All signs point towards what Niti Bhan has been saying for years: informal economies are the engine of many emerging economies. Sooner or later government officials and the likes of the IMF will start to acknowledge this. But for now, the narrative remains this: big bank finds way to "help" small shops and traders as it sees the potential of the informal economy. The biashara and trading economies running on Whatsapp and WeChat groups will not easily yield its data, and capturing data on African traders has not proved easy and will prove more difficult than in other regions. Here's a classic instance of the story from Reuters, which reports that Standard Bank is teaming with fintech Nomanini to install some kind of device with small shops and traders. "Using Nomanini technology, Standard Bank will collect and analyse data on the retailers. Adrian Vermooten, Standard Bank's head of digital in Africa regions, said data on just one primary product line, such as pre-paid airtime, was enough to proxy the risk associated to that shop, build up a financial profile and understand its ordering patterns. This will allow the bank to pre-empt the trader's re-stocking needs and send them alerts offering to arrange and underwrite its next order, for instance." That sounds a hell of a lot like Alipay, but hey, what do we know? Mr Vermooten went on to note that there are thousands of informal merchants who sell prepaid airtime points all across Africa, which Standard Bank hopes to turn into agents for financial services. "Those are all small little businesses that we find really attractive," he said. Turns out that it's the banks need the small merchants rather than the other way around.
There's little doubt that many great commercial opportunities can be unlocked by informal networks, but those networks can be electrified by digital platforms. It's worth noting too the difference between informal economies in emerging and developed markets. "In the west, the unstable and demanding nature of work under the gig economy has generated a significant backlash from workers and commentators alike," writes Neil Munshi for the FT. "But in Nigeria, where nearly a quarter of the population is unemployed, platforms that connect freelance workers to jobs can be a lifeline." (We've written recently about Farmcrowdy and other apps that connect retail investors with farmers.) In this case, apps and mobile payments are starting to remove cash from previously dangerous jobs: truckers have to carry for provisions. But for the last two years, Kobo360 has served as a platform for drivers and pays them largely upfront for trips, meaning they can use an app for payments and avoid becoming targets for bandits. "Companies like Kobo360 and its main competitor, Kenya's Lori, are trying to revolutionise the logistics systems that will be key to the success of the recently signed Africa Continental Free Trade Area agreement. The accord aims to boost economic growth on a continent with a combined gross domestic product of over $3tn and a young, fast-growing population." The changes underline the shifting nature of specialist manufacturing. The back roads of Europe are filled with new DAF, Renault, Scania and Volvo trucks which also show up on African markets. But for Obi Ozor, founder of Kobo360, there are untapped demands for African trucks. "He said he plans to visit China later this month to start the process of designing 'a truck that works for Africa' to cut costs for Nigerian truckers in half. 'There is no truck driver in Africa who uses AC, so why do we have $11,000 more additional costs for that? We have this digital dashboard -- we don't need that, take that $7,000 out and spend $4,000 on new suspension -- that's what we need in Africa'."