Inclusive Markets

Inclusive Markets

How Inclusive are Markets from the Micro-Entrepreneur's Perspective?

The terms markets and economy are often interchangeably used. I have called this post inclusive markets rather than inclusive economy which will be the topic for another time. UNDP defines inclusive markets as follows: “ that extend choices and opportunities to the poor (and other excluded groups) as producers, consumers and wage earners.”

In simple terms

“A market is a medium that allows buyers and sellers of specific goods or service to interact in order to facilitate an exchange. “ (Investopedia).

It can be at a physical location or virtual. Apart from specific products or services, markets can also be defined by the main player's characteristics such as age, income, education, etc. They can be permanent or temporary. Markets are part of an economy which the same source defines as “the large set of inter-related production and consumption activities that aid in determining how scarce resources are allocated. This is also known as an economic system.”



Markets exist and new markets emerge as long as there are sufficient numbers of participants to exchange goods, services or information. Both, the supply and demand sides usually expect to gain from this exchange. While the type of goods, services and information traded attract certain groups of people, it is often the income, educational, social, religious, and cultural backgrounds of people that prevents them from accessing markets. Subsequently, they are unable to pursue opportunities that would improve their lives. More inclusive markets generally accelerate economic growth.



As markets have many different types of participants , such as private consumers, businesses, corporates and governments, the transactions are not only regulated by money but also legal regulations, processes and systems, resulting in many types of possible barriers. Such barriers are not always visible to those who are not affected, they can be unintentional (dress or behaviour codes) and participants can be fully or only partially effected. In the following, I would like to highlight some of the barriers specific to micro-entrepreneurs:


  1. Infrastructure & Transport:
    Dan is one of millions of micro-entrepreneurs who rise very early to carry all of his stock from a local storage to his small stand he rents at a shopping centre. Come rain or sunshine. Due to repeated break-ins into a rented storage-space underneath a bridge at a railway station, he found a safer storage in the mens' toilet overnight inside the railway station. In front of the railway station, there are many women with all types of products spread out in front of them. In the evening, they carry the heavy bags filled with unsold goods on their heads and shoulders back to their homes or use mini-buses. The more sophisticated stands have tables, shelves and sun-screens, all of them are temporary structures for the day. Few of them are as “wealthy” to own cars or vans like a flower seller transporting water containers and flowers to a side-walk spot opposite a shopping centre. In cities, there is immense competition for trading spaces which sometimes end violently, either among traders or with the police driving them away from zones declared as non-trading. Friction caused by competition perceived as unfair, blockage of business entrances and other irritations, cause business-rates paying stores and shops to lobby City managers to impose and enforce stricter trading rules.

  2. Micro-entrepreneurs' commutes into cities are long, arduous and expensive. Most use public transport which limits stock quantities they can carry with them. Paying for storage closer to where businesses are operated cuts into profits. In no other city in the developed world, have we ever observed such long queues of mini-buses and public buses in the bus-lanes on motorways slowly winding into the cities than in South Africa. Mini-bus drivers mediately head back to the townships for another load as soon as they have unloaded their passengers in the city. Many of the the mini-bus drivers ignore traffic rules and endanger lives. Horrific accidents are not rare and are part of the risks micro-entrepreneurs take.

  3. Internet Access, affordable mobile devices and data, content: Although 2g coverage is near 100% in developing countries, internet enabling 3g is still lagging behind, particularly in rural areas. The cost either puts internet access out of reach for many or prevents users from making full use of the internet. The majority still use feature phones as their only digital device. For this and other reasons, many potentially useful business apps available for smart-phones and online use are not accessible to entrepreneurs in developing countries. The acceleration of the development of, home-grown content for mobile users also depends on internet access and affordability.

  4. Banking: most transactions between micro-entrepreneurs and their customers are in cash. Depositing cash and bank accounts fees are far more expensive than in industrialised countries. Apart from fees, a distrust towards banks and the physical distances to the next bank or ATM, lead many to deposit money in unconventional places bearing higher risk.

  5. Access to finance: loans to micro-entrepreneurs are costly and risky. If formal and regulated funders are available, interest rates tend to exceed those offered to established businesses by far. Many micro-entrepreneurs resort to informal lenders charging exorbitant interest rates. Alternative types of funding such as finance leases and hire purchases are mostly unavailable to micro-entrepreneurs.

  6. Access to premises: micro-entrepreneurs need production sites, meeting rooms, office-spaces and shop-floors that are affordable, conveniently located to their customers and the right size. Large deposits and higher rents due to lack of proof of income, the demand for long-term commitments, premises oversized for their needs, and removed from their customer-base are hurdles to business-growth that many struggle to overcome. There are no straight-forward solutions: we witnessed the development of a container park on industrial land next to a shopping centre outside Cape Town. Over a hundred containers were refurbished to offer premises for every type of business and resulted in a very attractive looking mini-shopping centre about 5min walk from the formal shopping centre. A coffee-shop successfully operated by a micro-entrepreneur at a railway station closed its branch at the container park within a short space of time due to lack of footfall. Many others experienced the same fate for much of the same reason. Some of the containers are used as show- or store-rooms with owners mostly visiting outside customers. Closed stores during main-office hours are not attractive.

  7. Trading Systems: many of the agricultural markets are dominated by few, urban-based stake-holders, and increasingly electronic trading systems are used. Small producers and traders find it hard to gain access or are disadvantaged. In South Africa, groups of immigrants have formed purchasing cooperatives enabling them to offer more competitive prices. Unable to compete with the new competition, many of the established local businesses without group-purchasing power had to shut their doors. Seeing their livelihoods destroyed by foreigners, anti-immigrant sentiment set in. Livelihood-businesses have been looted and destroyed in localised unrests.

  8. Cost of products and services: clearly, being able to purchase larger quantities works out cheaper in many cases. Without money available to spend, consumers cannot take advantage of it. Many poor people are not able to buy “3 for the price of 2”. In developing countries, the purchase of a whole bottle of shampoo is a big expense. To my dismay and disbelief, hygiene poverty is a reality even in the UK (and other high-income nations). Quantities and prices particularly for basic groceries and hygiene items can be market access barriers and can make lives really difficult. In the UK, some teachers provide soap and washing powder paid for privately to families so that their children are not ostracised in school.

  9. Rules and regulations: it goes undisputed that many are needed for public protection, and the existence of informal markets makes enforcement more difficult. However, often the registration or permit application processes are inaccessible to micro-entrepreneurs. Expensive travelling to and long waiting queues at public offices, reliance on forms incomprehensible for the less-educated, inaccessible online application processes, unsympathetic civil servants and staff, etc. lead many to live in constant fear of prosecution as they are unable to comply. Thriving “middleman” businesses assist with applications, form completion and other errands. Not only does this add to start-up costs for a business but also puts personal data security at risk. Another area is the allocation of trading, business and production rights. Limiting fishery-rights for example has increased poaching as the supported communities are unable to survive on the income from the fishing they are permitted to do.

  10. Corruption, bribery and crime: they are adding to the costs of starting and running a business and raise entry-barriers. Crime-hit businesses struggle to recover from the loss of stock, materials, mobile phones or a day's income.

  11. Biases and cultural norms: it is harder for women facing gender-based biases to succeed in businesses. In many cultures, they are unable to own land, property or even a bank account. Often contracts require signatures of husbands or male guardians.

  12. Education and skills: many parents struggle to pay for school fees, uniforms, books and equipment. Pupils lucky to receive education in often over-crowed, poorly equipped classrooms in schools without electricity and toilets do their homework on the floor in squatter homes. Lack of education and skills is perpetuated. Poorly educated youth without skills are deprived of opportunities in the labour market. Organisations addressing high youth unemployment through running entrepreneurship programmes in schools face opposition from parents who want their children to find jobs rather than running businesses. One such organisation shared that the little businesses started are safe while the kids are in school.


So the list goes on. If it makes you feel overwhelmed just reading it, realise that many a micro-entrepreneurs face many of these barriers daily! There are many local, national and international attempts to address theses issues. Barriers are specific to each of the many different types of markets. All of them have in common that they deprive people of opportunities to improve their lives and those of future generations. Therefore, it should be in the interest of all stake-holders to strive for more inclusive markets.


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