Prepaid Economy Newsletter: Curated Snippets on Informal, Rural and Prepaid



This is the first prototype experimenting with a newsletter format on topics dear to the heart of The Prepaid Economy’s research interests and reader community. Its a special edition looking back at the year.  Leave a comment or tweet @prepaid_africa if you’d like to see this become a regular feature. All feedback welcome! Click on thumbnails to  enjoy full size images.

~ The Ed


worldbank2014To kick off, lets start with news with the biggest potential to impact informal and rural primarily cash based economies across the developing world. The World Bank’s recently released 2014 World Development Report places emphasis on understanding the mindset, behaviour and worldview of the end users prior to design of development programmes, interventions or policy. The FT’s Martin Wolf adds his 2 shillings worth in “Make policy for real, not ideal, humans” while Oxfam’s Duncan Green rounds up the appropriate commentary and opinions. As the diagram extracted from the report shows, there’s a soupçon of experimental thinking and design in the mix.



Staying on topic, the CGAP released a review of their experiments with human centered design for financial inclusion, a 200+ page (PDF) “what we learnt and you can too” manual well summarized by FastCo recently if you’d like a quick overview. I’ve added a less jarring illustration you can click through for tips and tricks from exploratory user research in the field.



20140412_FNC688Nigeria, the African continent’s most populous country, made waves this year when it rebased its GDP figures. The Economist said:
The revision means Nigeria leapfrogs South Africa to be Africa’s largest economy. It rises to 24th in the list of the world’s big economies, behind Poland and Norway and ahead of Belgium and Taiwan.
Fully 57% of the new GDP is derived from Nigeria’s informal sector, according to the UNDP, making it the largest on the continent. The eminently attractive Nigerian consumer market is primarily serviced by informal markets, possibly close to 90% of all retail in the country. Fun fact: 99% of Nigeria’s mobile subscribers are prepaid.



Zimbabwe, on the other side of the coin, which has been 1-Making-ends-meet-....-aman-pushes-a-bicycle-laden-with-bread-for-sale-a-along-the-Harare-to-Masvingo-road-recentlyeconomically struggling for most of this year is eyeing the increasing visibility of the informal sector as it swells to accommodate the daily needs of the majority of the population.




_74555344_74555343Yet South Africa has recognized the vital role of spaza shops in keeping alive the township economies, even in the face of encroaching modern retail. Moves are afoot to boost this source of incomes and assist in their evolution.





The cash based informal economy’s noisiest kerfuffle has revolved BebaPay-2around public transport ticketing in Kenya. Matatus – ubiquitous minivan taxis – starting with Nairobi, have been wrangling with the spectre of lost incomes and great inconvenience as the government attempts to impose an inflexible cashless policy for passenger payments. Little progress has been made this year.




From academia, this excellent chapter (PDF) by Ravi Kanbur, Professor of Economics at Cornell University, whose thesis is better explicated by the following snippet rather than the formal abstract itself.

The administrative mindset on informality has somewhat more complex roots. It is best illustrated by a strand of the dual economy literature which goes back to colonial times. Indeed, the term “dual economy” was coined by the Dutch anthropologist and colonial administrator J. H. Boeke in his characterization of the economy of the Dutch East Indies.

riskinformalThe distinction here was between those activities that fell under the purview of colonial rules and regulations, and those activities that were beyond the legal and administrative reach of the colonial government. My reading of the colonial administrative literature brings to mind the notion of a wall which separates the formal from the informal.

On this side of the wall is the well-ordered colonial state, subject to a set of laws and regulations, managed by its administrators and officials. On that side of the wall is the (mostly native) informal economy, ill understood and misunderstood by colonial policy makers. It is perceived to be chaotic, disorganized, with criminal elements.

The colonial yoke has been lifted but not the mindset. Post-colonial administrators the world over, particularly at the local level, appear to have the same mindset as their colonial predecessors. Informality is a symbol of underdevelopment, a nuisance to be swept away and kept out of sight in the modernizing path of the national economy. This obviously meshes conveniently with the analytical mindset which sees informality as in any case dwindling with development.

Reading it made me feel that someone finally understood and could far better articulate the situation in formal terminology. Relieves the frustration I’ve felt when trying to explain the inherent creativity, imagination and dynamic spirit seen among those who daily earn their irregular incomes in the informal sector to those who only perceive the negative elements of the shadows. It describes the “gap” between the formal adn the informal, which Professor Kanbur envisions as a wall. The pattern recognizer in me appreciates the symmetry of this finding in this set of links, given that Prof Kanbur resigned from the subject of the first link on ethical grounds.



Let’s close with this worthy snippet from the World Economic Forum on behalf of the informal sector and its critical importance to Europe’s entrepreneurial future.

The informal economy is fertile ground for innovation and a DSC06896rich source of entrepreneurs. Giving unregulated workers the chance to become a part of the formal economy would not only help them, but help us. Society would benefit from the injection of talent and energy, and become more diverse and integrated.

We can’t remain trapped with of the same labour and fiscal policies that were created when the economic situation was simpler. It’s time to upgrade our ability to recognize patterns of change if we are to ensure economic survival for generations to come.

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