Key elements of market – informed agribusiness Models

Like all businesses, agribusinesses should be built around a product/service and a niche market. Ideally, more products and services spawn more business models with some models eventually becoming separate business units.  When that happens, it becomes easy to assess the viability of each business model. Contrary to some beliefs, in a business model, money is just like salt. Without meat or vegetables, salt is useless.  The salt owner should be interested in those with meat, potatoes, tomatoes and other products. On the other hand, while some commodities need salt, some consumers don’t need much salt.

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Confusing a business plan with a business model

Most agribusinesses lack models.  They confuse a business plan with a business model yet a plan assists in executing a model.  A model is an attempt to turn your innovation into profit or economic value.  The following pillars help to characterize a business model without over-simplifying the complexity in agricultural value chains

    1. The owner -who will provide the product or service.
    1. Value proposition – What need or solution do you want to address?  Have you addressed a need?  Absence of a value proposition is the main reason why we end up with copycats who just watch what another person is doing and try to imitate rather than focusing on the customer.  A need is a value proposition.  What loans are needed from the customer’s perspective?  To what extent is a reasonable interest rate a solution to farmers?  What if loan amount is the real need?  What if the main issue is unfavorable conditions that insist on collateral not in line with the agribusiness?
    1. Market segmentation – Who are you targeting?  Are you targeting farmers, traders, transporters or individual consumers?  A clear target will enable you to model in line with business behavior.  Most models, especially financial ones, are locked in systems.  It is important to create your own market niche that can inform what products to provide.
    1. Distribution channel – What is your distribution channel?  How are you going to reach your customers cost-effectively?  Most banks ended up setting up brick and mortar structure to establish presence. However, the entire value chain may be better supported by ICT-inspired channels.  Where Point of Sale (POS) machines are missing at other value chain nodes, clients get stuck.  For instance, loan disbursement will not be useful if traders cannot transact from rural agro-dealers where they stay.  Neither can loan repayment be smooth.  When clients get money, they want to use it somewhere.  It is important to understand destinations where money will end up being used.  That will enable building of other networks like between farmers and agro-dealers who also know what farmers need.  Concentrating on the immediate client is a big mistake, particularly in the network economy.
    1. Identify niche markets – Invest in building relationships or ride on partners who have already built networks. That is how you can build more models and networks.
    1. Best use of resources – resource configuration.  Should you go and rent a building or work through agents?
    1. Identify core competencies – What are the skills, knowledge, abilities, expertise and attitude available for supporting all other pillars?
    1. Networks – You cannot work in isolation.  Which partners are you going to collaborate with?  Trying to dominate the whole value chain speaks to unjustified enrichment at the expense of other actors.

Some of the fundamental considerations in agribusiness models

It should be about capturing everyone.  Start with early adopters who can assist you in refining as you go.  Do not dream of creating wealth if you are not creating wealth for others. Starting with others builds a sustainable base for your wealth.  From early adopters you are able to refine your financial strategy. Most business models have too many messages which end up confusing potential clients. Concentrate on a core message and few benefits.

If tobacco farmers who come to the market once a year get preference for cash from banks, what about traders who are in the market throughout the year and drive food markets?  That ignorance is counter-productive because it lures many farmers into tobacco, leaving other potentially lucrative commodities.  Why don’t banks enable traders to also get cash when they need it?  That is why traders end up locking their money in the market with their relationships with farmers.  They know that once they bank it, the money will be given to external value chain actors who are not interested in agricultural markets.

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

If acronyms were a solution, poverty would be history in many African communities

Almost all development interventions into Africa are framed into acronyms. eMKambo will not give examples because there are far too many acronyms to mention and you know what we mean. Although they are designed to make programmes easy to remember, most acronyms turn development interventions into slogans. As if that is not enough, acronyms have not become embedded into African idioms or metaphors through which Africans have traditionally filtered ordinary ideas into knowledge routines.

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Failure to gauge readiness levels

Condensing programmes and projects into acronyms has masked the need to gauge a community’s readiness for a new intervention. The underlying assumption in every new community project is that communities are always ready for what comes from outside.  Yet in reality, readiness may take much longer than three years, at which point some programmes will be phasing out. African communities are not always waiting for new projects but continue innovating and coping with challenges whether new programmes come or not. Sometimes old knowledge prevents new knowledge from coming into the community.  It takes keen interest to make sense of that situation. A lot of resources have been wasted and continue to be wasted due to unwillingness or inability to figure out whether communities are ready for new projects/ideas/concepts/knowledge and practices.

Toward knowledge readiness indices

eMKambo is more than three years into identifying and codifying contextual readiness indices for agricultural communities. A critical question in this process is: What is the minimum level of readiness for farmers and specific value chain actors to understand principles and potential outcomes of an agricultural intervention? Without thorough understanding of readiness levels, it is easy to waste resources since adoption may not be achieved. Gauging readiness also implies understanding what people are currently engaged in, sources of knowledge, capacity to unlearn and accommodate new knowledge.

African communities have been exposed to too many ideas, mindsets and approaches from diverse sources including NGOs and politicians such that it is a mistake to assume that they will simply jump for any new idea immediately. It may take more than two years for readiness to seriously kick in. A related question is: How do we figure out the market’s readiness for new commodities or new finance? Acronyms cannot answer such a question, neither are they effective in creating awareness about a development programme’s principles and potential outcomes. They are not vehicles for skills or knowledge acquisition because that requires experiential learning.  That is why a readiness assessment index becomes very important.

Filtering community knowledge into engagement

Knowledge is most useful when it can be translated into meaningful community engagement and that goes beyond acronyms. It means communities have to be adequately informed in order to take part in a much longer and meandering path for increasing the quality, impact, and effectiveness of knowledge-driven community engagement. People may have all the information but that does not translate to community engagement without intentional efforts at brokering relationships.

A fundamental part of developing a community’s readiness index is building local people’s skills and tools in identifying the most relevant and credible evidence for their context. Whether communicating among themselves or making their case to policymakers and prospective funders, it is crucial that communities are confident in assessing and using relevant sources of evidence. Generating high-quality evidence is a community effort and is the result of everyone’s willingness to ensure members are fully equipped with the information they need. Rather than be passive recipients of what comes from outside, community members have to actively engage in the production and sharing of evidence.

Farmers and communities are not mere recipients of information

A community’s ability to evaluate the quality and credibility of information is becoming more important today as information sources are continuing to increase. It means they have to continuously update their evidence using their own individual and collective learning skills. Very few development agencies focus on strengthening communities’ ability to critically assess the information they receive. Instead, they continue pushing information to communities irrespective of readiness to receive and absorb such information. As a result, acronyms are forgotten as soon as the programme ends and communities go back to their routines and knowledge rituals.

When high quality evidence is available, farmers and communities can develop stronger awareness of the implications and risks associated with their potential choices. In this regard, the key imperative identifying and understanding what constitutes appropriate evidence and how to put that into practice.  In an era in which the availability of information is no longer a problem, African communities should be assisted to use credible sources of evidence.  Every time information is provided to farmers, it needs to be logical in structure and clearly communicate objectives and outcomes rather than be too general.

When farmers and communities are appropriately engaged in information generation and dissemination, they can facilitate professionals and researchers’ understanding of their needs.  In most cases, acronyms hide more than they should reveal in empowering communities. On the other hand, local knowledge sharing routines and rituals in most African communities are designed to enable heart to heart communication among all community members. That is how trust is built and community solidarity is enhanced. Rather than sticking with acronyms, developments actors can use these community approaches to reach more formal results faster, with less resistance to change. Each farmer or community member has a unique way of combining wisdom from diverse sources.  That is why an individual farmer absorbs knowledge from an agronomist, animal scientist, nutritionist, engineer, economist, environmentalist and many other professions and still continue to remain sane.

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

Formulae for valuating intangible assets long overdue in Africa

Capitalism may be accused of misleading many African countries into limiting the valuation of their resources to tangible assets such as buildings, minerals, land and wildlife. However, failure to account for intangible assets like local experiential knowledge, wisdom, trust, relationships and emotional richness cannot be blamed on capitalism or modernization. While they are ambitious to become knowledge economies, African countries have not yet developed formulae for valuating their intangible resources in ways that can get these assets recognized as collateral in the modernizing global economy.  It doesn’t help to measure knowledge and human capital in academic qualifications excluding abundant unspoken and undocumented knowledge among ordinary people. Continuous over-rating of academic and documented knowledge is preventing African countries from realizing their authentic socio-economic value.

Accounting for intangible agricultural assets

A majority of African smallholder farmers have depleted their livestock, soil nutrients, water, wood, fish and other resources in sending their children to school. However, the promise of formal education has disappointed them and their children who, after graduating, cannot find employment that would enable them replenish resources that have been depleted over decades. There should be appropriate formulae for valuating resources that have been sucked from farming communities by formal education. Due to the absence of reliable markets, graduates from agricultural colleges who have ventured into agriculture cannot earn enough from agricultural activities to repay investments into their knowledge.

Agriculture is a combination of tangible assets (seed, equipment, livestock, cash, etc.,.) and intangible assets such as experience, knowledge, relationships, passion, ambitions, emotional depth, mental strengths, negotiation skills, relationships, trust and many others.  On the other hand, agricultural markets are more about intangible collateral such as knowledge, experience, relationships, trust and less about tangible assets.  While market experience is not a tangible asset, it has more value than tangible assets because the value of agricultural commodities is added in the market.  It is through intangible assets that farmers and traders are able to earn returns on their investment. Without these factors, sustainability of the whole agricultural sector is compromised. Intangible assets held by farmers and traders at individual level can be worth more than a tractor or a house in the city. However, because there is no way of valuing and recognizing such assets, knowledgeable farmers and traders remain in the economic fringes.

How the financial sector continues to looks at these issues

Since they have not invested in understanding intangible assets, financial institutions in Africa still consider tangible assets the only worthwhile forms of collateral. In a knowledge economy where intangible assets like innovation can build something out of nothing, one assumes financial institutions should rapidly be revisiting their notions of collateral to start with intangible collateral towards tangible collateral. Agribusiness models should be built from intangible assets to inform tangible assets required for effective production such as tractors, ploughs, water, technology, crop varieties, livestock breeds and others. Where agricultural financing is informed entirely by tangible assets, it constrains possibilities for innovation and emergence of new sources of value. Innovative youths armed with intangible assets are denied opportunities because they do not have tangible collateral.

The same people with tangible assets continue to benefit from financial institutions while innovative young people languish in poverty and unemployment. As if that is not enough, Africa has an over-supply of the same value chain models due to the financial sector’s preference for similar models that have reached their ceiling.  This practice promotes a copycat syndrome where several youths end up getting into tomato and eggs value chains because they are the ones financed by banks at the expense of potentially viable models considered green field. A dire need for new valuation models is also visible in how African companies which close down are assessed. Main considerations when valuating such companies takes into account equipment and infrastructure without considering investment in knowledge and experience built during the time the company was functioning.

 Why not convert the size of a market into collateral?

There is no longer any doubt that informal markets are a critical component of Africa’s invisible economy that has to be accurately measured and included in GDP metrics. With the right formulae, policy makers should be able to convert the size of informal agricultural markets into collateral. The collective experience in many informal African markets of large African cities like Harare, Lusaka, Accra, Nairobi, Cairo and Lagos can be more than 100 years. Very few corporate companies, who are considered bankable by financial institutions, have such knowledge and experience. In informal markets, knowledge and trends are continuously adapted and perfected in ways that increase credibility and legitimacy.

If properly captured and understood, knowledge and experience in African farming communities and agricultural markets can inform investment opportunities along several value chains. Investing in particular farming districts should start from market experiences of commodities and farmers from those districts. At the moment, most surveys focus on whether respondents have gone through formal education as opposed to deep inquiry about other forms of local knowledge that keep communities resilient. Each farming community and market has its own capacity to absorb knowledge and that capacity is determined by participants’ income levels, geographical location, demography and other factors.  If you take fruits like grapes to a remote rural market, they may not find buyers because of low income levels. Some  markets can determine the levels of imports into the country based on consumer tastes, demand and other factors.

The role of evidence

Limited attention to evidence is the main reason why African countries are failing to utilize their resources optimally. For instance, market evidence should inform capability building. At the moment, most production practices follow dead data in the form of previous year’s prices and production figures. There are no formulae for supporting predictive capacity.  As a result, intangible knowledge from farmers and informal markets is not being used to inform curricular development. Relevant valuation methodologies will also prevent the current under-utilization of local knowledge and create strong conduits for harnessing such knowledge for socio-economic development. Meanwhile the whole of Africa is importing more than $40 billion of food annually in cash.  That shows Africans have money but lack the right knowledge models for putting that money into more productive uses. This situation may only change through revisiting priorities, informed by evidence generated by appropriate valuation mechanisms.

 

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

How the informal economy tackles the middle class trap

In African countries where agriculture is a major socio-economic activity, policy makers and development agencies seem determined to move economic activities from agriculture to manufacturing. The whole discourse around value addition suggests a strong desire to get rid of informal marketing of agricultural commodities and convert all commodities into manufactured products which can be bought and sold in supermarkets or exported as finished goods. While that sounds logical and sensible, there is evidence showing that such a transition will not by-pass the informal economy.

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Lessons from South Africa’s middle class trap

What the South African economy is going through is an important indicator of the fact that a distinct development approach unique to African contexts should not ignore the informal economy. By embracing the Western model of economic development, South Africa has become locked into a middle class trap without realizing it. The country is now being forced to develop agriculture as a second economy because the current industrial system has no room the majority of people to participate as economic actors. Inequality, poverty and unemployment are increasing due to deep structural challenges imposed by the Western model of economic development. The domestic market is too small for the level of industrialization that has been provoked in South Africa.

You cannot be a successful manufacturing country when the domestic market cannot afford what you are producing. Due to insufficient local buying power, South Africa has reached the limits of its industrialization. It is now trying to use the supermarket model to break out of structural economic challenges. That is why South African super market chains are spreading their wings into neighboring African countries and as far as East Africa.  In an aggressive effort to broaden demand for products from its sprawling industrial sector, South African supermarkets are getting into countries such as Zimbabwe, Mozambique, Malawi, Zambia and other countries where local companies cannot compete due to poor supply chains.

Besides triggering resentment in the business circles of neighboring countries, the super market model is not sustainable because the middle class in those countries is too small to sustain levels of production in South Africa. The supermarket model focuses on meeting the needs of the middle class who earn more than $4/day. On the other hand, the majority of African consumers earn less than $1/day.  That class does not go to supermarkets but resort to the informal market. No wonder the informal market is expanding in many African countries. Manufacturing is a good idea but once it puts finished products beyond the reach of the majority of consumers, it stops contributing to economic growth.  It becomes big business without growth or employment creation and that is not sustainable at all.

The importance of fully understanding domestic markets

Assuming developing countries are determined to move completely from raw commodities to manufactured agricultural products, it is critical to fully understand the domestic market before exploring foreign markets which tend to be highly competitive and antagonistic. You cannot talk of value addition without an accurate sense of how much stocks are available in domestic markets per given period.  Every country should strive to know the local demand for each of its commodities ranging from horticulture, field crops and livestock. Such intelligence should be disaggregated according to population, buying power, class, age, gender, consumer taste, consumption patterns and other important factors. Where   consumption of particular commodities is going up or down or remaining stagnant, reasons should be teased out in order to inform socio-economic decisions.

Diversifying sources of evidence

While much of the practical socio-economic wisdom is now within the informal economy, economists and financial advisors in developing countries are still reluctant or unable to learn from this important sector. They prefer sticking to text book knowledge which, unfortunately, is being borrowed from the West where the context is different.  Like all truth, knowledge from the informal economy is likely to be ridiculed first, violently opposed and then finally accepted as self-evident. One of the reasons this knowledge is being ignored is because it flies in the face of what is considered common sense in academic and policy circles.  Having invested a lot of resources into what they think is knowledge, it is difficult for formal knowledge systems to accept that reliable knowledge can be found in unexpected places like informal markets. However, developing countries do not have the luxury of letting such important knowledge languish in obscurity when it can provide the much-needed solutions.

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

How African Agriculture is under-rated due to narrow notions of evidence

When economists and policy makers in developing countries talk about evidence, in most cases they mean numbers or statistics. For instance in African countries, statistics dominate the language used to describe fiscal policies and budgets in monetary terms. Factors like contribution to GDP, production outputs per hectare and export earnings are all about figures. However, in real life, evidence goes beyond figures or statistics. If developing countries swallow this notion of evidence hook line and sinker, they completely undervalue their economies.

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Towards a broader notion of evidence

A broader and meaningful notion of evidence can emerge from answering the following questions:

  • To what extent is information, knowledge and skills shared in the agriculture sector considered evidence and how is such evidence accounted for?
  • What are the drivers of knowledge sharing and skills development in agriculture and rural development? Who are the actors?
  • How do we account for soft skills that are passed from generation to generation?
  • How do we value knowledge and skills in agriculture markets that have sustained African agricultural sectors for decades, enabling farmers, traders and other actors to send their children to school? How do we correctly account for the contribution of such knowledge to academic education?

In African agriculture, the evidence default is to look at production statistics and productivity only. There is lack of evidence on employment creation along the value chain, covering activities like production, logistics, marketing, processing and others. Agriculture’s contribution to employment creation in related industries like input providers and equipment manufacturers is barely captured as useful evidence. Yet without diverse evidence, it is impossible to properly lure investment into the agricultural sector.

Harnessing the power of social evidence  

Beyond statistics, it is important to gather evidence of how trust and relationships are built as collateral, how business networks are forged and how all this sustains the whole agricultural sector.  Without strong relationships and trust we end up with actors working in isolation and silos, making it difficult to make a collective difference together.  Imagine what can happen if there are no relationships between farmers and traders, between informal markets and formal companies.

There should be tools and processes for assessing the value of such resources and hidden factors. Evidence on how the agricultural sector copes with shocks like floods and other unforeseen circumstances is fundamental.  Such evidence can be gleaned from how value chain actors and institutions like markets cope with challenges like climate change. Critical insights include how markets and households cope with floods and drought, before emergency activities like food aid are introduced. Ideally, households and communities should be empowered to come up with quick decisions that feed into coping mechanisms before external support comes. That means, reliable evidence should be available and properly consolidated. Households in a community may not be vulnerable to the same challenges at the same time.

Also important is the extent to which enough evidence of an agricultural sector’s coping strategies is available. Without such evidence, there is a danger of either over-rating or under-rating the entire sector’s capacity to cope with challenges.  It is possible for more than 70% of the coping strategies to be available within a particular community. Figuring that ahead of time will ensure interventions address underlying issues of which drought may just be one of the symptoms. To what extent does food aid address underlying socio-cultural and environmental issues that prevent germination of permanent solutions?

Importance of questioning conventional practices

How much evidence is there to prove that by pursuing monoculture in crops like tobacco, cocoa, coffee or cotton, African countries are not weakening their farming communities to achieve food security and nutrition?  It is easy to measure tobacco’s contribution to GDP in terms of export receipt figures but also easy to calculate the crop’s opportunity cost at household and national levels. The entry point into this issue can be finding out what could have been achieved by putting the same land to other uses such as producing nutritious food so that countries producing tobacco won’t have to use tobacco income to import food or medicine. What are the environmental and opportunity costs associated with cutting down trees to grow and burn tobacco versus putting the same land to alternative uses?

Do we have enough evidence of how our climate mitigation strategies are responding to climate change? If most causes of climate change are not in the agricultural sector but due to industrialization and other external factors, what is the point of subjecting farmers to climate smart agricultural initiatives that do not address the root causes? Farmers may do everything right but suffer from floods caused by factors beyond their control.  Due to lack of evidence, we may be very far from developing tools that can address the effects of climate change.

To what extent do we have evidence that technologies such as ICTs are addressing real issues?  What if technology may even be distorting markets and destroying established value chains.  For instance, use of mobile phones may be destroying trust between farmers and traders, built over generations by promoting side-marketing since opportunistic buyers are easy to access through mobile phones? To what extent can we say agricultural tools coming from outside are increasing agricultural productivity?  Those tools may even be leading to more losses through mismatching equipment capacity and the capacity of farmers.

 Developing appropriate evidence indicators

Indicators that try to address the above issues can be developed through participatory approaches involving diverse knowledge actors.  Working with value chain actors, it is possible to identify indicators that can track the value of trust in agribusiness. Local people can then be trained to use those indicators to embed trust in the entire agricultural ecosystem. It is by gathering evidence from the grassroots and diverse actors that we can be able to see whether we are over-rating or under- rating, over-positioning or under-position agriculture in the whole economy. A combination of qualitative and quantitative evidence can inform policy makers in terms of gaps that need policy intervention as well as opportunities for investors and development partners.

Investment is not just about dollars and cents (money).  It can in the economic or social side.  Some communities may just need someone to facilitate knowledge sharing in ways that enable them to fully exploit available resources. It may not be about Foreign Direct Investment (FDI) but Local Direct Investment (LDI) in the form of local knowledge and ambitions for progress. Most African rural communities cope with challenges because they do not think in terms of money.  They just exchange local commodities whose value has been locally agreed upon. That is why rural communities continue to thrive although there isn’t a lot of money in circulation.  People can provide labour in exchange for agricultural commodities and that minimizes the need for cash.  To a greater extent, rural communities have found ways of not being slaves of dollars and cents.  They have realized that, as merely a means of exchange, money should not control the game.  However, building resilient models based on these realities requires robust evidence.

Who says evidence should be gathered and processed by formal institutions?

In Africa, there is a wrong notion that evidence should be collected and processed by formal institutions in order to be considered reliable. Unfortunately, besides being constrained by disciplinary methods of gathering and processing evidence, such institutions tend to gather evidence in an ad hoc on and off manner. As a result there is no smooth evidence flows. Even in countries that boast of high literacy, communities are not being capacitated to collect and process their evidence longitudinally.  That way they can be able to enrich their own evidence and see opportunities for generating solutions. Data and evidence should be for the community not for formal external institutions who can keep it out of context.  Communities should be capacitated in evidence gathering, processing and utilization.  In the absence of a culture of building local evidence bases, financial institutions continue to rely on Finscope Surveys conducted more than five years ago when the situation has completely changed.

If communities are capacitated to handle evidence by inculcating an evidence and communication way of doing things, collective evidence from each community can easily be consolidated at national level to inform national policy. This will avoid numerous cases of partial policies where an agricultural policy may not speak well to the industrial policy due to lack of reliable evidence in crafting those separate policies. If women are responsible for more than 60% of agricultural labour, how much would that be translated to actual payment assuming they are formal industrial employees?  It is important to clearly evaluate their contribution.  To measure the contribution of women in agricultural markets, it is important to look at commodities they handle in the market and translate that into GDP terms.  Focusing on formal export figures may not give the total picture.  How much do women traders contribute to the amount of food that passes through African informal markets?

Pitfalls of ignoring opportunity costs

The most unfortunate thing is that economic planners in developing countries have not been able to develop appropriate formulae for determining opportunity costs relevant to their contexts. By ignoring this issue, they continue either over-rating or under-rating the value of different agricultural commodities and other resources.  Such formulae would make it possible for value chain actors to answer questions like: How else would the land put to cotton be used?  If such land is left fallow and used as pastures, how many beef cattle would be produced in two years?  Comparing income from cotton and beef would give farmers their opportunity cost. It does not help to continue looking at straight markets without factoring in opportunity costs. Due to lack of alternative evidence every farmer is compelled to produce common commodities like maize.  If enough evidence is available to the effect that a certain number of farmers are going to produce maize, farmers would focus on other crops in which they have competitive advantage.  That would prevent maize gluts.  Since that evidence is either lacking or ignored, most African farmers continue to suffer from perennial gluts and shortages.

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

How African Agriculture expresses differences between Men and Women

Millions of dollars have gone into promoting gender equality in many developing countries. More millions continue to be poured into gender programmes. However, it has remained easy to conduct workshops and write documents on gender than to address messy gender issues. Several gender discussions and policies are pitched at a high level of abstraction such that it is difficult for ordinary people, especially the majority of women to see how the notion of gender speaks to their conditions. A key part of the problem has been a tendency to propagate the myth of sameness between men and women.

How African communities account for differences between men and women

Although many African communities are assumed to be gender-imbalanced, Agrarian African communities have practiced gender balance before the word ‘gender’ was invented. They have traditionally been conscious of the differences between masculine and feminine energies. This is seen in their recognition of the fact that men and women have different ways of dealing with socio-economic issues. While masculine approaches focus on specific outcomes informed by efficiency considerations, feminine approaches tend to be more inclusive and holistic. The current emphasis on gender equality does not adequately reveal and build on differences between male and female approaches. A great deal can be learnt from how African agriculture handles masculine and feminine differences.

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Agriculture as an expression of masculine and feminine differences

The roles of men and women have had long routes in African tradition. These roles have traditionally been defined along societal, cultural and economic perspectives. A key role for women remains taking care of household requirements such as the wants and needs of children toward sustaining the next generation.  On the other hand men have naturally been the bread winners who focus on wealth creation for the household. Most masculine and feminine socio-economic roles and norms in African communities are founded on these principles, built over centuries. In relation to food and nutrition security, men are more on the production side while women focus on health and nutrition. These roles are currently reproduced along agricultural value chains. Men focus on production and productivity.  In the market, they are responsible for planning and deciding on the supply of bulky commodities like maize, potatoes, sugar beans, cabbages, sweet potatoes and others which have become recognized for fulfilling food security functions. They also participate in the whole marketing value chain, pushing commodities that require a lot of manpower of which the majority of women are not able to do.

Feminine decision making tends to be very important at household nutritional level. Women decide how much of, for instance, 20 bags of maize should go to the market, when and how much should remain for the family’s nutritional requirements. For men, what comes to the market is for wealth creation, for instance investment in livestock, farming implements and sending children to school.  Even if women do such roles, they will be doing what should ideally be done by men. On the other hand, starting from the household, women focus on the nutrition component. They are interested in what other crops can be produced to supplement household nutrition. That is how we end up with groundnuts, beans and different kinds of vegetables whose nutritional value is understood by women at an intuitional level. Where this balance is not taken into account, we end up with a male-dominated food system made up of maize, potatoes and other famous commodities whose nutritional content is completely not balanced.

Unfortunate lack of appropriate agricultural models and the bad side of mechanization

Industrial agriculture has destroyed most traditional agricultural practices that recognize differences between men and women. By now there should be agricultural models that support male and female decision-making processes on an equal basis. Ideally food and nutrition should be separated if useful models are to be built. That will ensure nutrition initiatives ride on the knowledge of women while food security issues ride on male knowledge and sensibility. There is no meaningful technology that can smoothen the processing of nutritional foods that are better understood by women starting from household level. In all African countries, monoculture has diverted the attention of policy makers and industrialists from supporting the value addition of local nutritional foods.

Besides lack of appropriate processing equipment for women, modern mechanization has shifted power from women to men.  For example, while women have traditionally controlled household processing tools such as grinding stones and pestles that were used to produce peanut butter and mealie-meal, as soon as mechanization came in, the ownership of grinding mills, oil expressing machines and others shifted to men. As a result, women’s tacit knowledge has been lost since engineers have not been able to capture women’s tacit knowledge and sensibilities into elegant engineering process manuals. A modern piece of equipment cannot fully capture the roasting process as well as twist and turns that have traditionally been an integral part of women’s knowledge in producing the finest peanut butter and small grains flour.

Feminine knowledge has to receive the respect it deserves

By gathering and articulating differences between masculine and feminine knowledge systems, gender activists can build a strong case for supporting the role of women in socio-economic development. Many big companies have taken a cue from women knowledge to create machines that are now producing African beverages such as Mahewu and opaque beer. All this knowledge was secretly ‘stolen’ from feminine practices and embedded into processing machinery. Unfortunately, women have been left behind as industries that produce these beverages are male-owned although such industries have been inspired by feminine knowledge and practices.  Beer brewing has traditionally been a female domain with men being customers but when it got industrialized it became a male domain.

Feminine perspectives define market requirements and collective consumption patterns in all African countries. They influence decisions around more than 70% of agricultural commodities that are consumed at household level. Feminine knowledge and sensibilities also influence what goes to agricultural markets in terms of quality, size and tastes of vegetables, tubers or fruits.  Rarely do you find men buying tomatoes and onions intelligently. Men may simply buy for price when women could consider many other parameters, including nutrition. Any increase or fall in demand for particular commodities in the market can be traced to feminine decision-making.  That role is key in sustaining markets and influencing consumption patterns.

Women have more knowledge on how commodities are used by the majority of end-users who happen to be women.  They provide advice to end-user in terms of food preparation, storage and additional foods or ingredients that go together with particular commodities. Some of these soft skills have been passed on from generation to generation but need serious documentation in order to make sense of their evolution.  Such skills constitute critical strengths that can contribute to more than 40% of an agribusiness’s viability.

Tapping into the way women understand customer needs will reduce losses along the value chain. The majority of losses are usually caused by a mismatch between standards and expectations of the market, which can be addressed by feminine intuitions better. Unfortunately industrialization has not fully recognized feminine knowledge which cannot be out-sourced. To what extent are modern food processing plants informed by feminine sensibilities? At SME level, we need to see women dominating peanut butter processing and aggregating commodities as well as owning businesses that contribute to improved nutritional status. The business of making soups such as Royco is yet to recognize women’s age-old knowledge on nutritional recipes.

Labour-saving technologies at production level should support women’s crops.  At the moment, we have ploughs and grinding mills for maize which is a male commodity.  High value crops that are a domain of women are often highly perishable but there is no machinery for addressing this perishability besides refrigerators which do not take into account women’s natural food preservation skills.  Peas and other vegetables are some of the highly perishable women’s crops which are challenging to process.

From food fairs to mass products

Instead of conducting a series of food fairs every year, promoters should support the evolution of feminine nutritional knowledge from food fairs to small factories where real products are produced for the majority of consumers. Cooking competitions are a waste of time and energy if they don’t translate into nutritional focused income streams. Unfortunately, a biased financial system which asks for collateral assets that women cannot afford and therefore prevent women from turning their ideas into sustainable nutrition businesses.  An ordinary woman cannot get a $1000 loan to establish a nutrition project as an individual because she doesn’t have collateral or a pay slip. As a result men end up doing that business because they have collateral and pay slips. That is why although women own chickens at household level, they cannot develop their small enterprises into big businesses. Major industrial poultry businesses are owned by men while women become ordinary consumers although they are the main sources of practical knowledge on chickens.

Harnessing the vitality of diversity

Development agencies and policy makers can learn from carefully studying how African agrarian communities balance masculine and feminine roles. That will ensure the current notion of gender does not destroy the vitality of diversity by propagating the false belief that men and women are the same. In many African communities, that false belief has weakened the social fabric. These communities have always been aware that women and men are different from each other right down to the way their brains and bodies function, never mind the obvious anatomical differences.  As a result, people have always been aware that the vibrancy of diversity is found in difference, not sameness

From time immemorial, African communities have learnt to honor diversity and celebrate strengths in everyone, regardless of gender. Respect for diversity is best expressed in honoring and leveraging difference, not in propagating the myth of sameness. Many organizations and African communities have been subjected to forced diversity by development partners, mostly based on imported models of equality.  Yet creating save spaces for sharing and developing different ways of learning and facilitating knowledge exchange is very important. Many of the tools used in facilitation such as field days, focus group discussion and open space are more akin to the feminine approach where, through apparent chaos, you reach fantastic lessons. More conventional lecturing approaches or planning techniques are more masculine with a sharp route to deliver.  To the extent that machines focus on efficiency, output and other easily measurable parameters, they speak to masculine thought patterns. Gender activists can add more value if they advocate for technologies that resonate with feminine knowledge expressions such as reading non-verbal cues and emotional intelligence.

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

How can African agricultural economies balance opportunities and risks?

Risk has been part of life since time immemorial. Even before the dawn of modern banking, risk could not be separated from human survival opportunities such as hunting and gathering food. African forests teemed with dangerous animals, rendering hunting a risky adventure. One would spend a whole day or an entire week without catching game meat and that meant loss of time which could have been used in alternative ways such as fishing. Risks and opportunities are always competing just as success and failure compete in business. Today, risks are associated with unforeseen factors and uncertainties such as climate change that are outside human control. However, human beings continue to build their capacity to reduce or mitigate some of the risks through reliable experiences and information.

Balancing risks and opportunities in the agriculture sector

Like any other business, farming is a risky business characterised by the good and the bad. The main reason farmers and other value chain actors continue with agriculture is because the bad is often outweighed by the good.  To the extent that the weather, climate and markets are not always predictable, farmers and traders get into agribusiness fully aware that possibilities of success and failure are unknown. Should they stop investing in agribusiness because of unknown risks?  In most African countries, when farmers and traders decide to get into agriculture as a business, they will have cushioned themselves against bigger portions of the risk. Investing years into learning the tricks of agriculture is a key part of absorbing risk.

how-can-african-agricultural-economies-balance-opportunities-and-risks

Some farmers and traders invest all their pension and remittances in pursuit of agriculture in order to identify wealth creation opportunities. At an individual level, a farmer makes a conscious decision to put all his life savings into the agricultural experience.  On the basis of such investment and experience, the farmer will become confident of approaching a bank for a loan.  Farmers and traders who approach banks for loans will have gained valuable experience and can clearly see opportunities with high probability of success.

Who is competent to assess agricultural risk?

Somebody who has spent more than 10 years in a particular agricultural enterprise or someone with two years office experience in assessing risks through reading proposals that come to his / her desk?  How much business experience, intuitions and nuances can be fully expressed through business proposals which are currently used by risk assessors to either accept or reject a business case? To what extent is the person who assesses risks in a bank an all-rounder in terms of expertise?  There may be more than 30 business proposals from diverse fields like engineering, trading, exporting and agriculture.  How reliable is one template in assessing risk?

The combined experience of those applying for bank loans could be more than 100 years. By rejecting most of these applications on the basis of the same risk assessment blue prints, most African financial institutions are killing a lot of business ideas and potential solutions that could contribute to national economic development.  Foreign Direct Investment (FDI) may not bring better solutions in the form of reliable and sustainable business ideas that are abundant in local people.

Need for dynamic risk assessment toolkits

New hybrid African economies characterised by a growing informal sector alongside a stagnant formal sector, compel financial institutions to continuously revisit their risk assessment toolkits. For instance, while a formal company may produce export receipts, most SMEs may not be able to bring documentary proof of their more than 12 year business enterprise. A trader in the informal sector can save more than 100 customers a day and generate more sales than a formal company but lack documentary proof of all those transactions.  Is that enough basis to consider that trader high risk?

Rather than assess the risk profile of an individual trader, financial institutions should assess and determine the risk profile of an entire industry such as Agriculture, Clothing, Mining, etc. Such a holistic assessment will enable crafting of specific business models that minimize risk for the entire industry or sector. Such assessments presuppose financial institutions have robust data and evidence on the industry or sector. In most African countries such data and evidence is missing. In the agriculture sector, financial institutions should know the performance of agricultural commodities in informal markets which currently absorb more than 70% of diverse commodities, for instance in Zimbabwe.

Through informal markets, financial institutions can be able to reach more smallholder farmers who constitute more than 70% of a potential clientele base. Robust evidence should be part of every risk assessment toolbox from individual value chain actor, sector and policy levels.  It is the market that gives you the rate of investment. Without identifying and analyzing market evidence, it is difficult to see an investment opportunity. The rate of investment comes from looking at price trends, actors, demand & supply trends, standards & specifications, consumption patterns, seasonality and whole market dynamics.

Minimizing fragmented socio-economic perspectives

Due to the current mismatch between formal risk assessment tools and economic realities in the hybrid economy, most African countries have an informal economy that is fully aware of its opportunities and potential on one side and outsiders such as financial institutions who think this sector is too risky on the other side.  As an institution, the informal market has several opportunities waiting to be explored. Risk assessments should be informed by many forms of evidence as opposed to relying on a written proposal. The new risk assessment toolkit should consider the loan applicant’s passion, previous investments and other attributes. Smallholder farmers and traders have tied their livelihoods to their small businesses.  They have no capacity or inclination to externalize funds compared to big corporates.

A new farmer with all resources such as land, water and labour may have challenges trying to access a $50 000 loan from a bank on the basis that he is new to the business.  The risk tends to be connected to the person as opposed to looking at the business with its own advantages such as a ready market, land, water and other resources. Although available resources constitute 80% of the business, financial institutions would let such an opportunity go begging because the individual lacks what is considered collateral.  Risk assessments should consider gaps that need funding rather than the person. More than 70% of the collateral should be about the business and 30% be about capacity building issues.  As part of assessing risk, a critical question that financial institutions should direct at potential clients is: In starting and sustaining your business, what opportunities have you forgone in terms of finance, time, career, etc..?

Limitations of excessive risk-aversion

Excessive risk-aversion by financial institutions is stifling innovation in many African countries. For instance, it prevents youths from participating in the mainstream economy.  Being inexperienced and lacking collateral, ideas from youths are classified as green field and therefore high risk. The green field label is stuck on the idea and the person.  Yet the fact that youths are young is beyond their control.  How are they expected to have gained experience when they were at school from where they have generated innovative ideas? Due to an unresponsive economic and financial environment, the majority of youths end up leaving their countries in desperation.  Some are encouraged to compete for funding under energy-sapping challenge fund competitions that are only accessible to the privileged.  The rest are condemned to poverty although they may have brilliant ideas.

There is a tendency to forget that by pursuing entrepreneurship, many young people including university graduates will have forgone other things they could have done over the past 17 years or so. Some engineers have become traders while some have left employment to become traders.  Isn’t that risk taking of the highest order?  It is important to consider the fact that someone is so convinced about the business to the point of fore-going other opportunities.  Ignoring this fact is the main reason why we end up with copycat businesses which are fueled by what risk assessors have become used to approving as good business ideas merely because many people are doing them.  What is the point of approving the same business models which end up competing and failing to service loans when new models could become opportunities for creating new value if supported?

The risk of mono-cultural business models

When risk assessments from financial institutions ignore new innovation, the economy remains stagnant.  Limiting financial support prevents growth and exploitation of creative businesses. Risk assessment committees should comprise experienced advisors who have actually been in business trenches. Too much risk-aversion puts the whole economy in a comfort zone, thus stalling progress.  Achieving national targets is a question of balancing risks and opportunities. Taking a cue from formal financial institutions, some value chain actors tend to shy away from risk and congest in established value chains such as tobacco, tea, coffee, cocoa, sugar cane and others with deep roots colonial routes. If everyone goes for these few established commodities, who will develop new models around hundreds of African commodities that have enormous potential to present unique selling propositions for African economies?

 In economies that are trying to promote entrepreneurship, risk assessment approaches should be positive and energizing for new entrance.  If somebody applies for a loan and is denied, it lowers his/her spirits and self-esteem.  If that happens to many people, the collective mood of the economy is weakened. Risk assessors should not behave like prophets of doom who undermine innovation and creativity.  People will start thinking that their ideas are not worth pursuing and therefore wait for government donations.

Current financial principles focus on adhering to formal standards and controls which are not fully embedded into agricultural value chains but delegated to risk and compliance departments which have a limited understanding of  the agribusiness context. Assessments are based on analyzing proposals yet, a proposal is only 10% of what an agribusiness is all about. Failure to understand the whole agriculture system is the main reason why financiers are often caught off-guard when failure occurs.  Formal risk management approaches are insufficient for a dynamic ICT-fueled agricultural sector where sources of value and knowledge sharing are expanding every day.

Old ideas are making it difficult for financial institutions to see abundant opportunities in African agriculture. As a result, most opportunities are passing unnoticed due to technical financial obstacles.  Value chain opportunities are either dismissed as too hard or pursued partially depending on the balance between the comfortable familiarity of old financial habits. Without the right ambition levels, financial institutions in developing countries will take decades to become key catalysts in translating abundant resources into economic growth and stability.  Such ambition levels can be measured through appetite for risk.

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