried to satisfy local demand during this period, mainly from South Africa.
Table 1: Units supplied
Graph 1: Total Estimated revenue per produce
Chart 1: E R Share by produce type
Graph 2: TRADER/FARMER PARTICIPANTS IN THE WHOLESALE MARKET
Through the agency banking model, the market can also lock funds in the market for farmers, traders, transporters and other actors so much that bringing commodities to the market is the only way to access such funding. This is more like a derivative market. ZB Bank injects money into agriculture via the market. The money is accessed by farmers and traders who have bank accounts with the bank. Customers with ZB bank accounts can come to the market without cash knowing that they will withdraw money from the agent (eMKambo) at the market for purposes of buying commodities.
eMkambo Call Centre:
0771 859000-5/ 0716 331140-5 / 0739 866 343-6