Growing relevance of the informal market

11 December 2020 | Bankwese
Frans Uusiku, Market Research Manager, FirstRand Namibia



The economic landscape has evolved in recent times and is becoming increasingly characterised by changing consumer tastes and preferences around the consumption of goods and services, combined with a heightened level of entrepreneurial spirit, especially among women and young people in agriculture.

These changing dynamics around value chain development across industries have an implication for the role of the banking sector as an important enabler and catalyst for economic growth. The reality is that the proliferation of informal side-line businesses in the form of hawkers, vendors, etc. has increased now more than ever as households seek alternative income sources due to worsening economic conditions that have been compounded by the impact of the Covid-19 pandemic. The current economic circumstances certainly do not reflect a “business as usual” scenario for both households and businesses and neither does it for banks. Therefore, as a responsible financial services provider, one of our important promises is to continuously question the status quo and interrogate how we should align our products and services in a way that continues to maximise and preserve the wealth of our stakeholders.

While this phenomenon is not unique to Namibia, the growing relevance of the informal market is often mirrored on the belief that “the informal sector exists to fill the gaps left by formal-sector economic activities”. Anecdotally, the informal market has grown more rapidly in the northern regions of Namibia as some people who have recently lost jobs due Covid-19 or could not find work in town, had to move back to rural areas. The inherent lack of tenure security that has traditionally served as a barrier for households to access financial services might have also contributed to these informal market dynamics. As we ponder on how best to capitalise on some of these emerging opportunities in the informal market, the following two strategy questions could serve as a starting point towards this conversation.

First, how can we adapt some features of informal financial institutions to improve our ability to service informal operators and ultra-low-income households?

Second, how can we forge strategic linkages with informal financial institutions to deepen our participation in the informal market ecosystem? This is particularly true for the deep rural areas where proximity to towns remain a stumbling block towards achieving financial inclusion.

Interestingly, a review of the informal market in Namibia shows that a greater proportion of informal traders in the far northern areas are trading in general enterprises such as fresh vegetables, poultry and meat. Whereas the central and coastal regions are mainly dominated by the industrial market such as auto mechanic, welding and upholstery activity. Therefore, from an informal market perspective, the northern region serves as an important jurisdiction for market penetration due to comparative advantage in the production and processing of fast-moving consumer goods along the agriculture value chain.

This implies that there is a relatively high degree of money circulation in the northern economy, especially during the wedding and festive seasons. The region also offers an immense value chain financing opportunity due to a broader market exposure - locally and by extension the neighbouring countries (Angola and Zambia). Therefore, to overcome the current concentration risk and find alternative revenue streams, a value-chain approach is recommended. Credit and lending solutions can be provided to backward linkages and transact and invest solutions can be provided to forward linkages.

Soortgelyk

 

Pastoor verkrag glo tienerseuns

8 ure gelede | Howe

Augetto Graig – 'n Pastoor wat tereg staan op vier klagte van verkragting van vier minderjarige seuns, is op borgtog vrygelaat.Die seuns is almal onder...

Eerste nag in selle vir Boulter

8 ure gelede | Howe

Ester Kamati op Outjo – Die invloedryke Britse miljardêr mnr. Harvey Eric Boulter (51) se aansoek om borgtog is gister in die landdroshof op Outjo...

Weer vir 12 Mei 2021

8 ure gelede | Weer

BINNELAND: Dit sal aanvanklik koud wees in die binneland, maar andersins sal dit sonnig en warm tot baie warm wees. In die Noorde sal dit...

Vermeende beesdiewe loop hul rieme styf

8 ure gelede | Misdaad

Ronelle Rademeyer – Drie mans is op Otjinene in aanhouding nadat hulle na bewering Sondag naby Summerdown die slot van 'n plaashek geknip en helder...

'Glyjakkalse' loop hul rieme styf

8 ure gelede | Howe

Twee jong mense wat glo by ver­skeie oornagplekke in die noorde van die land bedrog gepleeg het, is Vrydag in hegtenis geneem. Mnr. Francois Strydom...

Mobiele Covid-toetseenheid by padblokkade

8 ure gelede | Gesondheid

Die eerste mobiele Covid-19-toetsgeriewe vir toeriste is by die Okahandja-padblokkade op die B1-hoofpad geopen. Die mobiele eenheid is 'n inisiatief deur die Toer- en Safarivereniging...

Otji-5-verhoor: Weduwee wil vergoeding eis

8 ure gelede | Howe

Marc Springer – Die weduwee van 'n Zimbabwiese burger wat twee jaar gelede op Otjiwarongo vermoor is, het die eerste wetlike hekkie oorkom in haar...

Tweejarige peuters verdrink in puttoilet

8 ure gelede | Misdaad

Volgens die Namibiese polisie se misdaadverslag het twee kinders, beide twee jaar oud, Saterdag in 'n puttoilet verdrink. Die ongeluk het omstreeks 14:00 in die...

Transgender aanrandingsaak teen polisielid begin

8 ure gelede | Howe

Jana-Mari Smith – Die verhoor waarin 'n transgender Namibiër 'n klag van aanranding teen 'n polisiebeampte aanhangig gemaak het, het Maandag in die hoërhof in...