Are there any similarities between Nairobi Stock Exchange (NSE) and Wakulima market? Are there any similarities between Embakasi airport and “Machakos airport” (the bus terminal downtown)? Well, someone may wonder; what a question? – the differences are so clear. It is like comparing water to oil. We may go ahead and list a mouthful of differences between the two.
But hey, wait a minute. For purpose of this article, let’s take the NSE and Wakulima market. In both markets, there are some similar fundamentals:
- Demand and supply are the mechanism in both. The prices of ‘stocks’ in both are determined on the basis of market forces; as demand increases, prices move up and likewise, the lower the demand, the lower the price. Of course there are other factors that may come to play in any particular market. For example, drought may affect food prices at Wakulima while negative publicity of a company that is listed may have an adverse effect on the prices.
- In both markets, brokers are the key operators. ‘Stocks’ in both markets are bought and sold through brokers. A stock trader has to go through a broker to buy or sell at the NSE. At Wakulima, unregulated brokerage system occurs, which controls trading operations. Of course, many a time is when you will hear farmers’ complaining of exploitation from these brokers. There are instances where even some farmers have gone back home with a truckload of foodstuff if they do not cooperate with these brokers.
Until recently, the operations at the NSE were on an open floor system, where brokers shouted out prices. When a given counter was open for trading, the “loudest” made the deal. The computerization of this market has of course changed the scenario. Taking the same scenario down Haile Sellaise, when a truck arrives with foodstuff, the loudest broker takes the stuff.
- In both markets, operations are within certain times. At the NSE, operations take place between 10a.m and noon, while at Wakulima, operations start as early as 5a.m to 1p.m. After 1p.m, it is supposed to be closed for cleaning.
The above theoretical approach may sound simplistic because in reality, these two markets are so different. The main reason is that, while at the NSE the operations are regulated and hence structured, the operations at Wakulima are unstructured, with bare minimum regulations. The resultant effect is an almost chaotic scenario, which keeps away many would be traders and buyers from the market. The underlying effect therefore there is low trade both in volume and value. In addition, this is partly the reason why other outlets such as supermarkets and convenience shops started fresh produce counters.
Hence, the potential of these informal markets as a central trading place for groceries and other foodstuffs is not fully exploited. The variety of produce offered is low the market is reduced to the bare minimum bare offer or what the market would call common produce such as onions, potatoes, onions, cabbages. It is rare to find other fresh produce such Asparagus, broccolin, leeks, beets, Apricots, among others.
What’s the take? Regulating and structuring any market operations does lead to better trading environment. A place that is accessible to all without fear or intimidation. A place where standards are maintained be it in trading practices, safety, cleanliness or any other applicable standards. In the local markets, we have witnessed the effect of this, like in the matatu industry. At the international level, the agitation by the third world countries at WTO forums is all about enforcing trade regulations. Regulating a market in an objective way does not at anyone time imply killing competition.
The net effect is that it leads to saving time to trade, more variety of products & services are introduced in the market, there are more players and hence more competition. There will then be a trickle down effect to the producers and hence more incomes leading to better standards of living for the stakeholders in a given market. The call therefore is on all marketers to see ways and means that can be put in place to ensure proper regulations are put in place be it in terms of trade, quality of products, service offers or any other standard in place.
For details, contact:
pauline@episodesresearch.com
www.episodesresearch.com
