OpenIDEO is an open innovation platform. Join our global community to solve big challenges for social good. Sign Up / Login or Learn more

A central commission market, based on the agency model, for Zambia’s fresh produce industry.

The most effective way to bring fresh produce to the people of Lusaka

Photo of Jaco Oosthuizen
2 12

Written by

Lead Applicant Organization Name

RSA Group

Lead Applicant Organization Type

  • Farmer Co-op or Farmer Business Organization

Website of Legally Registered Entity

www.rsa.co.za

How long have you / your team been working on this Vision?

  • 10+ years

Lead Applicant: In what city or town are you located?

Johannesburg

Lead Applicant: In what country are you located?

South Africa

Your Selected Place: what’s the name of the Place you’re developing a Vision for?

Lusaka

What country is your selected Place located in?

Zambia

Describe your relationship to the place you’ve selected.

Our vision was sparked by RSA Group’s interactions with Zambian buyers, who always have plenty of questions about differences between the Zambian and SA systems that allow our country to offer such a reliably wide range of produce.As our relationships with Zambian buyers strengthened, we saw Zambia could benefit significantly from a structure similar to SA’s commission based markets.We started investigating and eventually sent research groups to visit the local Soweto Market and engage with communities and stakeholders.Commission-based markets drive economic growth. Many African agri-economies focus predominantly on the retail and wholesale environments, even though it is informal and small-scale farmers and producers who provide the crucial connective tissue that ensures reliable public access to fruit and vegetables. Focusing only on retail and wholesale becomes a zero-sum game for producers and consumers. In Lusaka, the range of choice for consumers is low, while farmers are exposed to rogue buying elements through a supply chain that is effectively a price taker trading system, lacking in transparency. “The value chain is strongly driven by brokers and [informal] commission agents that represent a consolidated informal system that dictate the terms of trade in terms of price, quality and volumes.  This limits the freedom of farmers to market their products in a transparent manner.”- FAO Assessing and Planning City Region Food System Study [1] [1]     Assessing and Planning City Region Food System Study, Food & Agriculture Organization of the United Nations, 2018, p.3

 


 


 

Describe the People and Place: Provide information that would be helpful for an outsider who has never been there and may have no context about this Place to better understand the area.

Zambians have, over the last twenty years, had many reasons to be positive about life. Landlocked Zambia is one of the fastest growing African economies, and Lusaka has been the fastest growing city in the Southern African Development Community between 2010 – 2018. The Zambian economy, dominated by the copper mining industry, has experienced uninterrupted growth for two decades. Poverty – although still widespread – has steadily reduced over the last decade. The country generates its own electricity with hydro power.

Zambian society is generally religious and family orientated, with a strong entrepreneurial orientation - technology is used by all. Most Zambian citizens prize their smart phones, which are often used for money transfers among individuals and from companies to individuals, and by farmers to sell produce.

The Zambian agriculture sector includes crops, livestock and fisheries. Maize is the staple crop, supported by other cash crops such as cotton, soybeans, tobacco, groundnuts, paprika, sorghum, wheat, rice, sunflowers, coffee, as well as sugar, fruits, other vegetables and flowers. The country features large commercial farming operations.

As positive as life has been, a mix of socio-economic factors signal looming medium and long term changes, which must be addressed if the positivity is going to continue.   

A fall in copper prices has hit national revenue hard, and agriculture now accounts for 40% of GDP. Thankfully, the country has significant agricultural potential and has grown over time from being a net importer to an exporter. The majority of the population is engaged in rain-fed subsistence farming, and reduced state support since the 1990s has seen an expansion of crop production from maize to cassava and other cash crops.

A crippling drought has negatively impacted livestock production, and affected the hydro power centred electricity network, resulting in sustained bouts of load shedding. Zambia’s dependence on maize has also made it vulnerable to the climatic shock of the ongoing drought. In urban areas food consumption patterns are changing, with rice and sweet potatoes gaining importance. A consistent decline in maize production, inadequate production of alternative staple crops, climate constraints and poverty are contributing to widespread food insecurity.

Simply put, Zambia’s dietary energy supply is not sufficient to meet population energy requirements, and undernourishment has increased in recent years (it reached 45% in 2005).

The country’s fresh produce sector is poorly equipped to deal with these macro level challenges. For example, Lusaka’s Soweto Market consists only of timber structures with sand floors and has no running water or electricity. There is no cold storage and there are no proper waste management structures, which compromises food safety and security. When there was cholera outbreak, the market had to be bulldozed, as this was the only way to eliminate the disease.

  

What is the approximate size of your Place, in square kilometers? (New question, not required)

418

Challenges: Describe the current (2020) and the future (2050) challenges that your food system faces.

Climate change is impacting Zambia. The current drought has devastated both the agricultural and tourist economies and lowered the country’s overall socio-economic resilience.

Unless systemic change occurs, Zambia will likely continue to face the same set of food security challenges over the next thirty years. In the agri sector, a weak set of unregulated, inefficient and interlocked agricultural systems could potentially unravel. Food security is likely to remain under threat, as are baseline levels of economic activity.

Access for ordinary citizens to quality fresh produce will be a flagship challenge - not only in terms of food security and national health, but also in terms of the ability of the country to create trade environments that offer sustainable economic activity opportunities at all levels of society.

It’s important to note that Zambians want to eat more fruit and vegetables. Low income households have doubled expenditure on fresh fruit and vegetables (14-32%) recently. This market segment now spends 25 ngwee of every Kwacha (1 Kwacha = US$ 0.70) spent on food buying fresh fruit and vegetables. Medium income and wealthier households have also increased their fresh fruit and vegetable consumption, by 11% and 5% respectively.

Unfortunately, this desire is currently thwarted by a market system that centres on wholesalers, retail distribution and the supermarket environment:

  • Farmers are forced to try and do business in the least favourable conditions, from the physical environment through to the limited range of buyers they are able to access
  • The market is structurally fragile, and when this fragility forces the market to close (as in the case of the Cholera outbreak) farmers have no alternative sales channels at all
  • With respect to technology, it’s every entrepreneur for themselves - opportunities to collaborate and achieve economies of scale through shared resources are missed
  • The lack of a singular operational backbone within the market environment means transparency remains at low levels, which undermines a sense of fair play and trust.
  • Informal traders – who play a key role in creating access to fresh produce for ordinary Zambians – struggle to compete, and the system thus reduces meaningful community access to fresh fruit and vegetables
  • Zambian society is defined by an entrepreneurial, can-do attitude. Yet, the current fresh produce market system means individual entrepreneurial activity is fragmented, and seldom results in shared wealth creation. The system is complex and yet not adaptive to economic and environmental realities, which reduces reasons to participate.  

Top down policy interventions are unlikely to inspire a sense of agency and empowerment in the various communities that make up and surround the fresh produce sector. Indeed, the South African sector has clearly demonstrated that successful growth and development actually result from incremental changes and nudges applied to existing, already active, communities.

Address the Challenges: Describe how your Vision will address the challenges described in the previous question.

A commission-based free market allows all stakeholders to take advantage of a world class, highly digitised and transparent trading platform. With farmers and retailers trusting the system and using it enthusiastically, rapidly increasing trade levels will incorporate small scale retailers and farmers and major players alike.

Lusaka will be positioned to better manage the risks of climate change. Crucially, produce farmed in areas far afield from Zambia’s urban centres will find its way to a functional market. Overall food security and national health levels will improve, and the country will be able to leverage the potential of its existing entrepreneurial culture with supportive and technically appropriate policies.

The Lusaka model can be rolled out in other regions, using a template approach, and backed by the Development Fund mechanism.


 

High Level Vision: With these challenges addressed, now provide a high level description of how the Place and the lives of its People will be different than they are now.

The people of Zambia will eat better and do better business – brought together by shared experiences and a common sense of purpose. Consumers will enjoy access to the fresh produce they want, in convenient locations, at affordable prices. A commission based fresh produce market in Lusaka will have transformed Zambia’s food security, while driving agri sector growth.

Rather than selling any produce, the Lusaka market will be characterised by a fresh produce focus. All players will be able to take advantage of a world class, highly digitised and transparent trading platform that creates mutual trust in the operating environment. With a trusted system at its core, the sector will encourage economic participation from participants of all types and sizes, and won’t favour vested relationships and wholesale traders backed by big bank accounts.

By growing in an incremental fashion - with an emphasis on establishing and nurturing a strong feedback loop between all stakeholders – the market will operate as a multi stakeholder platform that utilises dialogue and practical ‘on-the-floor’ interactions to evolve in a manner that serves the interests of all.  

As a carefully structured, bonded area that facilitates the movement of products across borders, exports will be facilitated, adding crucial additional revenue to the national coffers. 

The centralised development fund will remove the start-up burden from government’s shoulders, empowering it to act as an enabling guiding and supportive force.

Case study - Mooketsi Market, South Africa

The old Mooketsi Market featured one producer and and a handful of buyers.

After establishment of commission based free market system, evolved within months to feature more than 600 (and growing) producers and a full basket of products, sold to more than 15 000 registered buyers.

In less than 60 months (up until 30 June 2019), the combined producer sales and volumes reached R242,744,761.10, via trades of  67,812 tons per annum.


Full Vision: How do you describe your Vision for a regenerative and nourishing food future for your Place and People for 2050?

Creating the fresh produce market development fund 

The Fresh Produce Development Fund is a central mechanism that will allow the Lusaka market creation process to be clearly modelled and articulated, and then repeated in other areas of Zambia, and Africa as a whole.

What is it?

The market development fund is an investment vehicle able to provide start-up financing for the community engagement, design, development and eventual roll out of central, commission based fresh produce markets across Africa, according to the template developed during the creation of the Lusaka market. 

Why does it matter to this vision?

The fund will allow for the rapid development and roll out of central, commission based fresh produce markets without the stakeholders having to rely on formal banking interest requirements, or structures.

The fund will operate with a development view centring on long term return on investment and that supports the fundamentals of a free market system and a vision for the future that recognises the power of commission markets and the commission agency model.

How will it work?

The fund will be independently run, featuring a distinct board and investment committee guided by a clear development philosophy and mandate. It will take funding from relevant African and global development entities, and will leverage the African Rainbow Capital partner structure, which has proved very successful in the South African context.

 

The vision in practice: from theory to reality

  • Zambia currently has a strong agricultural legacy and entrepreneurial culture.
  • Its farmers, retailers and entrepreneurs have a vast amount of experience in growing and distributing food. It’s people understand nutritional value and how to make the most of scarce resources.
  • Unfortunately, it suffers from systemic issues, with several overlapping agricultural systems hindering equal access to economic opportunity and creating rising food security risks.

Establishing a commission-based free market system to service Lusaka’s fresh produce sector will allow the country to build on its base of knowledge and experience in a meaningful way. With a world class, highly digitised and transparent trading platform in the centre of the system, effort, knowledge and expertise will become self reinforcing and cross pollinating.

By focusing on establishing a commonly understood and transparent market system, Lusaka will be empowered to do better business, in a way that benefits stakeholders individually, as well as the community as a whole.

Achieving this vision will require three central steps:

 

1. Nurturing strong community relationships

2. Setting up the initial iteration of the system quickly

3. Supporting the evolving system with appropriate legislation and government input 

 

1. Nurturing strong community relationships

RSA Group’s experience in establishing such markets in other African economies is that ongoing community interaction and engagement is vital, from the word go. Even though the existing Soweto Market is 18kms away from the proposed site, it will be essential to include Soweto Market role players in the conceptual and practical work involved in developing the new structure, and to ensure mechanisms are established to allow for mutually beneficial interactions between the two entities.

Equally, to avoiding the imposition of any ‘top down’ systems or ways of thinking, regular educational and discussion interactions with producers and buyers (new and existing) will be required in the run up to the launch of the new market.

RSA Group, through Savenda Capital is engaging with Musika – a key Zambian NGO that “stimulates and supports private investment in the agricultural market, with a particular focus on the smallholder and emerging farmers”. Discussions centring on Musika making finance available to drive a sustained education process with producers and buyers about the new market have been positive. 

Community interaction is not a one-way street, however. As much as there is a need to engage with Lusaka’s stakeholders in their region, these stakeholders must also be able to engage with other African societies about their experiences with commission based free market systems.

To this end, the Zambia Horticulture Wholesale Market Feasibility Study Tour of South African Fresh Markets took place in the first quarter of 2018, and has proved to be an important tool to allow Zambian stakeholders to contextualise their vision of how such a market would operate in Lusaka. The tour focused on helping delegates explore and understand:

  • Fresh market ownership and investment models
  • Required legal frameworks and policy support for thriving fresh markets
  • Production and marketing arrangements, operations and payment technologies
  • New fresh markets design, development and investment requirements – including estimates of similar fresh markets in Zambia
  • Relevant data sets that inform the design and development of a Zambian market
  • Possible investment and collaboration partnerships with identified South African organisations

 

2. Setting up the initial iteration of the system quickly

Establishing an excellent facility with the right capital support is crucial to demonstrate the market’s potential through example and inspiration, rather than by lecturing or theory.

The set up of the Lusaka market is taking place with a strong focus on modular design that can be replicated in other regions and economies. The proposed development fund will play a key role in the ability to create a repeatable template, from capital raising through the design and roll out. 

For the Lusaka project, RSA Group’s civil engineering and project management partners, Savenda Management Services, has identified an appropriate site for the market, to which it holds the lease. A facility design has been complete, according to a six month project time frame. Savenda is also currently carrying out an extensive Environmental Impact Assessment (EIA) and Social Impact Assessment (SIA) which will inform the final phases of design and project plan development processes.

  • Central logistical challenges include drilling a borehole to guarantee a reliable supply of running water, and establishing electricity supply, supported by generators and alternative energy sources (such as solar) to proactively address the risk loadshedding. 

The operational business plan between RSA Group and Savenda has been developed, but still needs to be finalised in order to establish the mechanisms to put in place:

  • Sales structures
  • Operational equipment
  • IT infrastructure (potentially including satellite communication from SA to Zambia)
  • Forklifts
  • Floor design, producer visits, training and packaging requirements
  •  

 

3. Supporting the evolving system with appropriate legislation and government input

Creating an active partnership with the Zambian government from the beginning of the project is key to its initial success, and also to the country’s ability to create an enabling legislative environment over the medium and long term.

Given the many practical challenges the state faces, it’s important that such a partnership doesn’t rely on government for practical interventions, but rather allows it to offer medium term thematic sponsorship and support, resulting in the eventual implementation, when necessary, of relevant legislation. 

It is here that the Food System Vision Prize plays its possibly most important role.

 The prize creates opportunities to articulate and communicate the full vision behind the market, beyond what is achievable through the roll out of a conventional private sector project. While the project design places a strong focus on community engagement throughout, engagements with relevant regional government departments, and with national

How did you hear about the Food System Vision Prize?

  • Website

2 comments

Join the conversation:

Comment
Spam
Photo of Nandis Kuilder
Team

Looks like a Great plan, Very exciting

View all comments