Off the map

2013-03-22 00:00

MONEY, money, money! Even a six-year-old has developed an opinion about it. It is a universal language that runs through the narratives about quality of life, and many messages and warnings about cash continue to dominate media space.

Recently, I was invited to run a capacity-building session for a group of rural women who operate survivalist income-generating activities. Three issues dominated our discussion. First, it was about saving money under severe household financial pressures. In many instances, there is no money to save. Second, it was about managing the expedition of money from the business initiator through the biggest sales-taker, the household. It was made very clear that these money-making activities focus on meeting the daily demands of the household. Third, these women were expecting practical advice for improving on specific areas that put their enterprises at risk. Are there experts in this field? Who is best informed to provide appropriate direction here?

This is a sector where many practitioners grounded in the formal economy have burnt their fingers. It is poorly understood and largely remains in the domain of researchers who offer sometimes inappropriate approaches. I am raising this so that you can reflect on your experiences in dealing with the formal financial services sector, where many first-time home buyers experience glitches with the banks over issues of insurance and other associated financial products. In many instances, bank customers are provided with personal financial advice by non-bank employees without being informed that these workers are not employed by the bank. This is a serious omission of disclosure as expected by the Financial Services Board. Many customers may attest to this. They only discover this relationship when there is a dispute between them and the banks. Close to this are the experiences of many account holders who receive calls from financial service providers, allegedly referred by the banks.

Then there are the experiences of employees who have duplicate insurance policies in their risk-cover portfolios. Common sense should prevail: why should one person have three or four funeral covers? Worse, on top of this funeral cover, some have more than one life-cover policy. It would appear that the funeral-policy industry is slowly being turned into an investment instrument by some. The point here is that many ill-advised customers lose millions that could be better used to buy savings products. If such omissions exist in the formal sector, I cannot imagine what shape they would take in order to service survivalist populations.

We all agree that small business is the way to go, but how should this great idea be implemented? Firstly, there is money that should be saved to start an enterprise. If there are no savings, the business initiator should source start-up capital from somewhere, as pressing household needs are not likely to fade away. Micro enterprises had to survive against these realities; however, many of them are decimated by household consumption demands that tend to deplete gross sales ahead of profit calculations. Assuming a Good Samaritan lands tomorrow, what advice would he give to the formal sector to service the poor? Would he talk about the many barriers that deny productive linkages between survivalist producers and formal markets?

We are starved of good practices that assist the development expectations of the poor and vulnerable populations. Development is not defined in their terms. Millions have been invested many times in building bridges to connect the two economies — formal and informal — but reality tells us we are not getting any closer to inclusive economy and financial services. It would appear that we are not learning from some of the monumental mistakes that have been made in the past.

And what was the outcome of my session with the group of rural women? There was clear understanding that economic development has similar operating principles both for the informal and formal sectors. They appreciate that financial discipline and savings are central to a successful business. In some cases, they employ unfriendly local financial instruments. They know that they have to perform a calculated balancing act between consumption and production, and income and expenditure. Restricted access to resources triggers their innovation, which informs and improves what they do. These women are experts in keeping a business running and managing risk. They manage meagre resources and participate in their local markets in ways that remain mysterious to many. Surely the formal economic sector should invest in further research to learn from these experiences?

• Nqe Dlamini is a rural development consultant.

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