Posts Tagged ‘informal’

Importance and value of Africa’s informal food markets

Kenyatta Market, Nairobi, Kenya (Photo Credit: Niti Bhan)

Kenyatta Market, Nairobi, Kenya (Photo Credit: Niti Bhan)

There’s a new book released by the International Livestock Research Institute (ILRI) and partners — Food Safety and Informal Markets: Animal Products in Sub-Saharan Africa—that probes the complicated world of traditional or ‘informal’ markets in livestock products. Here are some unexpectedly juicy findings:

Research by ILRI and partners shows that in most developing countries, more than 80 per cent of livestock product purchases occur through informal markets — and in places where there is no ‘formal’ alternative, like a western-style supermarket, close at hand. And the studies find that this situation is unlikely to change for decades to come. Also, even where supermarkets are an option, studies in East and Southern Africa have found that, due to a poorly patrolled chain of custody between producer and seller, milk and meat sold in supermarkets may pose a greater health threat than what is sold in traditional markets.


Informal & Social Measures in the Kadogo Economy (Photo Credit: Niti Bhan)

Moreover, small producers have many attractions for poor consumers. They are typically within walking distance for people who lack cars and they offer the opportunity to purchase fresh food in small amounts — part of what is known in East Africa as the ‘kadogo’ economy. (Kadogo is street slang for ‘small.’) In addition, many sellers in traditional markets will extend credit and typically offer the traditional foods their customers prefer.


Uchumi Supermarket, Ngong Road, Nairobi, Kenya (Photo Credit: Niti Bhan)

Many policymakers mistakenly believe that food-borne illness in developing regions will rapidly decline as the modernization or ‘supermarketization’ of food sales steadily supplants informal markets. But the ILRI studies show that Africa’s supermarket food is not necessarily safer than food in informal markets and also that informal markets are unlikely to disappear — and could even become stronger — in the coming decades.

Indeed, the research shows that consumers prefer informal to formal markets, and not just for their lower prices, but also because traditional markets tend to sell fresher food. They also sell local products and breeds, which many consumers continue to prefer — and those preferences seem to intensify as incomes rise. For example, in Africa and Southeast Asia, consumers often prefer local chicken breeds over cheaper imported breeds.

Freshly shredded cabbage (Photo Credit: Niti Bhan)

Freshly shredded cabbage (Photo Credit: Niti Bhan)

Informal markets are growing, not shrinking, across the developing world and in many ways mirror the “locavore” trend occurring in wealthy countries’, said Grace.If we are going to improve food safety in these markets, we need policies that are guided by an understanding of producer and consumer behaviour, local diets and customs, and interventions that can reduce illness without imperilling food security or increasing poverty.’

 A deeper understanding of the entire value web (chain doesn’t apply as the rural ecosystem is as unstructured and informal as the markets) of  these informal markets for meat, milk, vegetables and other foodstuffs will offer greater value than towards informing policy alone.

Informal retail is expected to grow, and “supermarketization” will neither come fast enough to change this any time soon, nor be able to replace the complex role the bazaar plays in both rural and urban contexts. This is worth remembering for consumer facing brands, especially in the FMCG sector, as well.

More or Less: the flexibility of the informal

One of the things that stood out for me during the recent household consumer behaviour study was the lack of weights and measurements used to sell foodstuffs and commodities in the market. There were no weighing scales at all, unless they themselves were for sale. Instead, some form of “socially accepted” measure was used to display various quantities and their price.

Shelled green peas can be purchased by quantity displayed, and similar containers can be seen for dried fish and ground coffee as well. When asked, the shopkeeper may refer to each measure by “weight”, saying this is “half a kilo” or that is a quarter but in reality, these are simply approximations.

The dried fish has been more generously piled than the shelled peas, and this too is an interesting variance – primarily across product category rather than different shops. In a market, shopkeepers with similar products act like a cartel and offer similar quantities for similar prices (unless bargaining brings down the amount or a lagniappe is thrown in.)

Note how the ground coffee, which is slightly more expensive, is displayed in far small containers, catering to the purchasing power of the consumers frequenting the market.

This is called a ‘deben‘ and it is a standard measurement for charcoal across the entire country of Kenya. Prices naturally fluctuate between rural regions and city centers, but the container itself is ubiquitious though the actual amount piled on top might change according to the frugality of the seller.

This bagging was a surprise though, as I’d only seen it otherwise in rural Philippines (in informal markets, not supermarkets). This is not common.

These so called “social measurements” are intriguing to me. They are rough estimates and approximations and no two piles or containers will ever be alike, yet customers are quite willing for them to be priced the same. There is no pressure to measure exactly or purchase by weight of commodity, something so common in the wet markets of Asia. It seems to me there’s a link between this behaviour and the level of informality of the local market, as well as a greater willingness to accept that something might be “more or less” okay. How does this relate to local perceptions of time and money, the two key uncertainties in these challenging operating environments?

Your thoughts?

Mapping the path to prototyping an adaptable user centered design process

We’ve all seen the classic User Centered Design (UCD) process diagrams, mostly linear, that attempt to communicate the steps yet unable to capture the iterative nature of the activity simply due to the limitations on how many circular arrows one can add without losing clarity. When I first began exploring the process deeply for application in emerging markets, this is the one we naturally used during a brainstorming experience with David Kelley back in April 2006:

But those of you familiar with the application in the practice of user centred design will recognize that this section applies to the design planning phase, prior to the design and development of the first prototype, boxed up here as “implementation”. You’ll also note that “User research” or rather, “Immersion” in the field, is left implicit, although one can say that it is represented by the green circle. Exploring as I was, back then, the intersection of where design met business, I felt this diagram was limited in its ability to communicate what really happened, much less why or how.

[Illustration of the Process of Design from a great height]

Shortly thereafter, in May 2006,  Damien Newman put the now famous “squiggle” up on his blog in response to a contemplative post of mine. Aha! I said, when I read what Damien had to share about his illustration:

So I decided to consider how to frame design activities in all disciplines, to discover which ones were worthy of placing on my map, could be the process one takes to set about producing a designed solution. I think in its most basic and fundamental form, the process of design that one embarks upon, can be seen in three steps/stages/phases (whatever): Abstract, Concept & Design.

At first there is a sort of theoretical, not yet in existence, essence of a thought, state or problem solution. As designers, we set about to bring that abstract state into a concept, something that can be communicated, perhaps visualized, definitely discusses and shaped. The final stage is the design of the concept, into the form, solution or final presentation of the concept.

I’m not sure if you were to have stood at Fort Point in San Francisco at around 1827, and said “We need a bridge to get over there” if that is a fair description of the Abstract, phase – but its about the time a typographer decides to start their first sketches of a typeface that it shifts from being abstract into a concept.

At a firm like IDEO, all design starts with a healthy amount of messing around in the abstract. Human Factors leads their approach to framing a design concept and problem – and they clearly (like others too) excel at bridging any gaps between these three phases, and at including the client, their customers and designers in the process.

This squiggle was in response to this post of mine from August 2005, Design vs Design thinking where I’d first attempted to distinguish between the tangible role of a human centered designer and those who were inspired by the human centered design process for business strategy and planning. But, as experienced practitioners and thinkers on the messy, chaotic, non linear creativity inherent in these activities will recognize immediately, the squiggle is too implicit to help communicate the process with clarity to audiences without exposure to the process, such as your typical client organization or institution. Linear, structured thinkers need to feel confident they understand what you are planning to do and how you’ll go about it before they’ll sign a check.

And so, we finally arrive at early 2008, where the first attempt to crudely diagram the evolving process for emerging markets and bottom of the pyramid (BoP) customers as articulated in my previous post from 7th November 2012, was prototyped so:

Quite a few circular arrows are missing from the How? and Next? phases here as it attempted to frame the bullet points from process description into a visual format. Now I hope that with the help of excellent visual thinkers involved in our current project, there is a chance that this process can be greatly improved.

Tap lock: Design that mirrors need

These are jua kali manufactured locks for taps, where the padlock goes on the little handles shown and the contraption protects your faucet from either being stolen for scrap metal value or your water being used by unauthorized people. It was seen in the market in Nakuru, Kenya.

This is a conceptual design for a lockable faucet that I spotted on YankoDesign today. The blurb says:

The concept addresses the need for keeping these faucets secured and locked as unauthorized people may use them. The Locko uses a combination lock system to keep the tap locked and only those who know the combination will be able to use it. This will help prevent water theft (yes this happens!) and wastage. LOCKO is also a 2012 red dot award: design concept winner.

Bridging the gap: boundary spanners in the informal economy

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.

The Informal Economy Symposium, Barcelona on October 12th 2012

Our aim with this symposium is to explore the global scope, innovations and potential futures of the informal economy.

Opening Keynote will be John Keith Hart, who coined the term “informal economy” and the day long symposium on the 12th of October will be closed by John Thackara.  There will be three panel discussions, as follows:


This panel will explore the scope, tensions and influences of the informal economy. It will set the stage, provide case studies, and present new themes that make clear why the informal economy is a key topic for business and society today. It will address critical questions for the symposium: What are historical foundations, contemporary developments, conception and misconceptions of the informal economy? What parts are institutionalised or marginalised and which are not?  What does regulation look like?  How is the informal economy similar or different in emerging vs. developed markets?  What kinds of goods and services does it include?  Are there good and bad informal economies? How are the informal and formal linked? How do labor, goods and services move within and between them? Why does contemporary business need to understand the informal economy?


This panel will explore the use of money and other exchanges in the informal economy. This panel builds on the previous, starting with the premise that the informal economy is a place to create new value for business and society. It will discuss the relationship between regulated finance and informal exchanges, focusing on, among other things, mobile money. Some key questions to be addressed include: How is the use, exchange and idea of money similar or different in formal vs. informal economies? How do digital technologies encourage and expand informal practices and exchanges?  What are the ways to establish financial links and other bridges between formal businesses and informal practices? What are specific financial needs in various informal economies? What are the challenges faced by companies operating in financial services and other businesses when addressing the context and practices of the informal economy?
panelists: Ben Lyon, Ignacio Mas, Niti Bhan  moderator: Rich Radka


This panel will look at innovation within the informal economy. Rather than approach informal economic practices as make-do strategies of people in the margins, panelists explore the potential for the lean and agile practices of the informal economy to adapt to contemporary global shifts. Some key questions to be addressed include: Can informal economic practices be indicators of future economic activity? What can these practices teach us about our own innovation efforts and modes of doing business?  What does the persistence of informal economies mean for the future of business? What challenges does it present? What are some ways companies can act on opportunities?

You can register for the symposium here, or follow the blog and twitter hashtag #informaleconomy.

Financial Inclusion survey and the informal economy


Gallup conducted the survey on behalf of the World Bank and their comprehensive synopsis available online (with links to the full report) offers a few more charts in addition to the map above. These look at bank account ownership among adults in different regions comparing rural to urban, genders as well as the reasons stated for not having one.

What I’d be interested in would be to map those resulting patterns against a comparative map of the percentage of the regional economy that was identified as “informal” – I wouldn’t be surprised to see a link there as well.

This is a map from 2001 using ILO data on the informal sector while given below is a more recent one which maps the percentage of the economy dependent on the informal sector.

I see a pattern that perhaps formal institutions such as those conducting this banking inclusion study are not able to, due to their preference, ideology and metrics for success. Still, Gallup concludes with:

Although half of adults worldwide do not have bank accounts, at least 35% of them report barriers to account use that public policy could address. Among the most commonly reported barriers to having bank accounts are high cost, physical distance, and lack of proper documentation, though there are significant differences across regions and individual characteristics. These barriers suggest that a key to reducing the gap in financial inclusion is the expansion of new processes, products, and technology, such as mobile banking, that can provide affordable and accessible banking services, particularly to the rural poor.

Kenya’s Kadogo Economy

Charcoal seller Margaret Nyambura, a widowed mother of four, used Sh100 we had given her to shop for food and household goods that would last her family three days.

Her priority was cooking oil and maize flour, which cost her Sh20 and Sh10 respectively. Each was measured in portions to fit her money. She bought twenty spoons of sugar worth Sh15, although in lean times she can get a small ration for Sh5. She bought tea leaves worth 15 and Rice worth the same amount, then left the rest for sukumawiki (kales), tomatoes and onions.

Everything is sold according to the amount of money one has. Things that go for one shilling include one slice of bread, five match sticks, a spoon of tea leaves and sugar, half a spoon of cooking oil, a quarter candle stick and a slice of bar of soap. Indeed, one bakery based in Industrial area now supplies half and quarter loaves of bread to Mukuru slums. ~ Every coin counts in slum ‘kadogo’ economy, The Standard, Feb 2010

When I read this detailed description of Mrs Nyambura’s shopping behaviour, I was immediately reminded of the way customers would shop in Ma Fe’s little sari sari shop in the Filipino village, right down to the ‘finger’ of sugar they would buy for 2 pesos. Intrigued by the similarity, I dug up a little more about the so called Kadogo Economy of Kenya and here’s a 3 minute video from the news as well as a few more articles from last year.

Whats interesting is that The Philippines is the other country well known for having pioneered a successful mobile money platform in GCash although their airtime tends to expire at the smallest loads within 24 hours.

The next question then is, what would be the buyer behaviour and decision making amongst this demographic when it came to purchases on the mobile platform or made via the phone? And thus, how does it map on to the insights derived from the original rural research on the prepaid economy that could influence the design of more relevant business models and payment plans meant for this mass majority market?

Something that I would like to follow up on while I’m in Nairobi next month. Watch this space.

Island Life

Shankar Jadhar’s friends describe him as an “all-rounder”. The 40 year old Dharavi resident is married with 5 children and lives close to the traffic island which he has laid unofficial claim to, from where he conducts his business. He had been a barber for 20 years but when the road was altered 5 years back he lost his barber’s stall. Now he’s set up a makeshift stall and a shack to store items for his work in Dharavi’s recycling chain, encompassing multiple sources of income from the single location.

He buys various items (shoe soles, plastic bottles, glass bottles, wiring for its coper content) from local ragpickers which he then sorts and cleans up to sell on to middle men who deliver specific goods to recycling units elsewhere in Dharavi. There are bigger operations that do the same job utilising salaried workers but Shankar enjoys the independence of being self employed and amongst his community as he works. He makes better money from his recycling enterprise than his barber stall so he’ll make haircut & shaving customers wait till evening if he has a big haul of recyclables to get through.

On average he profits Rs 150-200 per day. Sometimes he employs up to 2 others to assist when he has a lot to get through (paying Rs 30-50 per day). On further questioning of his friends it seems that often others help him for short periods at no cost as his spot is a kind of neighbourhood hangout centre – though I’ve noted on numerous visits that Shankar is always busy on something and doesn’t sit around himself. Although he has erected a semi-permanent structure on the traffic island, the authorities have turned a blind eye due to the bribes he pays 2-3 times a year (Rs 100-200). Being well regarded in the area, Shankar has never been a victim of theft.

During monsoon his earnings are reduced by around 25-35%. He also fails to earn if he is sick or during the 3-4 weddings he attends a year plus income drops during the monsoon season. I’ve started to discuss savings and loans with him and will be getting more into this during upcoming interviews. His income is supplemented by his wife’s Rs 2000 per month salary which she earns washing dishes, etc for a middle class family in Bandra for 4 hours daily.