Archive for the ‘Base of the Pyramid’ Category

Insights on the psychology of cash money – Demonetization vs Financial Inclusion

moneyThe flurry of commentary on the Great Indian Demonetization of November 2016 has thrown up some nuggets of insight worth considering more deeply.

Santosh Desai explores the psychology of cash money in the Times of India blog, linking the need for tangible evidence of income to physical labour, as opposed to those of us with the contextual knowledge to understand the virtual concept i.e. digital currency.

“…there is another aspect of this situation that needs more reflection- the nature of the relationship we enjoy with cash. Cash is not merely a symbolic representation of value. Cash is the idea of value captured and owned. It is the product of labour that is an entity by itself and becomes much more than what it can buy. Sitting on a pile of cash gives pleasure both metaphorical and real.”

“…there is some value that is placed on the device of currency notes over and above the value that it signifies.”

This aspect has not been looked at deeply enough, imho, when financial inclusion is talked about, particularly in the context of digital solutions. I suspect that therein will lie behavioural insights that could conceivably drive design changes that lower the barriers to adoption in the strategies to introduce digital currencies and mobile monies to hitherto unbanked populations.

Earning money needs to be signified concretely. Those whose life’s earnings are in the form of a few high value currency notes, do not decode demonetization in quite the same way as those used to money in its conceptual form. The idea that it is possible to de-legitimise their life’s labour is to shake the foundations on which one’s life is constructed. What if some money is not exchanged? What if some paperwork, that bane of those living on the margins, is incomplete?

What if the mobile phone’s battery dies? Do my hard earned monies disappear like other unsaved data?

Trust in technology is a function of our contextual knowledge – our immersion in an environment saturated with electronic communication and screens of all types and purposes provides us with conceptual frameworks that are entirely different from someone whose daily labour is on the farm, or at a mechanic’s garage.

While those who are financially excluded might not face demonetization i.e. the de-legitimization of their labour, as Desai mentions above, the current attempts to convert their cash intensive habits into digital form via various “cashless” initiatives overlook the psychology of cash. Regardless of locale, those at the margins (the excluded) have high levels of mistrust in the system, through their experiences with institutions and the system, over time and history.

The talk of ‘cashless’ is easy, but it ignores that there is a cultural dimension to the physicality of cash. Digital wallets operate on a transfer of intention, where a promise to pay gets converted into an intention to buy. For this to work at scale, one needs to have become comfortable with the idea of surplus and develop the confidence that money will come without having to struggle or having to think about it all the time. One needs to develop trust in institutions, in a context where the evidence around is overwhelmingly to the contrary.

I suspect that if this subject was explored further, we would discover that where mobile money has succeeded, such as in East Africa, the institution that was trusted was the telco – the mobile service operator, and that the early stages of adoption have a different narrative from that being used currently in entirely new markets where mobile money still struggles to penetrate. India and South Africa are two such places where the unbanked and the financially excluded have reasons of history to develop high mistrust of the systems of the privileged.

To convert one’s worth into worthlessness, even if for a small period is to make everyone nervous. Psychologically, money works on a convention of mutual deception. We agree to call something money, and that is good enough. But to have the thinness of this convention exposed in such a way is to cause great anxiety.

The transition to a cashless future can be made gentler and more accommodating to their fears and concerns, generating a sense of security and commitment, with some empathy for an entirely different world-view and life experience.

An economy of trust

_92445052_02Cash on credit is the caption given to this cartoon by the BBC. Neighbourhood groceries are offering their regular customers cash advances in addition to bread and milk.

While the media is filled with a plethora of stories of heartbreak, my own suspicion is that we’ll discover the resilience of the cash intensive informal sector lies in the relationships between people, once the hubbub has died down.

Analysis of the mobile phone’s impact on cash flows and transactions in the informal sector

As we saw, Mrs Chimphamba needs to juggle time and money as part of her household financial management in order to ensure that expenses can be met by income. We also saw that the mobile phone was made viable and feasible by the availability of the prepaid business model that gave her full control over timing and the amount required to maintain it — how much airtime to purchase? when? how often? — all of these decisions were in her hands, within the limits of the operator’s business model. Now, we’ll take a closer look at the impact of the mobile on her domestic economy.

Readily available real time communication has helped Mrs C by speeding up the time taken for a decision on a purchase or a sale. That is, the transaction cycle has been shortened. As the speed of information exchange increases, it increases the speed of transactions — it shortens the duration of time taken to execute them from inception to completion. This, in turn, implies that more transactions can now take place in the same amount of time thereby increasing the frequency and the periodicity. When mobile money is present, one can see that as both quantity and frequency of transactions speed up, so does the cash flow. We’ll come back to this factor.

To explain using a real life example, Mrs Chimphamba does not need to sit at her homestead wondering if today someone will pass by to purchase a bottle of wine. Similarly, Mrs C’s customers do not need to go out of their way to pass by her homestead to see if the wine is distilled and ready for sale, or whether it will still take another day or two for the next batch to be ready. Further, the uncertainty of whether they’ll have cash on hand on that future day, or if they’ll return as promised are all elements that real time communication have minimized.

Now, Mrs C is able to let her regular customers know that she’s making a new batch for sale and do they want to reserve a bottle for purchase? It allows her customers to put aside cash for this purchase. She is even able to accept and execute larger orders for some future date, and even accept some cash advances if her operating environment includes the presence of a mobile money transfer system such as those more prevalent in East Africa. This in turn changes her purchasing patterns and decision making as the pattern of cash flows — timing and amount — changes. She isn’t making do anymore on an unknown and predictable sale based on sitting and waiting for someone to show up to buy her wine.

Real time communication has improved the decision making cycle for both buyer and seller in a transaction as it counteracts uncertainty and information asymmetry even while speeding up the time take for a decision.

As the quantity and frequency of transactions increase— first, in cash conducted face to face, and then later, remotely by mobile money, regardless of the size of each transaction — the change in cash flow patterns begins to smooth out the volatility (the uncertainty factor has changed completely) between incoming and outgoing, as well as the decisionmaking involved. That is, the gap between income and expense starts becoming less in terms of both timing and amount — there is the possibility of a steady stream in the pipeline. Calculus offers hints of how the curve can begin to smoothen out as frequency and periodicity of transactions begins to accelerate.

Size of transactions thus begin to matter less in that the incoming amount now does not need to be so large as to cover expenses for an unknown duration of time before the next incoming payment; nor do expenses have to be tightly controlled constantly due to the uncertainty of the duration of time before the next payment, and the types of expenses incurred during this unknown period of time.

So the boost in decision making — how long it takes to complete a transaction, how often can transactions be completed — enabled by the real time communication facilitated by the mobile phone; plus the attendant immediacy of receiving payment via the same platform is the root of the improvement in the hyperlocal economy and consumption patterns among the informal sector actors. This is why large established traders (with sufficient financial cushion) were heard to observe that both purchasing power and consumption patterns had changed in their market town (Busia, Kenya Jan 2016) in the past 10 years since first the mobile phone, and later, mPesa, were introduced into their operating environment.

Uncertainty and information asymmetry that have long characterized the fragile and volatile nature of the informal sector operating in inadequately provided environments with unreliable systems and scarce data. In the next chapter we’ll step back and take a broader look at communication, connectivity, and commerce in the informal economy starting with the description of the operating environment’s characteristics regardless of continent.

This is part of a newly launched Medium where I will write in detail on economic behaviour and its drivers in the informal economy. Much of it draws upon the original research in the field from 2008-2009 which was shared on the prepaid economy blog. I found that time had passed and increased my understanding and I wanted to explore those discoveries in writing. Much of this is the foundation for recent works on ‘Mama Biashara‘.

Mobile Money in South Africa: The nature of the beast by Flo Mosoane

pexels-photo-3The 2015 State Of The Industry Report (SOTIR) for Mobile Money published by GSMA, reveals a picture of a service that continues to change the landscape of financial inclusion in developing and poor countries across the globe. In December of 2015, the industry processed transactions in excess of a billion, most of which were in Sub Sahara Africa.

It seems however, that the continued success of Mobile Money eludes South Africa. What with the untimely death of Vodacom Mpesa after millions of Rands of reinvestment. Only 4 months after which MTN South Africa also announced that they are ceasing new registrations, marking the end of (Mobile Network Operator) MNO-lead Mobile Money deployments here.

Despite the large bang that MTN Mobile Money launched with, managing to sign over 2 million subscribers; at the end, Vodacom Mpesa only had just over 75 000 users, and MTN Mobile Money only about 140 000 or so users. A performance that neither of these well-established, successful, multinational MNO’s can be proud of.

We lament the apparent failure of Mobile Money in South Africa. It is well established that it has made a significant contribution to financial inclusion for underserved populations, and still presents significant opportunity to serve unbanked and underbanked communities.

This is a very special contribution by Flo Mosoane, writing from first hand experience on the ground on this subject. Do read the whole article.

Read On…

How to Spot Signals of Local Purchasing Patterns in the Market

np-md-mohamed-kanuThis photograph is taken from a regular news item from a Liberian newspaper announcing the opening of a new petrol station in the town of Ganta. What caught my attention is the size of the LPG cylinders being promoted. On the left is the 6kg and on the right is an even smaller size that I’ve yet to see elsewhere – the 6kg one has been spotted in the lower income side of Jakarta, and in the markets of Abidjan, and Nairobi.

What it tells me is that purchasing power in the local market is not only a little less than a major capital city, this is probably a tier 2 city, but also that its a cash intensive market where incomes are more likely to be the volatile cash flows from commercial activities in the informal sector.

The lumpsums available for LPG aren’t going to be as large as to afford the standard 13kg size, but it doesn’t preclude people from purchasing these smaller sizes more frequently. That is, we cannot assume total consumption volumes to be less than larger cities where larger sizes are more popular. On the other hand, the micro size on the right seems to hint at the possibility of LPG being more popular than traditional fuels such as kerosene, charcoal, or firewood.

These small sizes also signal a fragmented, informal market where small pack sizes and sachets are popular.

Poverty is Dynamic and Flexible, Just like the Informal Economy: Evidence from India

…the concept of poverty today is fundamentally different from that of poverty three decades ago, and that safety nets need to be tailored to meet the needs of a society in transition.~ The Hindu, 2 Aug 2016

When quantitative data provided by the India Human Development Survey (the first large panel survey in India) provokes the academics involved to question their fundamental assumptions and premise of what poverty is, and what it might mean, its a noteworthy moment.

The survey, conducted by the University of Maryland and the National Council of Applied Economic Research (NCAER) for the same households at two points in time, viz. 2004-05 and 2011-12. Their analysis has led them to say:

Once we recognise that poverty is dynamic in nature, and that as per our conventional definition of poverty, poor households may move out of poverty and the non-poor may become poor over a period of time, we are forced to question the veracity of our fundamental assumptions about poverty. Perhaps poverty occurs not simply due to the accident of birth or as defined in terms of where and in which family people are born, but also due to the accident of life caused by the occurrence of disease, disability and unemployment. Achieving this recognition entails a complete transformation in our mindset.

I will leave them to their explorations from the perspectives of their disciplines, and explore the broader implications of their findings.

A few years ago, as part of my discoveries from more qualitative user research in the field on the informal sector’s financial context and operating environment, I had had my insight on the dynamic nature of poverty as it was conventionally defined.

It was when attempting to clearly distinguish between patterns of cash flow in the formal vs the informal economy, using the concept of the degree of control granted to the end user over the variables of time (duration, frequency, periodicity) and money (amount, cash or kind), that it struck me what kind of difference does control over timing mean for money.

That is, there is a complex value processing underneath each of the decisions on allocating available cash money, particularly in rural areas where cashless transactions can tend to be more common.

When one can control the timing of one’s payments – such as the advance purchase of airtime minutes to use a mobile phone – one’s income could be called dynamic. Within any particular set of calender based time eg a week or a month or a quarter; a vast majority of the lower income bracket cannot predict their total cash income nor feel confident enough to claim it. It can be affected by seasonality prevalent in their region, or it can be purely random volatility, one’s workshop burns down in an accidental fire.

Static income is that which is stuck, such as a fixed salary paid every calender period, regular in frequency, amount and periodicity.

As cash flows tend to be volatile, fluctuating with seasonal influences, chance, and the vagaries of daily life, those whose incomes are not as predictable as a periodic paycheck, are more often than not unable to clearly state (or even know) their monthly or weekly income.

That is, even as data gurus in development banks seek to segment people into neatly defined ranges such as $2 to $4 a day or whatever, it is neither a given that people will remain within this range over the course of the natural year, nor can it be a reliable and consistent indicator of their income level – Below Poverty Line (BPL) is the concept used in The Hindu’s article above.

Therefore, if the survey studied households in an agricultural region during its fallow season the first time, and then went back to study the same households during the post harvest season the second time, that simple little factor of calender time alone can create a difference of as much as 100% to the incomes being claimed during that period. If the study does not follow up the income question to ask if there was seasonality in their cash flows over the course of the natural year and if this question was being asked during the high season or the low season.

When I did the original fieldwork for the prepaid economy project on an IDRC grant, looking at the rural household financial management behaviour in rural India, Philippines, and Malawi, I found that depending on the local region’s primary cash crop harvest patterns over the natural year (say monsoon to monsoon, or Christmas to Christmas) the entire local economy felt the impact of the difference in cash flowing through their ecosystem during the high and the low season. Or, the wet and the dry season.

It was not the naming of the seasons that is important. It is the ability of the people to forecast known fluctuations in their income streams based on patterns recognized from experience and local wisdom. Within the context of an environment of uncertainty and volatility, it offered them some anchors for planning and financial management.

Given that the vast majority of the poor in the developing world, like in India and across Africa, are dependent on irregular, often unpredictable cash flows from a variety of sources, in an environment of higher risk and uncertainty, their incomes can confidently assumed to be dynamic, rather than a static salary.

And the dynamic nature of the informal sector precludes conventional classifications and categorizations of poverty, especially by any stated amount of money mapped against a particular duration of calender time. Time and money are themselves the uncertain elements requiring flexibility built into the systems if they are to work properly in this operating environment.

Thus, I can confidently state that what the Indian data is finally providing the evidence for are the findings from my qualitative research among the same segments of the population, using design ethnography methods. That is, we now have the quantitative data to support the insights derived from the qualitative research.

Full Stop.

African Youth find Opportunities in Informal Sector Biashara

2

Biashara in Africa’s emerging economies – Nigeria, Kenya, Zimbabwe- are at loggerheads with the state.  An ever bulging young demographic  and a failure to absorb them into the formal economy has resulted in increased biashara.  The informal sector’s low barrier to entry, appeals to the young Africans’ aspirations, like Simon Danda from Zimbabwe. Rather than to idle, he is one of many tapping into biashara opportunities, mostly in trade and services. A common theme is sweeping across the the continent. Yacine Bio- Tchane observes from Benin, West Africa

“ECOWAS countries’ economies are driven by more than 50% by the informal economy. In Benin, where the informal sector represents more than 90% of the economy, graduates are found becoming drivers of taxi-motos to make ends meet. They were not able to find work within their sector so they became taxi-motos.”

But, the peculiar nature of the informal economy is a challenge for state agencies.

On July 13 2016, for the umpteenth time, City Hall officials from Kenya’s capital, Nairobi, vowed to crack down on informal sector biashara people: Hawkers, Matatus, Boda bodas, car washes, roadside eateries, and street families.

“The Nairobi County Government has formed a sub-committee tasked with restoring order and sanity in the central business district (CBD) following complaints from businesses over hawkers’ invasion of key streets. All car washes, kiosks and hawkers will be arrested with immediate effect”  – Business Daily

2 weeks earlier, the Nigerian state of Lagos had clamped down on street trading in a bid to sanitize its streets.

“Lagos State Governor Akinwunmi Ambode, said the renewed enforcement was in line with Section One of the Lagos State Street Trading and Illegal Market Prohibition Law of 2003, prohibiting street trading.” – Lagos Goes Tough on Street Trading, Hawking

2 months prior to Nairobi’s crackdown, Zimbabwe’s efforts to contain protests were met by strong resistance from informal biashara people. Traders opposed an ultimatum to either vacate streets by end of June or face arrest.

“We are not going anywhere until the government give us jobs, it’s better they kill us. I have an accounts degree and was forced into street vending because there are no jobs. They destroyed the economy and now they ban us from selling on the streets.”Ventures Africa

In Africa, the line between an entrepreneur and a lawbreaker is a thin one.

Biashara contributes to the economy

informal sector jobs

When I walk through Nairobi’s Tom Mboya and Moi Avenue, I see entrepreneurs. Young men, women, breastfeeding mothers and the disabled committed to biashara. They will sell you anything you want! From foodstuffs, to electronics, or the popular mitumba (second hand clothes) to a quick boda ride out of the city.

Arguably, no one understands the needs of consumers better than biashara people. They naturally seek out demand and will go where they can find it. The massive evening foot traffic of the continent’s buzzing capital’s (Nairobi Lagos,Harare) makes for a great concentration of demand.

More people are now turning to the informal sector. GDP and labour force statistics highlights the vital role of this segment in Africa’s economies

“In Kenya, it is estimated that the informal sector in excess of 35 per cent to the GDP and employs close to 80% of the workforce.” – Taxing the informal sector requires better strategy

“In Nigeria, informal trading of which hawking is a part thus accounts for 10% of total Nigeria’s GDP, bigger than crude production” Yemi Kale, Director General of Nigerian Bureau of Statistics

The trouble is the conflict between the state agencies’ perception and the value creating biashara. How we view this sector is important and matters for both public and the private sector in

  • Crafting public policy

Biashara people are taxpayers, and economic contributors just like formal institutions, a fact often forgotten. Just like we craft targeted policy for the formal economy, after considering stakeholders interests, so we should for biashara.

  • Product and service design for Sub Saharan Africa consumer markets

Biashara people are the consumers of the formal economy’s products and services like mobile money transfer services, mobile banking services, sports betting, airtime, and FMCGs.

We need to understand biashara’s operating environment (business or people), if we are going to sell goods and services to this sector.

  • Innovation for Sub Saharan Africa’s economies

Once we appreciate biashara people as a market segment with its own merits, we can free ourselves of our one eyed biases and innovate for their  biashara needs.

For example, we can start by not referring to them as Bottom of the Pyramid people.

 

 

*The original version of this article appeared on my blog

Lowering the barriers to effective communication is the key to sustainable development

KnowledgeOne of the challenges that we discovered during our multistakeholder workshop in The Hague a few years ago was that people tended to fall back on their expertise when faced with the discomfort of empathizing with farmer’s needs. Particularly so when the farmers in question were from Africa, and not from their own regions.

Our design visualization team – Jam visualdenken – captured one element of how this barrier manifested. Experts talked a lot about “Knowledge” being the key to effective agriculture value chain development, and how it was critical to transfer as much of it as possible. It became this big thing shoved at the ‘global South’, with little thought given to how it would be transferred, much less how relevant and appropriate the “knowledge” would be. A silver bullet, or a panacea.

Today I came across this article from Zimbabwe – “Limitations of using documents & reports to share knowledge in Africa” and I could immediately perceive the author’s deep understanding and empathy of their own local context and needs. Here’s a snippet:

While African communities have learnt from each other for generations, the conventional way of trying to spread knowledge through case studies is not yielding sustainable results.

There is an assumption that technical people can get into a community, work with local people, document their successes and share success stories with other communities, leading to adoption of best practices.

This notion misses a thorough understanding of how communities learn from each other. Almost all rural African communities rely on collective sense-making through very patient conversations, observations and learning by doing.

This led me down the rabbit hole of the authoring organization‘s website, where I came across a blog worth following for their deep understanding of the African agricultural landscape and the information needs of the farmers. Here are two selected blogposts from their site:

From farmers and traders to knowledge artisans

[… ]motor mechanics and metal fabrication are now part of the informal sector.  Previously locked in formal systems, these skills are now being unpacked and applied in informal markets.  This is leading to the integration of indigenous knowledge systems into formal knowledge sharing pathways. 

Since indigenous knowledge is more customer-oriented, it results in the production of needs-based products, tailor-made to meet the needs of diverse customers.  For example, ploughs and hoes are made as per customer requirements unlike the previous mass production ethos in the formal sector which had little consideration for existing draught power dynamics in different farming communities.
[…]
Technology and digital tools do not know empathy and why it is important.

Why some approaches and technologies are not moving beyond early adopters

A lot can be learnt from remarkable ways through which African socio-cultural systems generated and shared knowledge. There were reliable conduits for sharing knowledge from one age group to another, one gender to another and one society to another.  Besides respected knowledge brokers, each community had sense making tools linking different communities of practice. Some of these methods and tools included rituals, idioms, metaphors, stories and various forms of apprenticeship.
[…]
This is exactly what our modern knowledge systems lack. We have not cultivated proper ways of sharing the rich information/knowledge from schools, colleges and university curricular into diverse African communities.  There is an expectation that this knowledge can be shared by students after graduating. However, a lot of what can be useful in communities is either forgotten or misapplied.  More than 70% of ordinary Africans who function through their own languages, values and norms have no way of meshing what they know with the formal education system.  In most cases, their cultural values are still considered barriers to academic knowledge which is being confused with modernization.

Unless we develop verifiable ways through which knowledge is questioned, shared, rejected and value-added, it remains stuck within various communities of practice.  Such knowledge will have less developmental impact than anticipated. Academics continue to be locked in their systems, speaking to each other while farmers and rural communities continue holding onto what they know works. As if that is not enough, the language used for crafting policies in most African countries is not suitable for use by the majority but for lawyers and judiciary systems who can interpret it.

Borderland Biashara: Mapping the Cross Border, National and Regional Trade in the East African Informal Economy

efl research team

Rinku Gajera & Michael Kimani, Malaba Border, Kenya, January 2016. Photo: Niti Bhan

And, we’re back! With apologies for the long delay in posting on the blog, we’d been busy wrapping up our groundbreaking design research for development programming project for Trade Mark East Africa this past month or so. As you can imagine, the last few weeks of any project suck all the bandwidth out and leave little for blogging or writing.

Let me be the first to say that this project could not have been executed or completed without a rockstar research team – Rinku Gajera, Research Lead, and Michael Kimani, Research Associate, together put in gruelling hours in the sun, and on Skype, to help increase our understanding of the informal economy in East Africa, particularly the informal trade sector – cross border, national, and regional. Emerging Futures Lab has been immersed in design and development of pioneering methodology for mapping the informal trade ecosystem – henceforward known as biashara, at the borderlands of the East African Community, since November 2015.

tmeaFor this opportunity, I must thank the CEO of Trade Mark East Africa, Frank Matsaert, who saw our passion and our belief in the worth and value of the informal sector, and recognized the need to understand the traders, their business practices, and their aspirations, as the first step necessary for the design of interventions that are not only people-centered, but cost effective and impactful.  We were granted creative license to colour outside the box of the terms of reference with our designer’s empathy and exploratory mindset, and frame this project as an exercise in developing the understanding necessary for the design of human centered methods, tools and frameworks for development programming. You can be sure that there will be more on this topic published soon on this blog, so grab the RSS feed now, or sign up for inboxed posts.

Download the Borderland Biashara Ecosystem Mapping project at the Kenya/Uganda border at Busia and Malaba.

Nov 2015Inception report Informal Economy, Kenya/East Africa/Uganda
Jan 2016Literature Review on Informal Cross Border Trade in the East African Community (EAC), the DRC and South Sudan
May 2016Final Report, General Public – Borderland Biashara, by Emerging Futures Lab

The Kenyan informal sector’s well-trodden paths of upward mobility

IMG_4417Studying the dynamics of the informal economy of a particular region in Western Kenya has been an eye opening exercise in questioning one’s own assumptions and frameworks. Other times, I noticed answers to questions I’d never even thought of asking (an outcome of holding implicit assumptions).

One of these was career paths and ambitions.

The most obvious paths are the ones with tangible indicators of upward mobility. You begin with the bicycle, adding a cushioned seat at the back, and dream of purchasing a motorcycle, which can also double as a micro distributor at the last mile of delivery. Then, you dream of a car and taxi.

I was wrong. The decision to select one’s choice of vehicle is a professional one, and each of these transportation mechanisms is a distinctly separate cluster of owner/entrepreneurs. There isn’t much cross vehicle mobility as you’d imagine. There are older gentlemen who preferred the simplicity and the low running costs of a bicycle, saying that anything one earned after a big solid breakfast in the morning was pure profit.

However, this is not to say that the fundamental paths to expansion and growth of opportunities were as closed. They are just different from what we imagine, looking on from the outside, and the drivers for decision making are fundamentally characterized by the patterns of flow of time and money in the informal/rural economy.

For instance, in Malaba and Busia on the western Kenya/eastern Uganda border, one does not begin in Malaba. For the penniless youth emerging from his father’s shamba deep interior where no tarmac goes, its Busia that provides the facility to earn seed capital. They call this kibarua, and there’s a yard near the truck loading docks where they can join the available pool of labour. Its the first step to earning an income in the economy the world calls informal. Women prefer to grow something to sell – be it chickens, eggs or a wide variety of fruits and veg. One lady sells partially treated roots and branches that’s the seed for locally brewed beer.

Once one has amassed some cash, one can buy stock to sell, or invest in a growth vehicle for cash flow. A dairy cow is a growth vehicle, with almost daily cash flow. The challenge for growth on the farm is lack of cash money. Women dominate the informal wholesale and retail trade, just as they’ve been documented to do in West Africa. They are newcomers to trade, having been noticed in this region only in the past 10 or 15 years. They’re smarter, shrewder, and know how to leverage their extensive social networks. They are a growing demographic, particularly in Kenya, Uganda, eastern DRC, South Sudan, and Rwanda. Burundians, it seems, are happy to live on their farms and let their Rwandan friends do the hard work of buying and selling them stuff.

Then, one can move from tabletop sales into retail and wholesale. Its an interesting example of leapfrogging the middle income trap – by the time the market woman with a cloth covered with merchandise can grow her stock to rent a permanent store, she has also become a micro-wholesaler who will break bulk down to the smallest denominations for her micro retail customers to sell on their tables and mats.

Their next ambition is to become that micro-region (a radii of 50km) re-distributor. That is, by the business practices of the global FMCG majors, they want to be registered and counted. The local Coca Cola distributor has probably a hundred such wholesalers scattered around a 100km radius. The scale of operations is limited by the cost of fuel and transport.

Now, many who don’t wish for the extensive groundwork that the former ambition requires, move on to trade from Malaba. Its where the larger regional trade flows take place, not just the multiple micro-crossings of Busia (which by the way annually cross 33 million US dollars). In just one border market, there’s annual biashara worth $5 to 10 million. There will be one or two outliers to this due to natural and geographic advantages.

The energy of biashara is obvious in the market. And every market day along the better roads, the scale of trade was far more than anywhere upcountry, even the roads to Nyeri and Nanyuki. These trading ties go back centuries to before the white man came and the kings of the Buganda loved teh stuff the Indian Ocean traders brought to the Swahili Coast.

The best paid profession is that of a long distance trucker. Yet, intriguingly, young men aspire to reach this position only to acquire the networks of a broker and to retire from the dangerous business of driving heavy inflammable loads for a living.

There many such paths to live a good enough life, educate the kids in town, take care of mums back home on the homestead. The informal economy does indeed offer the lowest barriers to entry into business.