Inequality and Economic Inclusion

Friday, 18 November 2011

Mediating from the margins: The role of intermediaries in facilitating participation in formal markets by poor producers and users

  • Year: 2011
  • Organisation: TIPS
  • Author(s): Marlese von Broembsen
  • Countries and Regions: South Africa

Patrick Sathorar acts as a marketing consultant for a group of 25-30 HIV-positive women in Nyanga, Cape Town. They produce textile and beaded products and Patrick facilitates their participation in the formal market by sourcing and negotiating contracts for them. Patrick’s role comprises the following: first, he meets with a client (typically a conference organiser) to discuss the items required (such as beaded lanyards or conference bags) and to negotiate the quantity. Then Patrick sources the raw materials. Often he needs to source fabric from various and geographically dispersed suppliers. Thereafter, Patrick commissions a designer to make up a sample, which is costed and presented to the client. If the client is satisfied, the parties negotiate terms of the contract, including the price per item.

If the client rejects aspects of the design, it is back to the drawing board for Patrick and his producers, who must produce new samples. Often, conference organisers require several samples to send to clients overseas. The negotiation process can last up to three months. Once the parties have contracted, the producers learn to reproduce the sample. Patrick is responsible for quality control; the women for the packaging; and Patrick for delivery of the products to the client. In between, Patrick sources contracts from small retailers.

Patrick generates contracts that produce a turnover of approximately R40 000 per month and each woman earns between R1 000 and R2 000, depending on how much work is available, and how many units she has made. Although this amount does not represent a decent wage, it does make a critical contribution to the women’s livelihoods. It also fulfils another important social goal – that is, to facilitate their economic agency. Without Patrick’s intermediary role, these women, who are functionally illiterate, have a poor command of English, have no formal sector experience and limited numeracy, and would be unable to manage the complex communications and networking necessary to sell products to the formal economy. They would be unable to do this because they do not have the skill set necessary to manage the negotiation process, and because they do not have the necessary resources - such as transport, design expertise, or the ability to manage bulk orders.