How African mass markets make productive use of gossip and the grapevine

AMONG several aspects that make African mass markets more inclusive and resilient than formal corporate marketing systems is the ability to make use of gossip and the grapevine productively.

One of the questions continually asked by agricultural economists and policymakers 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 sits 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.

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 instinct directs people’s behaviour in their workplaces, 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, pricesetting 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 a pathway shaped by gossip and the grapevine. This is also partly because there are no formal structures of marketing goats and indigenous chickens.

What also differentiates 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 linkage is more than connecting farmers with buyers.

While the notion of market linkages is also an integral component of cartels, there are several examples of how and why formal market linkage 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 organisations 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 co-operative or commodity association can broadcast to all registered buyers with a single text. That text describes quantities and qualities and, if desired, the expected price. In the same way a buyer could send one text stating requirements that will be delivered to all registered co-operatives that will 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 to secure favours from big buyers who have in turn granted those favours to cut out 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 or over supply in the next week as well as who is importing what well before policymakers or regulators know what is happening.