THE MARKET PLACE/IBI OJA

Series 1

Informal and formal

The market place in the simplest of terms is a place where buying and selling of goods and services occurs daily or on specific market days either in physical or virtual platforms. The market place in most parts of the world is structured or semi- structured and basic accounting technology is usually deployed by government or gotten by entrepreneurs on play store and it’s like to enable them adhere with government regulations and incidental obligations. So it’s likely one finds a high percentage of the informal sector players in the diaspora operate bank accounts and as close to a cashless policy as they can. This is why, most times as international travellers when you shop and present your $100 dollar bill, the first thing is for the cashier to put it to an integrity test as the system is wired to use minimal cash and more reliance is on card (Credit or Debit cards) and this enables a close to accurate data gathering and analytics that generate algorithms upon which critical decisions that shape their economy and security are premised. No nation can succeed in its drive to grow internally generated revenue, secure its borders or citizens, provide basic or essential amenities and infrastructures or even understand politics and what informs people’s choice of who to? vote for without creating apparatus for accurate data gathering to drive the entire process of governance.? I term it ‘The intricate spider’s silk web’

?

However, in most African countries and zooming into Nigeria, the structure is still quite informal and the players in this sector are mostly non-banked, at least 75% still do cash-based transactions on a day to day. The traders keep cash handy in their shops or at home as they do not trust the banking system to ensure they have their funds available when they want to order goods, clear, warehouse or transport them.

?

The market place is a beehive of seemingly uncoordinated activities but at its core, it is actually very well coordinated by the leadership of the various markets and associations. Yes, each market and or trade association has its own leadership structure and any trader disrespects the structure at their peril. Amid that market place noise (a rí wo ?jà), each trader transacts their business with the required dexterity and marketing craftsmanship most times transferred from one generation to another through hands on training (A type yet to be taught in the foremost of MBA classes), the Netflix story ‘Afamefuna’ gives a glimpse of the business model that has survived for decades and which has birthed too many to mention business success stories.

?

Each trader understands the value chain and their plug-in. The market players import the goods as a sole importer or the arrow head for a group of traders who contribute funds to a representative who now travels on their behalf to buy the desired products abroad or in another State and then apportions to each according to sum contributed mostly without rancour, as the rules of the game have been tried, tested and trusted over decades. From the berthing of the ships or landing of cargo planes, the containers are off loaded onto trucks and driven to warehouses where they are stashed& locked at the upper levels of the shopping complex with the market executives and or traders believing that because the stores are locked even with goods stocked in them they shouldn’t have tax implications or used in determining a traders total income. This is due to their literal interpretation of the term “owo ori" to mean tax per head and not per income, number of shops or size of business( story for another day). The apprenticeship kind of education is at its best in the market place and unrivalled by international MBA schools. The display of wares in the tiniest of spaces to attract passers-by's, the traders honing in on the potential buyer and each bringing on their best A game to win the bid and buyers trust that they have gotten the best bargain. Most times you may have a whole lane/street selling the same product(s) but somehow each holds sway.

kindly share your thoughts on the structure and leadership found in the market place.

?

‘THE MARKET PLACE/ IBI OJA”.

Series 2

A day in the market place

Immediately or while the bid is ongoing, there comes the shadow woman (a la ba ru/1st level carrier) promising to alleviate all your pains by committing to be the burden bearer with her small crafted metal bowl (also belonging to an association and faithfully contributing a membership due and buying aso ebi/uniform party attires to celebrate with colleagues). The latching on of the carrier means others should look elsewhere and there comes the drinks/chilled water seller wanting to assuage your thirst in the scorching hot sun and winning you with their smiles, while they are ready to get you the gala (meat roll) or whatever you want to go with it to guarantee satisfaction. Somewhere in the garages or just close by, the transporter has his conductor shout the various destinations, waiting to transport the goods after an interesting price haggling.

Have you ever wondered how someone selling sewing thread, beads or nails ekes a living from what you may think is a mundane earning? You need to understand the value and distribution chain that starts from the thread, beads or nail seller in Idumota and such other markets all the way to the far Northern States or countries across the borders and how turnover is the rule of the game. The supply chain often extends to the most expensive fashion houses in the country, beyond the borders or shores, as well as houses built in the various estates that dot the countries real estate landscape.

The economy is strengthened or weakened from this pyramid base. Remember the groundnut pyramid and how the width of the pyramid determined and defined the height? The informal sector is a critical component in the health or otherwise of an economy or country, because it’s the new oil and growth area. So as a potential business owner who wants to access that sector and grow the value chain one MUST understand the impact of the following

1. Cost: The cost of production or of imported of goods and or service is a major business decision. It is important to ensure best price and value for your clients. 2. Marketing: Identify your target clients and structure the marketing strategy that will be fit for purpose

3. Technology: This is useless where the business does not have an existing functional process, because technology usually stands on human intervention, structures and need (So a need analysis is important) (GIGO)

4. Products: Research how to source for your product (quality, cost, storage, etc) 5. Customers: Whether wholesale or retail. The distribution chain is critical 6. Transportation: This can make or break a business. It’s the difference between fresh and stale farm produce.

7. Payment: Ease of payment is the rule of the game in this cash-based terrain. 8. Regulations: Be acquainted with the laws and regulations guiding your proposed business so you don’t run foul of the law(s)

kindly share your experience in any of the markets or your thoughts on some of the business models discussed.

Series 3

Building a Value Chain

The previous posts were written with the intention of making the conversation relatable but without taking away from the salient points articulated in that conversation, i.e. the organized structures springing up within the seemingly informal sector; the impact of turnover and supply chain on income of traders who the tax man may underrate on the premise that the overall income maybe inconsequential. The seemingly unlettered market or trade artisan association executives who keep minutes of meetings and records of membership dues. One can begin to picture the value chain that can be enhanced to add value to the nation's economy as an emerging market and developing economy with the likes of the trade artisan associations, BDCs with huge data on the informal sector players and its invisible trade and a lot more. The huge repository of data that can be reused and repurposed due to the population of individuals resident in this grey economy and its impact on IGR, tax, infrastructure, health, security, politics amongst? others for each State, the nation and intra, inter and cross border trade. In my research on this sector and from interfacing with them closely, I have to say that another sector has reared its head without being noticed. Creating a group that has benefited from the shadow economy alongside some formal sector players who have also avoided government regulations and the taxes due.

In my earlier post, I spoke a bit about the market men and women, the “a la ba ru” (load carrier), “Ala pa tá”(butcher), road transporters, etc. This group of people who belong to registered associations as they understand the strength in numbers. They keep minutes of meetings, have their member’s register, contribute dues and they have a respected disciplinary structure in place. Sometimes when you visit the market, it is usual to find members serving punishments for infractions, as the leadership of the market or associations are feared and respected, as they can determine whether you trade or not even where you own your shop/stall.

This third leg that is springing up is what I will like to term “The Semi formal sector”, a growing transitory group between the informal and? formal sector players who prefer to be categorized as “informal” to avoid government regulations and payment of accurate tax on income. Instead, they continue to take advantage of the presumptive tax which government introduced for ease of tax payment for the unlettered.

The World Bank report shows that post Covid-19 80.4% of Nigeria’s economy is made up of the informal sector. This I believe is because this outlier has not been identified and separated. Also due to the current economic situation, the transition from PAYE to Direct Assessment will grow as those laid off from their formal jobs will take up one business or the other, not to mention those in formal employment who also trade in this sector to enhance their streams of income. Not forgetting the growing e-commerce virtual platforms which are now springing up as shops and stalls for business. (This is a tale for another day.) So it’s time to lift the veil on the grey economy and carefully separate the wheat from the chaff to grow our IGR and international trade (GVC) as a State, Nation or Continent that is serious about international trade or becoming a destination hub.

What’s your take on the adoption of semi formal sector and on separating the formal from those that rightly belong to the informal?