VIRTUAL mMARKET SYSTEM REDUCING TRANSACTIONS COSTS TO

BRIDGE THE ECONOMIC DIVIDE

Armour RJ, Bloemfontein

jack.vslandbou@gmail.com

The Problem:

• Dualistic Agricultural sector in South Africa

• Factors affecting Markets Access:– Transactions costs– Economies of scale– Gap between the formal and the informal markets

30 000 Commercial farmers National food security & International Trade (forex)

300 000 Small Scale farmers mostly former homelands Local food security?

3 000 000 Household and backyard gardeners

Household Food Security? / Food Sovereignty?

-Access to Markets-Access to Finances-Access to Information

Literature Review:• Groenewald (2003) Conditions for successful Land Reform:

“Complementary services and infrastructure are needed in the form of improved access to financial services, markets and inputs and also improved transport, health, communications and other infrastructure.”

• Dr E. Gabre-Madhin (2006) AEASA Simon Brand Memorial Address, then Program Leader for Ethiopia’s Development Strategy and Governance, now CEO of Ethiopian Commodity Exchange, stated :

“the 2nd revolution will be in markets: – “New exchanges” (self regulated) – “086 Ag-trade network”, – low cost V-SAT technology making rural entrepreneurs into

knowledge brokers. – A warehouse / silo = a potential bank!”

WEF research

2009-11

Boston Consulting Group

“Mobile communications can help to meet the challenge of feeding an estimated 9.2 billion people by 2050. The 12 specific opportunities explored in this study could increase agricultural income by around US$138 billion across 26 of Vodafone’s Markets in 2020.” - Sept 2011

ICT / services Gap• Grameen Foundation AppLab MTM Uganda case:– Google Earth has the GIS positioning Technology– Google Trader has the virtual trade platform– Google sms provides the extension platform– Grameen Bank - micro-finance (MPESA in Kenya)

• OPPORTUNITY: – Integrated solution with central database, – Incentivizing NARYSEC & extension officers – Corporate social responsibility, – Targeted GeoTag Advertising

The proposed VIRTUAL mMARKET SYSTEM

CONCLUSION

This paper is a plea to bridge the industry and digital divide:• Between farmers, agricultural & social development researchers, extension officers, Government officials and agri-business practitioners and the often very distant ICT applications programmers and developers.

NAMC, the Meraka institute mLab and Mobile operators are key stakeholders in SA.Working together as an integrated team and with the correct structures and systems in place, we could do far more toward achieving Improved Livelihoods and Food Security in South Africa and beyond.

Key ROLE-PLAYERS: Research Corporate Finance

Supplier development fund

Thank You!

Armour RJ, Bloemfontein

jack.vslandbou@gmail.com