Among several aspects that make
African mass markets more inclusive ad resilient than formal corporate marketing
systems is the ability to make sense of gossip and the grapevine productively. One
of the questions continuously asked by agricultural economists and policy
makers is: Who sets the price in African mass markets? This is a legitimate question
especially from people who have gone through the formal education system where
it is assumed that there has to be a committee that seats down to set commodity
prices. Gossip and the grapevine have enormous influence on price setting in
fluid African mass markets where there is often no institution responsible for
consolidating data from thousands of economic actors participating in a single
ecosystem.
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Besides directing price
setting, gossip and the grapevine are largely responsible for influencing other
critical aspects like measurements for different commodities as informed by gluts
and shortages. If you want to understand how human instincts direct people’s
behaviour in their work places, visit the nearest African mass market. Farmers
and traders who participate in mass markets have become adept at using gossip
and the grapevine in acquiring the ability to process real-time information. Whereas
in formal institutions like supermarkets, price-setting is directed by the
board and management, in mass markets price-setting decisions are informed by
the fluid state of affairs. No wonder the price of tomatoes is usually the same
among traders selling the same commodity in the same market. Depending on
various uses, the trading of livestock in African mass markets tends to follow
pathway shaped by gossip and the grapevine. This is also partly because there are
no formal structures of marketing goats and indigenous chickens are usually missing.
What also differentiate mass
markets from formal companies is that mass market actors understand the special
role of leaders like market committees that are also participants in selling
commodities in the same market. Being active participants, market committees
appreciate difficulties in implementing changes within fluid market operations
and pathways for overcoming such challenges. By using their power constructively,
market leaders enhance social and economic harmony.
Challenging the superficial notion of market linkages
Many government departments,
development agencies and formal private actors have a rather superficial notion
of market linkages as a simple process of connecting farmers with formal buyers.
Yet in practice, serious farmers can easily visit buyers like wholesalers, hotels,
processors and many others with no need for someone to arrange such engagements
because several formal companies have marketing personnel and contact details like
mobile numbers which rural farmers can easily use to stay in touch. The fact
that mass markets continue to thrive although formal markets that are supported
by policies and banks exist is a sign that market linkages is more than connecting
farmers with buyers.
While the notion of market linkages
is also an integral component of cartels, several examples of how and why formal
market linkages arrangements have failed to solve challenges for the majority
of smallholder farmers. If anything, market linkages tend to benefit formal
companies. Across Africa, there have
been several noble attempts by development organizations and government departments
to connect grain buyers with producer cooperatives. Riding on the proliferation
of mobile phones, these interventions have set up simple text messaging systems
where a cooperative or commodity association can broadcast to all registered
buyers with a single text. That text would describe quantities and qualities
and, if desired, the expected price. In the same way a buyer could send one
text stating requirements that would be delivered to all registered
cooperatives that would have been trained in post-harvest quality
management and marketing.
Despite high hopes that such systems
would overcome several marketing-related constraints, they have not addressed marketing
challenges because the implementers have not taken into account the larger market
ecosystem in which individual farmers have long-held personal relationships
with diverse traders in mass markets. A more surprising lesson has been that marketing
managers in formal companies have used lack of market information secure favours
from big buyers who have in turn paid those favours to cut out the competition.
The same happens in formal settings where formal companies apply to government
for permits to import some foodstuffs. Information asymmetry is used to issue
permits for the importation of commodities that are often abundant in some
parts of the country. On the contrary, through gossip and the grapevine, mass
markets are often the first to know which commodity will be in short supply or over
supplied in the next week as well as who is importing what well before policy
makers or regulators know what is happening.
Using evidence to correct assumptions about digital marketing in African
markets
Among other organizations,
eMKambo (www.emkambo.coo.zw) has been
working with African mass markets for more than a decade. After learning that
most farmers associated authentic information with voice and did not really
trust text messages, eMKambo introduced audios and radio as part of the knowledge
exchange platform. Another initial assumption was that mobile apps would
solve challenges related to information asymmetry but there was a realization that
mobile apps introduced information overload which busy farmers and traders had
no time for. In fact, the speed of transactions in African mass food
markets does not allow traders to spend time on a mobile app.
Some telling mixed results
were also experienced in Rwanda through attempts to link farmers and buyers on
a platform called Viamo. Based on a successful trial in Nepal
where linkages between farmers and buyers of harvested produce were done
through basic mobile channels, a similar system was set up in Rwanda but the
experience in Rwanda turned out very differently. A toll-free service was established
with MTN where all MTN subscribers had ten free calls each month. The service
had content for health, education, agriculture and other topics. All in
Kinyarwanda and accessible in both USSD and audio (interactive voice response).
On average, there were around 900000 unique callers to the service each month,
beating Facebook, Twitter, Instagram combined.
An option was introduced for
farmers and buyers on the toll-free service where farmers could register their
location and crop for sale, and buyers could register their desired crop and
desired location. The system would then match farmers and buyers and each would
receive SMS with the phone numbers of one another. However, the results were
not that encouraging with few buyers and farmers following up and contacting
one another. Some of the critical learnings
included the need to invest heavily in marketing digital services among farmers
in order to increase registrations.
Another learning was that most buyers heavily
relied on their personal/professional networks which were based on relations
created over time. However, the most significant learning was that providing a
new digital way to engage without personal connections is very difficult as trust
between farmers and buyers cannot easily be established through simple mobile
connections and mobile conversations. To
be fairly successful, such solutions have to be situated within existing
ecosystems, where the main players already know and trust one another through gossip
and the grapevine which is typical of the way African markets function
progressively. That is why, to a large extent, attempts to formalize the
informal sector without making sense of all these dynamics is a very stupid action!
