Posts Tagged ‘rural’

Convenience as a service

Shredded cabbage for sale, Wote, Kenya 3rd February 2012

Convenience can mean different things to the household consumer, depending on their location. In urban Chicago, its stocking up the freezer and pantry with a trip to a megastore like Costco while in Singapore it might be the ubiquitous neighbourhood hawker stand where rice, meat, two veg can be had for as little as $2.50 per person. Here in the mostly rural, arid Makueni district of Kenya where the concept of leftovers is moot and only bars and restaurants tend to have a refrigerator, convenience means stopping by the cabbage lady for just enough for tonight’s meal.

Kerosene sales, Wote, Kenya 4th Feb 2012

Purchasing patterns observed previously among those on irregular income streams have been clustered into  four major categories:
1. Prepaid or pay as you go
2. Bulk purchases of non perishables
3. Sachetization or as its called here in Kenya, kadogo
4. On demand, for immediate use

The shredded cabbage, being sold by weight or “amount” (half a cabbage or quarter) is a clear example of the last pattern and common across the world while the way kerosene is being sold could be said to be closer to a ‘sachet’ or small purchase as it tends not to be a daily or on demand purchase.

Interestingly, here I saw bulk purchasing for firewood or charcoal rather than foodgrains since most families have some land where they grow maize.  The maize is first and foremost for household use and only the surplus is sold.

So why have I called this ‘convenience as a service’?

There is a premium one is paying for the convenience – whether its the shredding being done for you or the difference in price of kerosene between the town and the village.  Someone has saved you the time and effort thus it costs money. There’s an entire economy around water and its supply chain that I’ll be taking a closer look in a forthcoming post.

Immersion in rural Kenya

Next week's office

We start the immersion phase of our project tomorrow and leave for our first location in rural Kenya today. Our focus is to better understand household consumer behaviour and our methodology is inspired by the early stage of the human centered design process.

Ukambani has been the traditional homeland of the Kamba people for at least the last four or five centuries. Although oral history acknowledges that the Kamba came from the south, in the region of Mount Kilimanjaro, the creation myth which is most popularly cited places their origins in the heart of Ukambani: Mulungu (God), who created the universe, also created the first Kamba man and woman, and placed them on top of Mount Nzaui in the fertile Mbooni Hills (roughly 20km north of Emali).

We’ll be based in the market town of Wote, capital of Makueni district.

The multifunctionality of livestock in rural Kenya

This is an interesting research paper from Purdue’s Agricultural Economics department published in 2008. Titled Traits Affecting Household Livestock Marketing Decisions in Rural Kenya (pdf), it’s abstract informs us that:

While many contemporary development programs with regard to Sub-Saharan Africa’s pastoralists promote improved livestock marketing as a way out of poverty, they also fail to take into account the multi-functionality of livestock within these communities, and thus are doomed to failure. While livestock are a main source of income for the pastoralist household, they also serve a purpose as a store of wealth, food source, and status symbol. Furthermore, cattle and smallstock (sheep and goats) fulfill each function to a different degree. Since livestock are so multi-functional, marketing projects could better achieve their objectives if they had a more accurate picture of what motivates household livestock sale decisions.

The findings from the first phase of my fieldwork in rural Philippines and India identified the tendency for livestock purchases to be perceived as investments, maturing at different times over the course of the natural year. A piglet, for example, could be used as an investment – to be sold when adult for 2 or 3 times its original cost or as a cushion against shock – to be eaten as food or sold in times of need. Whereas it was rice or wheat that tended to be used as a store of wealth by the Filipino and Indian farmers, this paper demonstrates that rural Kenya pastoralists display the same behaviour, only changing the form of the stored wealth from grain to livestock.

We cannot look at any rural marketing strategies without first understanding household financial behaviour (or consumer behaviour as traditional marketers are wont to call it, though that can be misleading) and many of the traits so displayed offer a challenge to conventional business practices and market entry strategy.

Here’s a lovely paragraph from their research paper which echoes my findings, giving me confidence that my findings from the upcoming rural Kenyan fieldwork will only underscore the basic patterns of rural financial household management already seen elsewhere.

Given the emphasis placed on the multi-functionality of livestock in the literature, the implication is that households will treat livestock similarly to a savings account or stock portfolio and typically (and perhaps reluctantly) only sell livestock to cover cash shortfalls when certain necessary expenditures arise. Depending upon the household liquidity of livestock, animal sales may take place frequently to cover living expenditures or infrequently to cover lumpy expenses such as school fees, tuitions, and uniforms. Additionally, pastoralist households likely hold livestock as a buffer against future uncertainties and obligations that cannot be completely foreseen.

Lack of liquidity among rural households has often led those evaluating the so called “base of the pyramid” households to inaccurately assess purchasing power based on availability or spending patterns of cash money whereas in actuality cash money is rarely held onto and rapidly converted into tangible goods as a form of investment in a diversified portfolio.

If interested in comparisons, my second link above ‘findings’ is the final paper I’d submitted to the iBoP Asia project in 2009 on the ‘Prepaid Economy’ research.

Human centered design: Surprising insights from rural Kenya

One of the most surprising things that struck me over the past couple days of running around doing recce visits for our upcoming rural research was just how rapidly and how well the concept of the user centered design (UCD) process and thus, the human centered approach to research and development was not only understood by our rural hosts but how much it was appreciated. As others in the field know, it can often be a challenge to explain to clients why user research is critical and what kind of difference it can make, more so in the former rich world.

Even the local councilor’s political protege beamed when he heard that it was critical to understand ‘his’ people first and their daily life before coming up with any product, service or plan. In fact it makes me wonder whether his little part of the world is in for any changes?

Mind you, we were extremely blessed during our visit to Makueni district – one of the more challenged parts of Kenya, where the arid landscape can suffer from insecurity of such essentials such as food and water.  Our contact there introduced us to his old friend, who was in between contracts, and Rafael (whom I’m sure I’ll be mentioning more in future posts) turned out to be an experienced expert in poverty alleviation programs and a trained anthropologist to boot.  Our initial meeting rapidly turned into a project planning session.

But that’s a welcome side note. I started this post because as we were discussing the methodology and approach that I intended to use for our consumer insights research, I found that not only was the UCD process grasped rapidly by all the others at our table, its value was also appreciated and understood.

As our local businessman friend explained, too often products for their market were simply direct imports or secondhand and shoddy goods “sent to Africa”. The fact that their community’s lifestyle and daily challenges were considered important enough to be understood first before the development of any strategy or device was felt to be a mark of respect.

It makes me ponder whether we do the economically or infrastructurally challenged a disservice to continue to think of them as the BoP – no one, if asked, would ever consider themselves the base or bottom of anything.  And I wonder if that’s why so many of these socially beneficial products or poverty alleviation products and programs fail because to embrace them would imply to one’s peers and community members that one was ‘beyond hope’ or ‘poor’ regardless of one’s one economic challenges?

Rise of tricycle pushcarts in Mexico

ClubOrlov has a guest post from a small Mayan fishing village in Mexico by a writer only known as Albert, who observes this informal economic activity and its players closely:

photocredit: author

What struck me is that I cannot recall a time in the past decade that I have been observing these vendors when there were more of them. Call it a sign of the times, but every few hours another passes by the front of my house, shouting out what he or she is selling. In the morning its newspapers and fresh, hand-made tortillas. Around lunchtime is it fresh garden vegetables, epizote, bread and other kinds of unprepared food. There might be a tricycle for fruits and juices, another for tomatoes, onions and peppers, another for potatoes, beans and rice. By late afternoons they may pass by with fresh sweetbreads, steaming hot tamales, or corn on the cob.

A man with his tricycle grinding stone offers to sharpen machetes, knives, scissors, shovels, or any other sharp objects. A man with a blender (12V but it could as easily be pedal-powered) makes cups of shaved ice with sweet corn or coconut.

You can buy a tricycle brand-new, assembled, already painted in taxi colors of orange and white, and be ready to take a fare straight from hardware store to wherever they are going. The price of a new Chinese-built trike is 3200 pesos, about US$229.32 at today’s rates. The board that goes across the bars for a seat was salvaged from the trash at no cost, but perhaps some cushioned fabric is sewn over to help you through the potholes. Typically a fare pays 20 pesos ($1.43) for up to a 10-block ride.

I asked a tortilla vendor who plies a regular daily afternoon route how much he sells in an average day. “100 kilos” is what he said. His corn tortillas sell for a 3-peso mark-up over the tortilla factory (and there are three of them within a 5-block radius). So if he sells 100 kg, he makes 300 pesos per day, enough to pay for the tricycle in just under 11 days. Perhaps his wife has a masa roller and automated oven at home and he makes his own tortillas and the margin is even better.

Stopping by the largest of the tortilla factories in town — a one-room addition to a family home, which now employs three women from outside the family to turn corn meal masa into machine-stamped tortillas — I inquired how many tortillas they make in a typical day. “Ocho o nueve,” she said, meaning eight or nine metric tons — 8000 to 9000 kilos — and remember, this is just one of three within a short distance, and many people prefer to make their own at home. The entrepreneurial drive explores for available niches and fills them. Many of these factories supply restaurants and grocery stores. Retail home sales pass through bulk buyers at the tortilleria, like my local trike man, who do just fine with the small margin people are willing to pay for the convenience of not walking around the corner.

I noticed that my man sometimes gets lucky and lands a really big sale, however. Maybe someone is throwing a big party (and this happens often) and needs 20 kg. Or a tendajón finds itself short on a holiday weekend and buys 50 kg. His route is pretty small, just a few blocks, but if his son could run his trike in the mornings, or a second trike in the afternoon when he is making his rounds, perhaps he could extend his family’s range and double their earnings. Then again, as I’ve seen, he’s not interested in that, preferring to live quite adequately on 300 pesos per day ($21.50) in a town where the average unskilled worker makes even less than that. Or perhaps he has another job already and is just enlarging the family’s income by putting in a few extra hours while schmoozing with his neighbors.

For me, I’d rather save 3 pesos and ride my bike a couple blocks to the tortilleria, but that’s mainly because, being a writer, I need excuses to force myself out of my chair. As times have become tougher for average people, I’ve also noticed more homes along my bike route opening their front rooms to make tendejóns or comidas economicas. A comida economica provides a home-cooked meal with table service, giving the buyer a plate of whatever the family is making that day. A tendejón is an informal home store. It might have home-grown pigs, chickens or eggs for sale, or garden produce. It shares the same root word, tener (to have), as the more formal store or mini-mart (tienda), but whether for legal reasons or just wanting to keep it more neighborly, a tendejón is an unpredictable collection of wares in someone’s living room, next to their Christmas tree and fluorescent blinking statute of the Virgin of Guadelupe.

Between the tendejón and the tienda lie the more formal abarrotes, or package stores, which usually sell cold beer, insect repellent and junk food. These are usually under a residence or in an adjoining building to the family’s principal dwelling. There are one or more abarrotes, tendejóns and tiendas on nearly every block.

Tricyclos are a common sight in much of Yucatán Peninsula, as they are in Asia, Africa, South America and other parts of the two-thirds world. In the United States you mention a tricycle and people think of Monty Python or Laugh-In. In the global south they are multifunctional and ubiquitous. You see them as fishermen’s friends, beach-roving gear-buckets for surfers, portable crepe parlors, bellhop cabin service, and the poor man’s moving van.

Low Income Household consumer research in rural Kenya

Roadside clothing shop, somewhere between Emali and Wote, Kenya Nov 2011

In a couple of weeks, I’ll be starting a whole new set of fieldwork in rural Kenya.  This time we’re doing something closer to the better known applications of our human centered design approach for increasing our understanding of people. It will be among rural ‘BoP’ households on behalf of a consumer product that’s retailed in leading supermarkets. While our previous client project allowed us to delve deeply into a topic that interests us both – mobiles, internets and cyber cafes – I’m looking forward to the opportunity being made available to me to finally be able to do something approaching the ‘prepaid economy project‘ from two years ago.

That is, I’ll have the chance to find out how those on irregular income streams manage their household finances and share this openly on the blog. Since it is also a rural location, it maps on almost exactly to the criteria of the previous locations in The Philippines and in India thus permitting an excellent opportunity for contrast and comparison. What’s exciting me however is that this will be in Kenya, home of the mPesa mobile money transfer system, and I want to see if it will be mentioned by any of the respondents in their answers to the same set of questions I’d used previously.

That is, without any mention of it from my side, I want to see if MPesa has made any difference to the way rural folk deal with emergencies or planned expenses or any other aspect of their daily life.  If there’s anything of note, my hope is to be able to write a comparitive paper on it and extend the findings from the previous research. Of course, our current client will also receive what they have asked us to find out for them – its just that its all under an NDA.

This series will be categorized under the Project category titled “Prepaid Kenya series” and I’ll be using “prepaidkenya” as a tag to all relevant posts, if you’d like to follow along.

Pondering a new prepaid research focus

Ever since I completed the first Prepaid Economy study which looked at how those on irregular income streams managed their household finances – focusing on rural Philippines and India – I’ve been curious about rural Kenya. I’ve long wanted to delve into the impact, if any, of the mobile money systems that have rapidly gained popularity in the country.

My thinking goes that if I were to ask the same set of questions as I did in Philippines and India (and as John Lumbe did for me remotely in Malawi) without any prompting, then if services like MPESA et al had indeed made any signficant social or economic impact in the ways people deal with and manage emergencies, loans and planning for large future expenses, it would emerge spontaneously in the answers given.

Now it looks as though I may just get my chance to follow through with this dream in at least two rural locations, early in the new year. Lets keep our fingers crossed.

At the inflection point of high growth to mature plateau

Focus Cyber - the largest one in town, Wote, Kenya 1st Nov 2011

The only other cybers we’d seen this packed till now had been those in Nakuru – a veritable boom town for the industry- since in the past 5 years, the numbers had grown from 10 cybers to the current 77 not including the ones in the process of opening.  Focus Cyber in Wote, in an entirely different province on the other side of the country was the largest among the 5 or 6 cafes in this town among a mostly rural area thats more economically challenged than the other places we’ve seen.

Alex the manager mused upon the future of his business –  it actually struck him during the course of our conversation that the boom had begun suddenly in late 2009, gone on for a while and he felt that it had begun to taper out earlier this year around April or May. In fact, he conjectured, would next year be as good as this one and was the boom period over the business?

This observation inspired us to take a closer look at Wote’s ‘cyber boom’ aka the growth phase on the industry growth curve – here, it was less to do with increasing numbers of cybers the way it was in Nakuru. The push towards increasing use in internet – Alex’s cyber had been the first in town, opening its doors back in 2007 – had been impelled the increasing digitization of Kenya’s institutions – both government offices as well as educational institutions.  A recent spike in business seen by cybers in Wote (we’d also visited another location in town) was in September, just before the national examinations.  Now that examination registration for high school students could only be done online (just like KRA pins and VAT submissions) even teachers were coming into town from remote rural locations to register their students. The town itself had seen parents, students and teachers – the educational system as a whole – go online for a variety of reasons such as exam prep, registration and research, during this period.

Now though there was  directive from on high that all schools were to obtain their own computers and this factor was what made Alex ponder the future of his cyber traffic.  In a very different way from the urban digital plateau and decline seen by the industry in Nairobi, Wote was reaching a saturation point in that anyone who wanted to go online was already going online and there were enough cybers to support the existing business.

Single computer outpost off tarmac on the way to Wote, 1st Nov 2011

In way this could be said to be an inflection point for internet awareness in this region – Elizabeth from the other cyber cafe felt strongly that mobiles were not at all having an impact on their business. Her rationale was that customers found going online with the phone too expensive, approximately 4 Ksh a minute versus the 1 Ksh a minute that was standard in Wote. Only those who came in to town from remote locations were using the phone to browse – they’d stop by the town’s cyber to set up all their browsing needs.

Neither cyber cafe had observed any increase in ownership of personal computers or other devices. The computer and the internet seemed to have found its place in the community, allowing cyber cafes to continue their roles as intermediaries across the digital divide as well as business bureaus and office support services.