While economic planners in most African countries still associate manufacturing with big corporates rooted in colonial legacies, Micro, Small and Medium (MSMEs) have quietly moved the manufacturing cheese. This trend has been accompanied with silent commercialization of indigenous food. A few years ago, many urban consumers were too shy to be seen eating sweet potatoes, yams and indigenous fruits or drink baobab fruit and traditional beverages made from small grains. But that is no longer the case, a lot of indigenous food is now gaining commercial traction and enabling many rural communities to earn significant income. However, due to absence of documentation all these trends have remained unrecognized by policy makers, financiers and development agencies.
Youth and women resetting the commercial agenda
A large measure of MSMEs-driven value addition is in the hands of youth and women. Youths ae in charge of aggregating food commodities and bringing them to Africa’s booming territorial mass markets while women are responsible for careful grading, sorting and allocating various grades to diverse small scale manufacturing process like fruit drying, pounding grain, meat sausaging, peanut butter processing and many other processes including diverse menus. Many elders who previously worked in formal manufacturing industries have taken their expertise to the MSMEs sector where they are now manufacturing the same products with different names and flavours for diverse consumers.
The levels of uniquely home-grown indigenous commerce and decolonized manufacturing quietly happening in countries like Zimbabwe can only be appreciated through investment in data collection and monitoring fluid trends. The MSMEs sector has taken over the manufacturing sector from big colonial manufacturers that used to supply processed commodities to supermarkets. MSMEs manufacturers have taken the next step to build strong relationships with tuckshops and other smaller shops that are now the main sources of food, replacing supermarkets. Consequently, retail and supermarket models are heading for extinction together with colonial corporate manufacturing models. As retailers and supermarkets go out of business, tuckshops are gaining more competitive ground. Failing to cope with the trends, formal retailers end up misinforming policy makers by saying tuckshops are selling sub-standard or expired imported products. Yet most of the products in tuckshops are produced locally by MSMEs manufacturers in several light industrial sites. Bread, peanut butter, cooking oil and many other products that used to be a preserve of colonial manufacturers are now being produced by MSMEs manufacturers. Several people who used to work in colonial manufacturing industries have formed their own MSMEs manufacturing units. This is another example of unmonitored knowledge transfer from corporate manufacturers to MSMEs.
Harnessing the power of social capital
While colonial manufacturing companies have relied on formal banks for finance, MSMEs thrive on social capital. The African MSMEs sector has demonstrated that social capital is more important than money. This is visible in how formal companies with access to banks but without networks are failing to compete in procuring agricultural raw materials for processing into products even under contract arrangements. In supply chains based more on relationships, networks and social capital, raw commodities like fruits and tomatoes can be ring-fenced in ways that make it difficult formal companies outside that ecosystem to access such commodities. The growing convening power of African territorial markets have seen these markets influencing the flow of commodities from production areas to urban markets including formal processing companies. For instance, relationships within territorial markets enable the movement of commodities from production areas to markets without paying a cent but corporates or external people trying to infiltrate the system would have to pay at every node. That compromises viability especially when competing with people who move commodities to the market without paying at every node. This is how the power of the social fabric keeps mass markets alive and are an integral component of socio-economic resilience.
Some of the misconceptions about middlemen
Farmers who have tried to by-pass territorial markets to sell their tomatoes or any other commodities door to door in residential areas have quickly given up after learning that such a task can be easily done by middlemen within territorial markets because these have the required patience and also understand consumption patterns better than farmers who are always in a hurry to sell and go back to the farm. Information and knowledge are the lifeblood of a food system and agriculture-driven economy, not just physical structure. How is the market connected with supply sources in terms of physical commodities and information? It is also key to know the value of the commodities traded in the market daily through volumes that get into the market. Once volumes are known, prices are also known, that gives the value of commodities traded which translates to GDP. Being aware of commodity sources, it becomes possible to see how much is going back to rural communities which also shows how the markets are building partnerships with farming communities. When manufacturers and policy makers are not aware of these details at ta granular level, it becomes difficult for formal companies to compete with the MSMEs sector. No amount of witch-hunting against the MSMEs sector can solve this challenge.
Importance of revising the knowledge prescriptions
Instead of designing academic training programs for integrating MSMEs and their financial models into colonial manufacturing and formal banking models, African policy makers and research institutions have to build pathways for formal systems to learn from MSMEs and territorial markets. Development agencies, practitioners and consultants continue to apply academic knowledge in trying to ‘’modernize’’ and formalize MSMEs when corporate manufacturers and banks are the ones overdue for rescue from rigid formal systems that are being outcompeted by economic informality. Although formal retailers continue to receive much of the policy and financial support, MSMEs continue to flourish in Africa’s cities, towns and villages. However, powerful norms and values that have been developed and shared by traders for decades remain undocumented and unexplored.
African territorial markets remain significant in defining MSMEs because they are a source of wealth and practical wisdom. Traders and middlemen help to influence the flow of goods and services, shape human interaction between rural and urban areas as well as determine consumption patterns. They can also provide important lessons to tax authorities. For instance, the wide range of MSME businesses and commodities can show fiscal authorities the limitations of designing a one-size-fits all taxation system. Gender, size of business, seasonality and other elements should inform tax brackets. Ideally, tax should be informed by underlying elements that make up a business including different profit margins for small grains, herbs, chickens and other commodities traded in territorial markets and the MSMEs sector. Financial models and revenue streams in the MSMEs sector and territorial markets are informed by granular data and intricate details of each economic actor including distances between sources of raw materials and manufacturing sites. Capturing these details is key.
charles@knowledgetransafrica.com / charles@emkambo.co.zw /
Website: www.emkambo.co.zw / www.knowledgetransafrica.com
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