Archive for the ‘Frugality’ Category

The Informal Industrial Ecosystem: An Introduction to REculture

The Art of Seeing Beauty in Garbage, Kenya, September 2010

This article introduces and explains some things I’ve been seeing in the informal industrial ecosystem in the developing world context for almost a decade now. First noticed in 2009, I then named it REculture, a neologism to capture the vast and complex ecosystem I saw in the revenue generating facility of recycle, replace, repurpose, reuse and resale. Given contemporary interest in developed country concepts such as the circular economy, and other sustainable and ecological initiatives, I thought it timely to sit down and attempt to synthesize the past work before proceeding to write more on current events.

What is REculture?

I thought I’d start from the beginning – is there, for example, a difference between “the entrepreneur” and “the producer”, “the creator” and “the innovator”, if at all? And if none, then perhaps start to fill in some few blanks based on our earlier thinking on the BoP “consumer” and their mindset, worldview or value system.~ June 2009

In July 2009, I was inspired by my observation of a man sitting under a tree in the administrative district of New Delhi with a visibly large bag of buttons by his side. His service, to the civil servants rushing to and fro from important governmental meetings, was to quickly repair a missing button from their suit jacket or shirt. Not unlike a shoeshine boy, this gentleman’s service was on demand, while you waited, his fingers flying rapidly with the needle as he sewed a reasonable facsimile of your missing button back on for you.

Look at the unusual yet welcome niche he had found for himself! A repair service that could only work in this part of the city where the common uniform was a suit and tie and important visitors the norm.

Once he opened my eyes to what it was I was seeing on the streets – the entrepreneurial opportunities squeezed out of the margins of daily life – I began noticing such services more and more. Repair, re-use, re-purposing, resale, and, in their own inimitable way, recycling of used up or abandoned products of industrialization were turning out to provide a significant chunk of the revenue streams of many of the informal sector’s service providers who now became visible to me.

In June 2009, I wrote:

…many other such observations got me thinking about the whole RE culture among the BoP. Stepping back, if you take the broad space of REuse, REpurpose, REpair and REcycle – its the low hanging fruit for the BoP entrepreneur’s opportunities for income generation. In fact, REpair is an entire professional service area in its own right, perhaps a subset of the opportunity space in the informal economy with varying degrees of skill and ability required.

But coming back to the other three, it seems at first glance that they look to be more or less the same thing i.e. how different is it to reuse a plastic bottle to contain some liquid from recyling it? particularly if the manufacturer had intended for it to be a disposable container? Yet, from the big picture perspective, one can say (and it has been said before) the whole concept of recycling is a cost in the OECD world whereas its actually a source of income, in a myriad ways, among the BoP.

The second thing that struck me, when I pondered these signs of a post-consumption economic ecosystem, was that the actors in the informal sector – whom we now discuss as traders, fabricators, service providers – were still then thought of as the “Bottom of the Pyramid” or the BoP – the economically vulnerable, the marginalized, the low income barely making ends meet on a dollar or two a day. There was no attempt at segmentation, this was the lumpen mass of the next 4 billion. Even though the late CK Prahalad had called them out as micro-producers, creators, and innovators, in his seminal book The Fortune at the Bottom of the Pyramid, those who had grabbed the label with both hands and run with it were still thinking in terms of consumption. “How do we make products profitably for the poor?”

What about the creators, the makers, the innovators, and the producers in the informal economic ecosystem?

Again, back in June 2009, I wrote:

I am attempting to evaluate whether all our previous observations and learnings viz., “Life is hard” (the mindset and values of a customer at the BoP particularly one living on an irregular income) can help us begin to understand the other side of the coin, that is, the “innovator” or “creator/maker” or simply, the “informal business owner or service provider” at the BoP.

At this point at least, it seems to me, that rather than quibble about each individual word choice to describe “who” or “what” they are, perhaps we’re better off looking at the “why” and “how” – by this I mean, that the driver of motivation is to generate an income stream (the why) and the gaps observed, as mentioned above, are the opportunity spaces (the how). That is, the BoP seem to display more of a tendency towards ‘opportunity spotting’ (not quite the same as the word opportunists, though that may also apply in many cases or situations), filling the niche quickly with a service or product. Some of these services have arisen spontaneously around the developing world, mobile phone repair comes to top of mind.

It feels as though its a far more active than passive quality – poverty and hardship can be a powerful motivational driver in itself, though we tend to overlook the ingenuity and creativity involved.

That is, back then, just over 9 years ago, I connected the dots I was seeing in this space – the mindset and values of the low income customers and their post consumption behaviours, taken together with the “RE” space where visibly they were earning income – and framed it so:

That is, the lower income market tends towards maintenance and extending the lifespan of the products (through repair or repurposing it) they purchase rather than disposing it for convenience or replacing it for a trendier style. All very obvious, you say, but its this very same quality that leads to the wide variety of opportunities for the entreprenuerial or the innovative to make some money (or even a living). From the very basic, in terms of skills and ability such as the button repair guy to the complex, such as the mobile phone hacker, all of these services meet an ‘unmet need’ in the market, an opportunity gap which they can fill.

However, what’s interesting about this is the fact that these opportunities would very rarely be either a) spotted as one in mainstream consumer culture; b) not be a gap per se due to a difference in mindset/worldview OR even c) not be profitable enough, given the comparative cost of labour vs the price of the product involved. These conditions for making money, and more so, making money that is deemed a valid ROI seem only to be available among the lower income demographic and in the developing world.

For the precondition to their success is also a sufficient customer base seeking such a service and their willingness to pay for it,  and that, imho, emerges from their mindset as BoP consumers, one quality of which is their need to Maximise the return on their investment (purchase). This shows up in this context as a wish to REpair, REuse, REsell (for REpurpose or REcycling or whatever along those lines) – I doubt if they’ve stopped coming by from door to door among the ‘consuming classes’ in India to buy old bottles, newspapers and other sundry junk. (A sign of development if it stops?)

Once I could “see” the entire post consumption entrepreneurial activity in the informal sector, I went back to my research documentation conducted in rural Philippines and India for the original ‘prepaid’ economy work, and pulled out the patterns seen in the photographs that, when fitted together, showed all the evidence of an entire industrial ecosystem. As a working title for this seemingly vast economic space within the informal economy across Asia and Africa, I had called it REculture – the group blog went on spawn a magazine.

An entire industrial ecosystem within the informal economy based on the discards of the consumer lifestyle

A discarded Kraft cream cheese bottle would be picked out of the garbage by a waste picker and sold to an intermediary who would clean and sort these by colour and size and sell them on to a fabricator, who in turn, would convert these into affordable – and handmade mass produced – kerosene lamps, completed with spot welded wick tube.

An entire industrial life cycle from “raw material” through to “mass production” supported by distribution and retail. The only difference? The informal nature of the entire value chain and the post consumption adaptation of the materials and discards.

My concluding thoughts at the stage in which I’d left my explorations almost a decade ago can be summed up thus:

So, at this point, early stages of exploration though it is, one could say that the whole area of “post consumption” consumer practices – most of which have withered away like the appendix in the ‘rich’ world – forms one major  basis for both products and services, with value addition to varying degrees, in the ‘informal economies’ of the developing world.

There are insights to be teased out here on flexible, adaptable, ‘on demand’ business models ~ but applied outside the virtual world. Scarcity of resources and circumstance force lean overheads and inventory. Constraints of demand and customer purchasing power create their own flows in the chaos. Is there a pattern to the flow of the informal after all?

What next?

I summed up this history so as to provide me with the foundation and backdrop to pick up the threads of this conversation, now with the added insights of the past decade, and the increasingly sophisticated frameworks of framing the informal economy as a commercial environment in its own right, populated with entrepreneurs and niches that the mainstream overlooks.

As the topics of sustainability, resource conservation, and the circular economy become top of mind and critical, the early lessons from the developing world will only become more important going forward. I’ll be writing more under the category and tag “REculture” for old times’ sake.

The Resilience of Innovation under Conditions of Scarcity

Kouassi Bafounga works on a storm lantern, Bangui, Central African Republic, January 16, 2018. Thomson Reuters Foundation / Inna Lazareva

Innovating beyond the traditional tin lantern – a simple wick attached to the can – Kouassi Bafounga cuts shapes from tin cans and fixes them together with glass, string and a little petrol to produce storm-proof lanterns.

Last year, Bafounga was one of 11 winners in a “Fab Lab” innovation competition run by the French embassy and Alliance Française, a French cultural centre in Bangui, with financing from the European Union’s Bêkou Trust Fund. The finalists, chosen from more than 100 applicants, received assistance to develop their products into businesses.

Inna Lazareva writes on this “creativity from crisis” sharing stories of inventors and makers who must single-handedly create solutions for daily needs in highly volatile conditions of material scarcity.

Given the challenges faced by the Central African Republic, I see these stories as evidence of the resilience of innovation, something often overlooked when we ooh and ahh over the creations themselves.

How can we learn from this?

 

For more on Innovation under conditions of scarcity and Scarcity as a driver for innovation

A Unique Path to Development Seen for the Informal Economy

Just recently I stumbled over this slim book < 60 pages that analyzed existing data sources in order to frame an answer to the research question they posed:

How did the informal economy―markets and the private sector―develop in the absence of legal and administrative frameworks to support it?

Some of the most intriguing insights extracted here:

And they echo my own statements regarding the East African Community that its the informal sector that’s growing faster and responsible for employing the majority of the population. This makes integration and bridging efforts between the formal and global together with the local and informal even more critical.

The path to integration as described in the book may not apply to the African economies but holds some unusual insights for those in eastern Europe which may struggle with some of the same issues of top down planning and grassroots income generation.

All in all, the step by step approach over the past decade to recognize, and thus integrate the informal sector was much appreciated and if you’re interested, you can download the book here.

Household energy consumption behaviour in East Africa: Lighting & Conclusion (3 of 3 Parts)

 

Jua Kali Kerosene Lamp, Kenya

The following is extracted from a six month study during 2012 on household energy consumption behaviour in rural Kenya and Rwanda among the lower income demographic, that led to an understanding of some of barriers hampering the sales of client’s solar products in this market. This 3rd and final part will focus on fuel usage and consumption behaviours for lighting. Users sampled for this study were selected based on varying fuel consumption patterns, ranging from a single homestead to a rural hotel open from dawn to 1am offering solar powered football on television.

Fuel Choice and Consumption Behaviour is Influenced by Duration and Timing of the Need

Kerosene is the primary source of fuel for lighting for those who live without access to electricity, regardless of whether its on their shamba, or in a building in town. Not only is the reach of grid access limited to a small percentage of rural Kenyans but the cost of the final connection to the dwelling is also a barrier for many. Due to the nature of this project’s focus, the majority of homes visited were without a solar home system.

Hurricane lanterns are the most popular lighting devices among kerosene users, as the glass covering the lamp protects the flame as well as contains the smell and smoke. With prices as low as 250Kes, everyone has at least one, if not more at home and the number maintained depends on size of the family, number of buildings on the homestead and the fluctuating ability to purchase fuel.

Pressure lamps can cost ten times as much and consume far more fuel although they offer a brighter light – they were not seen in Makueni households and the only regular user was the furniture maker who restricted its use to times of high productivity during the Christmas season. In Kisii, they are owned by members of the congregation who use them once a month for religious functions and the fuel is provided by the church. Gregory the schoolteacher called them “gas guzzlers” whose bright light was not worth either the high running cost or price of the device itself.

Everyone owns a few small tin lamps but they were referred to as something discarded during the upwardly mobile climb to a hurricane lantern – “Oh, we must have a few lying about somewhere in a dusty corner” said one wife while Mama Grace only used it in the confines of the kitchen building where the open flame, with its attendant smoke would make no difference. However, due to their small size, they require very small amounts of kerosene and tend to be kept as a backup for times of need when the fuel supply runs low or to be used by the aged, such as Kilonzi’s grandmother who finds the hurricane lantern difficult to maintain.

In addition to kerosene fuelled lamps and lanterns, every home owned at least one flashlight of some sort, whether powered by dry cell batteries, grid rechargeable or disposable for what they referred to as “emergencies or needing to go outside at night”. By emergency, they meant that this form of light was faster and easier to turn for sudden need than the more complicated task of lighting a kerosene lamp, plus it could be used in wind or rain. For many, this item received first priority if resources such as batteries or cash for charging were limited.

What stood out across the board was that everyone knew, almost to the minute in some cases, exactly when they used their light source. This behaviour was evident regardless of the household’s energy source including if it was solar power and thus “free”. Answers would range in specificity from estimates “around 7pm to maybe 10pm, sometimes later” to on the dot timings “from 5.45am to 6.30am in the morning”.

“I only use it for children to study” Mama John who scrimped and saved for solar

This gives rise to the conjecture that the fundamental observation in household financial behaviour of being able to control time (duration, frequency, periodicity) and money(whether prepaid source of fuel like kerosene or postpaid like electricity), is an ingrained habit even after upward mobility has removed the need for such stringent conservation. SHS do not require the same frugality daily use and cost and this can be seen in increased use of entertainment appliances like televisions and radios but lights still follow this pattern. However, it can also be said that rural life is slow to change in response to the introduction of modern conveniences and this may also be a significant factor.

The dry cell battery

Similar patterns of duration and accuracy of timing were also observed in choice and purchase of dry cell batteries, particularly for the radio. People knew which specific programs they wanted to listen to thus the
time and duration of their use of the radio. Everyone wanted to be able to listen to the radio more often but conserved battery life for as long as possible. Many even acknowledged that expensive brands like Eveready which cost 65Kes a pair lasted three times as long as the cheaper Chinese Lion brand costing only 30kes the pair but their irregular cash flows acted as a barrier to purchase dependant as they were on what cash was available on hand (or in pocket) at time of need.

Concluding Remarks

Consumers with limited incomes prioritize household energy and fuel spending according to importance for survival. Food and thus cooking come first followed by light. Everything else depends on the criticality of need against funds available. For example, Muthoka, who was unemployed and living on his small subsistence farm deep in the interior away from a market town, said that if he had to choose between 20Kes worth of kerosene or charging his mobile phone, he would choose kerosene first for lighting was more important to him than his mobile.

Similarly, Gregory the schoolteacher, put batteries for the emergency flashlight as more important than for playing the radio. The question becomes “What can we do without?” and only one of the many respondents of the more general household survey prioritized her mobile phone over light but she was a business woman whose income depended on her being available for calls.

The caveat here is that these answers are not absolutes and while most people will say that the phone is less important, there will be times of need when charging the phone or topping up airtime will be critical.

However, unlike kerosene or dry cell batteries for light, one can always borrow a friend or neighbour’s phone for an emergency phone call. These are the kinds of trade-offs people make when living on the edge on limited and irregular cash flows.

Pricing is rarely the problem

These insights on people’s household energy management and purchasing patterns, based as they are on the limitations and timing of their income sources are what led to the conclusion that the actual price itself was not the barrier to sales but instead it was a combination of factors starting with the choice of packaging and the subsequent pricing and sales strategy.

 

Part One: Introduction to Household Energy Consumption Behaviour Study in East Africa (2012)
Part Two: Cooking

Household energy consumption behavioural study in East Africa: Cooking (Part 2 of 3)

Scrap wood fueled three stone fire in sheltered corner

The following is extracted from a six month study during 2012 on household energy consumption behaviour in rural Kenya and Rwanda among the lower income demographic, that led to an understanding of some of barriers hampering the sales of client’s solar products in this market. This 2nd part will focus on fuel usage and consumption behaviours for cooking. Users sampled for this study were selected based on varying fuel consumption patterns, ranging from a single homestead to a rural hotel catering for more than 12 hours a day.

Fuel Usage Behaviour is Influenced Greatly by Location

Choice of fuel and decisions on quantity kept in stock for cooking is dependent on the location of the primary residence rather than income. Rural homesteads in Kenya have a separate outhouse for cooking and firewood is the preferred choice of fuel even in those regions where shambas are too small to support their own grove of trees.

Kilonzi’s wife dreams of upgrading to an LPG cookstove some day in the future

That is, while Kilonzi’s wife on a large shamba in Makueni might stack enough firewood for just two or three days, collected for free from her own backyard, Mama Grace the tea farmer with land constraints in Kisii will purchase an entire tree to last her for a month. Meanwhile, the more economically challenged on small shambas devote a week foraging far and wide for enough brushwood to last for two or three months before needing to take time away again from more pressing household duties.

Charcoal is also used on the homestead but only for certain tasks like making chapatis or for quickly brewing tea for visitors or in the morning rush before school or work. Even if the charcoal is made right on the shamba from a tree that needed felling, most of it is kept aside for sale and considered a source of cash money rather than consumed as fuel.

Residents who live away from their shambas, taking up rooms in town due to their work where cooking must be done in the same space as living and other activities, cannot use firewood. In fact, if renting, landlords clearly state that the use of firewood is banned, as a safety precaution. Thus, urban residents are forced to choose fuels that can be used in small, portable cooking stoves and charcoal ends up being the most common due to its relative cost as compared to kerosene. Those who do own a kerosene stove are in the minority and again, its use is only for very specific tasks that require speed such as making tea for visitors or in the morning.

Heavy Duty Charcoal Usage by Hotel

For those whose primary fuel for cooking is charcoal, the quantity purchased is dependant on cash in hand if their income is not from a salaried position and this ranges from a ‘deben’ which lasts for about 5 or 6 days and costs around 100 – 130 Kes to an entire sack which ranges from 500 to 750 Kes and can last as long as a month. Pricing for fuel is closely related to its proximity to the source, since transportation can be expensive and convenience is a service that comes with a premium. Kerosene which sells for 83 Kes a litre at the petrol station in town was found to be selling at a rate of 140Kes/litre at a small duka deep in the interior.

Part One: Introduction to Household Energy Consumption Behaviour Study in East Africa (2012)
Part Three: Lighting & Concluding Remarks

Introduction to rural household energy consumption behaviour in East Africa (1 of 3 parts)

The following is extracted from a six month study during 2012 on household energy consumption behaviour in rural Kenya and Rwanda among the lower income demographic, that led to an understanding of some of barriers hampering the sales of client’s solar products in this market. This first part is an overview of household financial management in conditions irregular and unpredictable income streams from a variety of sources. The 2nd and 3rd part will focus on fuel usage and consumption behaviours for cooking and for lighting separately. Users sampled for this study were selected based on varying fuel consumption patterns, ranging from a single homestead to a rural hotel catering for more than 12 hours a day.

Aspirational ownership and tangible evidence of savings in prepaid purchase model of solar panel, as seen in Chuka, Kenya (Photo: Niti Bhan, February 2012)

Rural Kenyans are not very different from rural Filipinos or Malawians or Indians when it comes to the way they manage their daily household expenses. Similarities in decision making, in purchasing patterns and in observed consumer behaviour, all stem from the same underlying need to plan and manage on irregular incomes from a variety of multiple sources in harsh environments of scarcity and uncertainty. The underlying driver is always to stretch the limited shilling, rupee or peso to the maximum while keeping one’s head above water.

With the exception of the salaried schoolteacher, who managed on fixed amounts of cash paid predictably on a calender schedule, the rest juggled an irregular cash flow against required expenses, attempting to minimize the differences over calender time and as a planning mechanism across the natural year’s seasons of abundance and scarcity. Even cash croppers like Mama Grace, who received end month payments from the tea factory, coped with the significant difference in the quality and quantity of tea harvested during the wet and the dry seasons with a variance of as much as 300% between high and low payments.

Rural homesteads manage their household finances rather like a “portfolio of investments” that mature over varying times such as cow’s milk which can be sold daily for cash, while a chicken takes less time than a field of maize to be ready for harvest and sale. Thus decisions are made based on timing of the expense and the choice of ‘investment’ to liquidate on what was ‘ready’ as well as the amount of cash required. For example, in Kilala livestock market it is a known fact that livestock prices always drop in January as its time for first term school fees and everybody needs to sell to raise the necessary cash. Similarly, major purchases or cash outlays are planned for known times of abundance such as right after the seasonal harvest.

Unlike those on a fixed salary who are able to plan ahead, those on irregular incomes need greater control and flexibility over the timing – that is the frequency and the periodicity; and well the amount – in cash or kind; of their cash flow, as a planning mechanism for financial management. In fact, the greater the span of control the customer has over their time and money, as articulated above, the greater the success of a business model or payment plan. This is why prepaid airtime is the preferred model for 96% of the African continent’s 700 million mobile phone users and also why kerosene has been so hard to dislodge. It can be purchased by cash amount (say 40 Kes worth) or quantity (half a litre or 5 litres) on demand or in bulk, and then frugally used for as long as possible, allowing consumers control over their “time” and “money” with great flexibility.

Observations on household fuel and energy use reflect these purchasing patterns and consumer behaviour. Cooking and then lighting are the most important needs, and the two elements of time and money as discussed above, show up in the form of duration and location. While duration of use has a direct relationship to the amount of time and money required, location has a critical bearing on behaviour in rural Kenya as will be seen in forthcoming posts.

 

Part One: Introduction to Household Energy Consumption Behaviour Study in East Africa (2012)
Part Two: Cooking
Part Three: Lighting & Concluding Remarks

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.

What marketing 101 can teach development practitioners and academics

The entire universe of people with an unmet need that you expect your solution to fulfill is not your target audience.

The fundamentals of market analysis include the basic calculations that allow marketing managers of all stripes to calculate (guesstimate) their potential market size, and thus a realistic assessment of its value. That is their marketing universe, within which they will set targets for the acquisition of customers. That potential customer base is the targetted audience for their marketing efforts, in order to get them onto the customer journey ladder to “loyal advocates” your brand or service.

This simple yet powerful understanding is known even to Ghana’s market queens, the ladies who trade. They don’t imagine that they can serve the 100 million people without tomatoes that day. Yet these are the kinds of grand targets that development, and its little cousin once removed, social enterprises announce day in and day out in press releases.

I was lucky. Yepeka Yeebo reached out to me before a trip to Accra, where she had been commissioned to write a profile of such an entrepreneur.She has permitted me to use her photographs and to write this story of Auntie Matilda, the tomato trader of Accra, Ghana.

Yeebo_Market_01The market mummies, the market queens – the informal retail sector across most of West Africa is dominated by women. Women inherit their mother’s social and commercial networks, the goodwill of her mother’s trading relationships and thus, her social capital and repute. As Yeppi writes, there was a time when the intricate webs of economic power wielded by these ladies took the full might of the Ghanaian army to dismantle.

Gerry van Dyke has studied the customer experience design strategies the ladies use to distinguish themselves, though selling the exact same unbranded commidity. Even Unilever comes to learn at their feet, and Maggi Cubes know they can’t win if the mummies are unhappy at the margins for breaking bulk of one of those long boxes we all have at home.

Yeebo_Market_08

Break bulk is visible across the developing world’s informal economies. Just like the prepaid business model, the irregular income streams of the vast majority of the informal sector, even those who would the upper middle class of their milieu, mean that wherever one can negotiate some flexibility of time and money, their business is assured. It is a mark of trust to be able to agree to accept a payment over time.

This extends then to the way the products are sold. There is no concept of discounting for bulk purchase, simply because you’re unlikely to sink  your daily working capital into a huge bag of toilet paper. Liquidity is the real king, cash is only the manifestation in the real world. Flexibility is one of the ways to mitigate the risk of uncertainty that small business owners face daily.

Auntie Matilda’s business choices, marketing and customer development strategies, and the health of her cash flow, all depend upon her ability to build a network of working relationships predicated on trust, references, and thus, proof of performance. One wonders if the only reason she might not be formal is that there isn’t any particular segment or category in the current forms of registered businesses that apply to her kind of business.

Its time we overturned the ivory tower’s disdain of filthy lucre and trade in the city center and gave these ladies their due.

Innovation, under conditions of resource scarcity

When Mkulima Young, a social media community for young farmers in Kenya tweeted this photograph of a motorcycle modified to pump water, I was delighted. It had been a long time since I’d seen such an excellent example of innovative product development under conditions of resource scarcity.

REculture, the group blog hosted by the now defunct Posterous is gone, though Makeshift magazine still keeps the spirit alive. Afrigadget rarely updates these days, and I, too, have moved on in my interests in the past 5 years since Mikko and I first went to Nairobi for Maker Faire and research.

 

The end of the global middle class: A more frugal world?

The past half decade‘s worth of financial crises and increasing scarcity of resources have led to an increasing equalization in the global water level. Instead of the high tide that would lift all boats, the leveling off of growth is leading to an entirely different equation of purchasing power parity. Tomorrow’s equilibrium seems to imply a more frugal world. ~ Niti Bhan, 2012

I wrote this concluding paragraph just over 3 years ago. Today, I look at research from Pew that informs me the great American middle class has declined by half. An article on the Indian middle class claims they’re actually the world’s poor. And the mythical African middle class emerges, floats and sinks, sometimes all at once in the same article.

Water has found its level, and its barely staying afloat.

If indeed the global demographics are changing such that what was formerly considered the “middle class” by the metrics of the day do not apply anymore, would it not make more sense to rebase and then assess who is in the middle than to go chasing the golden children of the boom years long past?

Or, one could just stop looking for these unicorns everywhere and take the trouble to study the people who are the majority in these markets.

Either way, what was is over and what’s emerging is more frugal world with thinner wallets, fewer bank accounts and propensity to pinch their pennies. The data demonstrates it clearly enough.