Applying the Systems Test to the Regional Informal Economic System

Adapted from Arnold and Wade (2015)

If the informal economic system, as seen in east Africa, is a system, and there are social practices at both the rural end of the interconnections and flows that comprise the functioning of the system, then taking a systems approach to food security would facilitate not only the increase in stocks i.e. the yield of the harvest, but also ensure that it was sold at farmgate and circulated in the region’s wholesaler produce markets.

Arnold and Wade (2015) propose a Systems Test drawing heavily from the systems thinking work done by Donella Meadows (2008), which I have rewritten to accommodate the peculiarities of the informal economic system. Here, I will take the urban last mile of the farm to fork agricultural value chain, comprising of wholesalers in Nairobi’s informal wholesale markets, and the vegetable vendors who buy from them and go to sell in the city’s informal settlements, reaching the lower income residents. It can be considered a subsystem of the larger system, and falls within the bounds of the regional informal trade ecosystem that links the rural produce markets to the city’s consumers.

However, it is not primarily a socio-technical system, although the mobile phone is an integral part of the infrastructuring required to facilitate and maintain flows and interconnections between the elements, but a socio-ecological one. Parts of it may be a socio-ecological-technical one but all of these descriptions are challenged by their operating conditions which are assumed, usually implicitly, to be that of a developed country with systems and infrastructure to provide the basic services. In the context in which the informal economic system tends to dominate the local market economy, institutional delivery of services and the local infrastructure may only offer variable quality that may not be consistent or reliable.

Uncertainty and volatility are more prevalent in these conditions, and for the most part, are the drivers for the variety of risk management practices observed among traders at the scale of urban wholesaler with market stall/s in the central hub. On the other hand, unlike the precarious nature of outdoor vegetable vending which has low barriers to entry and less reliance on a regular customer base for predictable cash flows, the wholesale trader requires established socio-economic relationships and access to working capital in lumpsums in order to source and supply perishable fresh produce in saleable condition without a cold chain. Barriers to setting up a market stall in the wholesale market are much higher than being able to sell fruit or veg from the boot of one’s car.

Created by Niti Bhan based on dataset analysis

When the interconnections and the purpose are modeled for the elements – starting from the perspective of the urban wholesaler – one can see their lynchpin role in facilitating flows of fresh produce from farmgate to fork. Street vendors of produce and hawkers of cooked food are far more highly visible in the cities of the Global South than the suppliers to will extend credit to them. Though important for the food security of the poor, they would be helpless without the services and support provided by wholesalers. Only by taking a systems thinking perspective were they identified as the leverage point for interventions to boost the system’s socio-economic resilience against future shocks.

This entry was posted in Africa, African Consumer Market, Biashara Economics, East African Community, Ecosystem, Indigenous & Traditional, Informal & Flexible, Mama Biashara, Marketing, Perspective, Retail in Africa, Sub Saharan Africa, Systems. Bookmark the permalink. Post a comment or leave a trackback: Trackback URL.

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