Why African countries should question middle class solutions to poverty

Why African countries should question middle class solutions to poverty

One of the reasons African development is taking long to achieve its intended outcomes is due to  class structures which have become barriers to knowledge-based development. Agricultural value chain actors identify niche markets that speak to their class.  Smallholder farmers, vendors and consumers from high density areas identify with informal markets such as Mbare, Sakubva, Malaleni, Chikwanha and others.  They may go to supermarkets but their heart and freedom is with people’s markets.  On the other hand, hotels and food chain stores tend to link up and be comfortable with registered institutional buyers which operate as formally registered companies. Formal requirements by development partners who insist that those keen to provide services to them should be formerly registered entities to be on the buyers’ list also end up privileging a certain class of organisations – those able to register as a company.  This means, smallholder farmers who cannot meet this requirement, even if they may have superior products, are excluded from this class.

21 September 2015

Examples of smallholder and small-scale processing enterprises

Responding to the collapse of class structure in some developing countries

Over the past decade and half, Zimbabweans have witnessed the collapse of formal agro-industries and related class structures.  In as much as smallholder farmers are producing diverse agriculture commodities,  there still intangible class barriers preventing strong links between the majority of farmers and institutional buyers like processing companies, hotels and food chain stores. As a result, these farmers resort to the people’s market which is in line with their class.

While banking has existed for more than 100 years in some African countries, 90% of smallholder farmers have not opened bank accounts because they associate banks with the urban middle class, those formally employed and those who own immovable assets in urban areas.  One would expect, African financial institutions to recognize potential collateral within certain rural communities, e.g. good climatic conditions, economic drivers such as availability of surface water, community cohesion, local accountability structures such as chiefs, local assets like cattle and, more importantly, local knowledge acquired over years and institutionalized into community norms and values.

Climatic conditions favourable to consistent agricultural production can be a more powerful form of collateral than a house in an urban area which can be very difficult to sell particularly during economic hardships when there are no buyers.  Some of these business opportunities have been identified by informal traders who are now entering into unwritten contracts with farmers to finance producers in cash or kind (providing inputs) on condition that they share proceeds upon sales.  This is a very practical business model.  Such contracts are mainly built around trust and relationships as both parties look forward to the growth of their collective business – contributing to a win-win situation.

The collapse of class structures in the food market is also due to an increase in free-play in market forces as shown by the emergence of many players in agriculture value chains – traders, roadside markets, small processors, etc. This means producers have more market options and may no longer be comfortable being locked in contractual arrangements to save a certain class.  Prevailing market dynamics require fast and prompt service delivery.  Where a farmer’s business proposal to a bank would take six months to be approved,  new farmers cannot afford to wait that long while seeing opportunities disappearing.  This is one reason why traders can end up going for high cost finance whose main attraction is easy access so that they respond quickly to market needs and opportunities.  Since they are still locked in the middle class mind-set, most African financial institutions are still not agile enough to meet the requirements of fast-moving agricultural markets.

Interventions by development partners also miss their intended results because of long processes before funds are released to intended communities. By the time these funds are released most enterprising farmers will have gone to look for alternatives.  As a result, some rural people end up concluding that development programmes are meant for the very poor class who have no options.  Regarding policy formulation, some rural communities think policies are meant for the middle class.  They can’t identify their roles in policy formulation and thus don’t see the need to contribute resources towards the success of such policies.

The role of intermediaries in managing polarities between class structures

There are increasing opportunities for intermediaries to broker knowledge between class structures in African countries. Since the market is the main meeting point for commodities from different classes, intermediaries find areas of common interest and overlaps between class structures. Most markets do not have information on the amount of support being provided to producers by development organisations and financial institutions.  On the other hand, these institutions also do not have a firm idea of total market supply and demand trends. It becomes the role of intermediaries to produce fairly reliable projections based on insights from both sides.  Some smallholder farmers have traditionally associated high value crops like cauliflower, peas, green beans, broccoli and garlic with the middle class and commercial farmers. These crops are still being imported because most smallholder farmers think they are for a certain class yet they are demanded by low income consumers.  It’s the role of intermediaries to say, “look there is an opportunity to make money there.”

Most rural people in Zimbabwe grew up associating dry vegetables (mufushwa, nyevhe, etc.,) with poor people.   A paradigm shift has seen the middle class going for such foods including small grains, cow peas and indigenous chickens which are now available in some hotels and food chain stores.  While some farmers have embraced broiler production in rural areas, there is a growing market for indigenous chickens which are easily produced in rural areas. The proliferation of eating places serving indigenous food is an indication of how the notion of class has shifted in Zimbabwe.

A number of smallholder farmers are not comfortable with classes because they think contractors make them price takers as opposed to informal markets which cater for all classes.  Some class issues are tied with policies which cannot be changed overnight – e.g., buying procedures insisting on three quotations, paying after 21 days, etc. The majority of smallholders and traders think the 21 day payment period is meant for those with money who don’t mind staying long before re-ordering.  Historically this has been the case in the evolution of farmer unions who still think the commercial farmer is meant for a certain class of buyers yet when food flows into markets like Mbare – there is no distinction between what comes from CFU, ZFU, etc.  The situation is the same at corporate level where we have the ZNCC and CZI whose membership pool is now almost the same.  Millers associations should also try to accommodate all the grinding mills across the country rather than segregating for the sake of it.

A few years back, bottled water used to be associated with the middle class yet it is now common at informal markets like Mbare.  People interested in variety are now frequenting informal markets like Mbare.  It is no longer about class but value for money. An intermediary uncovers all these relationships and webs to prevent misallocation of resources.  A farmer can produce with a food chain store in mind when such a market is already taken or there is already some vertical integration.  Class structures no longer represent the way the world works in practice. African countries should stop relying on privileged perspectives on development and economic growth but embrace wisdom from all classes of society.

More information:

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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