The movement of former commercial farm workers and procurement specialists into informal agriculture markets is improving the quality of commodities and services
Charles Dhewa
While the Zimbabwean economy has noticeably changed over the past few decades, ways in which organizations and companies function have largely remained the same. Most companies and banks are still driven by beliefs and methods inherited from the West. Since the economy is now a combination of formal and informal activities, one expects to see appropriate methods that support exploitation of emerging opportunities and alternative business models.If properly mastered, these new models can lead to sustainable economic development. For this to happen, organizations have to shift from command-and-control to organizational models fit for the knowledge-driven economy.
From indigenous to commercial
Traditionally, the Zimbabwean society had a tacit mechanism through which skills and knowledge were transferred from one generation to another in line with a subsistence life. That is how artisans and farmers forged career paths. There were no formal Small and Medium Enterprises which enabled formal and informal knowledge exchange.
In the new economy, formal organisations are struggling to cope with a shift where indigenous knowledge systems are moving to a commercial stage. This development is questioning the long held myth that indigenous knowledge can remain pure and undiluted in rapidly globalising world.
Retrenchment of employees from formal organisations, happening over the past decade, has offloaded some formal skills onto the previously very informal sector. For instance, formally trained motor mechanics and metal fabricators have joined the informal sector. These skills which were previously locked in formal systems are now being unpacked and applied in the informal sector. This is leading to the integration of indigenous knowledge systems into formal knowledge sharing pathways.
Since indigenous knowledge is more customer-oriented, it results in the production of needs-based products. For example, ploughs, hoes and other farming implements are being produced as per customer requirement unlike the previous formal mass production ethos where there was little feedback from farming communities.
The movement of former commercial farm workers and procurement specialists into informal agriculture markets is improving the quality of commodities and services. This injection of formal skills into the informal sector means the informal sector is no longer what it was before these skills invaded the market. Unfortunately, there is no supportive policy environment conducive for this new knowledge ecosystem.
The way local authorities allocate industrial areas is no longer suitable for the new economy. They should foster an environment where farmers, traders and consumers meet without many hustles. The approach should be more about designing market hubs than trying to fit everything into structures built based on colonial architecture. A collection of farmers and traders doing business is different from a supermarket contracting a few farmers on the other side.
In order to thrive in uncertain economic environments, formal organisations should reinvent how they work and create value. Rather than continue relying on command and control, they should learn from the informal economy which is coming up with new organisational principles that are adaptive and decentralised. One of the lessons from the informal market is that it no longer makes sense to separate thinkers from doers.
Farmers, traders, consumers and all other actors in the value chain can be either doers or thinkers at the same time. Besides creating flexible organisational structures, the informal sector has unique ways of grouping actors with similar interests to create value together.
Naturally, SMEs try to cluster themselves. Instead of spending time to understand what brings SMEs together, policy makers are busy pushing formal policies to determine resource allocation. They need to understand how commodities bring people together not how buildings and individuals do so. Unlike the formal system where knowledge and information sharing tends to be systematic, the informal economy functions on social cohesion, trust and relationships. These trigger knowledge sharing.
You can’t just get into a market and say, “please give me information” because without trust and relationships you get misleading information. In the market, individualistic people don’t get useful information. Knowledge sharing can start as a story and identification of common interests before knowledge sharing patterns open up.
Need to understand governance issues in the informal sector
There is still a lot to be understood about how SMEs are governed. They still have their own ways of forming Communities of Practice which determine when to start work and when to close. Formal institutions have policies and procedures such as working hours, leave days, etc.
It will be informative to find out how SMEs handle these issues. What attributes make SMEs work well without policies and procedures? Answering such a question is a fundamental part of understanding the new economy.
While women and youths are financially excluded, they dominate the informal and SMEs sectors. On the other hand, national Research and Development efforts do not contribute to the SMEs sectors. Most graduates do not see the informal sector as a source of knowledge and employment. Yet in SMEs, knowledge is cultivated and strengthened between owners, employees and customers.
Most SMEs are run by extended family members and this sustains the whole business. Skills are transferred from brothers to cousins and to other relatives. Knowledge transfer is faster in a family business compared to strangers. That is why many SMEs started off working for their relatives.
The power of open knowledge
sharing
An open knowledge sharing system makes informal systems more powerful and efficient than formal systems which try to use workshops and training courses to share knowledge. Since most SMEs do not work in buildings, learning happens through observing as well as casual work and contracting. A good example is in the commuter omnibus business where 90% of the drivers were previously conductors and hwindis.
The open knowledge system enabled them conductors to learn through observing. They were able to gain the necessary confidence before working hard to become drivers.
The majority of connected SMEs obtain bigger contracts than they can fulfil and end up sub-contracting to their peers. As a result, knowledge is transferred to peers since the one who has the contract ensures high standards are adhered to.
In addition, big companies which sub-contract SMEs extend knowledge through insisting on specific standards and specifications. That is why we end up getting high quality furniture at Glenview 8 informal market comparable to what you get in Pelhams.
Standards and specifications result in numerous knowledge leakages. The way SMEs are clustered reinforce the same bargaining power and unwritten agreements about pricing. That is why the price of scotch-carts is almost the same in Siyaso — Mbare and Gazaland in Highfield. SMES have also gained knowledge on how to determine the bottom price after analysing labour and the cost of raw materials.
Farmers, traders and borrowers not to be treated like irresponsible children
While availing inputs and finance to farmers and traders is a noble thing, these economic actors should not be treated like irresponsible children to be subjected to excessive command-and-control. Such approaches create all kinds of incentives to manipulate the system. Farmers and borrowers end up self-optimising instead of doing the right thing.
The power of peer pressure is often underestimated or entirely ignored by command-and-control thinkers. Organizations have to work hard to move away from prescriptive approaches which limit human potential. They must look for and embrace holistic technologies that enable human creativity and potential.
A lot of socio-economic re-alignment is required if our economy is to prosper through people acting collectively. One area in which the informal sector is learning from the formal sector is information management.
The informal sector does not have an explicit information management system. On the other hand, the formal economy had its own information management system which informed pricing, management practices and oligopolistic tendencies.
The indigenous knowledge system also had its own system supported by tacit knowledge gathering through chiefs, families and clans. This knowledge is now finding its way into the modern economy without a proper information management system. For example, food preparation systems and recipes held by grandmothers are not being adequately documented and shared with the young generation.
Strengthening a demand-driven economy
Systematic knowledge sharing pathways linking Communities of Practice in one business cluster with those in different locations or town is becoming very urgent. This will systematise the informal economy so that it informs policy. There is a pattern behind what looks like a chaotic sector. We need a mechanism for tracking where those who were retrenched went with their skills. In most cases, these skills have been blended with indigenous knowledge resulting in the current improved quality of commodities and services.
Former extension officers and farm managers who have moved into agriculture and markets are contributing to the high quality of commodities.
Fitter and Turners who have moved into the informal economy are also contributing to improvements in the quality of engineering products.
We should revisit our tendency to treat formal and informal economies as distinct entities yet there could be an expanding middle part where knowledge blends are emerging.
That we are now a demand-driven economy is no longer questionable. If you look at sizes, packaging and prices, you can see that most products are made as per demand.
There is something for one bond coin because that is what most consumers can afford. The informal market does not speak in kilogrammes but dollars.
Colonial measurements which we have been using for generations are slowly giving way to a blended vocabulary in the informal economy. Rather than relocating SMEs, policy makers should gather adequate evidence and then provide appropriate infrastructure.
Charles Dhewa is a proactive knowledge management specialist and chief executive officer of Knowledge Transfer Africa (Pvt) (www.knowledgetransafrica.com ) whose flagship eMKambo (www.emkambo.co.zw ) has a presence in more than 20 agricultural markets in Zimbabwe. He can be contacted on: [email protected] ; Mobile: +263 774 430 309 / 772 137 717/ 712 737 430.