Trade is the network

By | April 19, 2016

Trade is not a verb or a noun. Trade is a living, breathing network of give and take. When Doc and gang wrote The Cluetrain Manifesto all so many years ago, the first chapter described teh “bazaar” – that markets are conversations was a revelation to the first world in the generations since the end of the World Wars, now almost a hundred years ago.

The conversation, that is, the social network, is the market, and its characteristic of the developing world’s informal economies. The informal trade ecosystem is a complex web of trust and transactions. Keith Hart made mention of this in 2006, and Oliver J. Walther tried his hand at network analysis of the trader’s cross border trading connections in West Africa in 2015.

Inspired by the existing literature, we went off to look for the value web at the last mile of globalized trade in Kenya. We went right to the border and made ourselves comfortable. We stumbled over a rather enterprising category of informal businesses that we’re calling the value creators. We can’t actually say how common they are, but their peer group does this at a much less intense way. Many seek to scale out of having to nurture a customer base.

Others, however, leverage the network, and their geographic location in the borderland’s rather distinct ecosystem of economic opportunity. We don’t need to raise teh ghost of that dead horse, the unemployed African youth, and we don’t need to belabour the point that Kenya’s youth employment is far too disproportionate to its relatively better educated population.

These value creators nurture their networks, and focus on developing up and coming retail traders, newcomers returning to work after the kids are in school, as well as building their own trusted business connections. Their web of transactions of value are their stable sources of demand and currency.

This is Alice’s business, mapped out to highlight the various exchanges of value that take place.

impact web by rinku gajeraAs a value creator, that is, a successful entrepreneur, Alice’s rise helps raise the level of a number of boats in her network. Not included here are the transporters, and the cobblers.

9 years ago, Alice was selling petticoats and curtains on the street, just like everyone else after a few years of marriage, now that school fees must be found. The establishment of a rented store front offering school supplies, shoes, bags etc including custom made leather shoes, and the growth of a wholesale business in mitumba are all a function of her network and delivered by them.

Given that 80% of the employment in Kenya is from the informal sector, of which around 70% are in wholesale and retail trade, and hospitality – at the very least half of all the employment is through this very network of commerce and trade. As teh growth driver for employment, we need to look at the informal sector not through the lens of the formal, where it doesn’t fit, but within the context of its own ecosystem and operating environment. And, that is, the informal economy, where the majority rely on multiple income streams from a variety of sources to manage their household finances rather than a predictable, periodical paycheck.

This is the mainstream economy in countries like India, where 92% of the employment is from the informal or unorganized sector. Isn’t it time to close the gap?


Leave a Reply

Your email address will not be published. Required fields are marked *