My recent diversion into exploring the increasing visibility of the informal economy in the developed world has been providing much food for thought on the perceived boundary between the formal and the informal. More so, than in Europe, does the need exist among the most economically challenged across the still developing world for ways and means the grassroots entrepreneurs can aspire to their economic ambitions.
This though then reminded me of some articles on the topic of boundary spanners – while they look specifically at different types of organizations, it struck me that the same concept could be used a lens by which to assess the ‘borderlands’ between the formal and the informal economy, especially in the developing world where a very significant proportion of the population earns a living from the unorganized sectors of society including subsistence farming.
What are some of the existing ‘bridges’ that I’ve seen?
Prepaid airtime for mobile phones
As the business model that made mobile phone ownership and usage viable, feasible and desirable for the mass majority in the developing world, this is the best known example of a transaction model that bridges the informal economy and the formal. Even subsistence farmers and daily wage labourers, living on a pittance, can purchase a service from some of the largest and most profitable companies in the world.
The flexibility inherent in this model transfers the control over time and money to the enduser, not imposing a payment amount and deadline like a monthly phone bill does.
Informal trade networks
Whether it is television sales in a rural African market or the initerant hawker with sachets of FMCG brands of consumables like coffee or dry cell batteries, when products are sourced from the erstwhile formal manufacturers in China or elsewhere, there is a natural bridge that spans the boundary between the two.
What are the touchpoints where this occurs and how and when it works is an entire area that needs a closer look in order to understand what works and why.
Small scale industrial (SSI) value chains
From agarbatti makers in rural India to artisans making crafts for sale in Kenya, this is the reverse situation from the above, yet again offering a bridge for cash flow between the formal and the informal. A well known example is the Amul brand of dairy products, which can be traced back to the cowherd in his village.
If a cooperative has reached formal status, does it naturally and automatically transfer that to each of the members or will the subsistence farmer or village entrepreneur still be considered an unseen member of the vast unorganized sector?
Essentially, it seems as though that at point point in the distribution network or supply chain, the locus of activity shifts emphasis from one to the other. And at some point the red tape that separates the two begins to act as a barrier. At least in much of the developing world, such as in India where close to 90% of those employed are classified to be working in the unorganized sector, this red tape comes with additional social and economic hurdles which seem too challenging to be crossed.
How then can the concept of boundary spanners help in this case? By framing them as those who go back and forth between the rigid and the flexible or as a semi-permeable membrane that can offer benefits to either side? This line of thinking will continue to be pursued.