Agri Value Chain Virtual Discussion Series – Informal Markets

Informal trading has always played a role in South Africa’s economy it creates livelihood, opportunities, contributes to alleviating poverty and serves as a buffer between employment and unemployment. This session is part one of a two-part session focus that takes us into the fascinating world of informal trade. A large number of informal traders have been left vulnerable by the lockdown with most losing up to 60 percent of their income. In this session, we hear from informal traders as they take us into how they are adjusting and recovering from the changes.

The session is anchored by Dr John Purchase and the panel is made up by Louw van Reenen – Beefmaster, CEO, Izaak Breitenbach - General manager of SAPA’s Broiler Organisation, Clive Tigere – Entrepreneur - KC Hatchery – Success Story and Informal traders from Soweto and Alabama.

Viewers are introduced to informal traders through a series of video snippets. Each of them run a unique small business and they each explain the mechanisms and operational processes of their businesses. Sibongile Khumalo sells amagwinya, amakota and pap. She talks about the challenges she has faced since the lockdown which began with finding transport to get to the areas from where she buys the ingredients to make her stock. She laments a loss of income due to her not being able to sell from the bus stop where she used to operate before having to move into a shop to adhere to lockdown regulations. Mary who operates from Alabama in Klerksdorp seconds Sibongile’s sentiments by giving her testimony of how her business has suffered during the lockdown. The common thread among the featured traders is that they all have hope that the continued ease of restrictions will improve each of the economic situations.

Louw van Reenen says the difficulty with the informal market is that it is often not defined or quantified. “We suspect that it could be anything to the range of about 20 billion Rands of protein that goes to the informal market each year.” He goes into the complex nature of the market and its operations. He also highlights some of the challenges that the lockdown presented to the informal market link in the value chain. “Unlike some of the bigger companies like corporates and restaurant groups, there is very seldom a payment problem in the informal market. They are so on the tight rope that they never want to take chances with their supply.” Louw speaks of informal traders as astute business people who have the finger on the pulse of success in the value chain. The panel agrees that this is a sector where small business development can be accelerated in South Africa and give the economy a boost.

Izaak Breitenbach echoes Louw’s words saying that informal trade forms a huge part of their market. He says about 20 percent of chicken slaughtering happens on a small scale and not in large corporations. He also shares the massive ways in which the different lockdown levels have negatively impacted a percentage of their business which is served by informal trade. He highlights the plight of communities in rural areas and how they have been the hardest hit because informal markets operate primarily in those areas.

Clive Tigere shares his informal market success story. The young entrepreneur from Louis Trichardt in Limpopo started breeding broilers while in high school which opened his eyes to the business opportunity that lie in chicken trading. Once he completed his studies, Clive identified a gap in the market and started his hatchery. “At the moment we sell about 17 to 23 thousand birds a week and I would estimate that we have a 3 to 6 percent share of the informal market trade in Limpopo.”

The panel explores ways in which government can assist informal trade in regulating business structures to make things easier for entrepreneurs in this market. Louw suggests making use of a better-organised logistics system to get the product to the people in a more convenient way.

Francois Strydom, Senwes Group CEO, wraps up the conversation by stating that the importance of the informal markets often goes unrecognised. He says it is important for commercial farmers to heed the importance of this sector and access these market. “This is a market that has unlimited potential.”

Keep an eye out for part 2 of this discussion which will be available on the Agricultural Value Chain | Virtual Discussion Series platform, come Monday, 22 June.