2.1 Economic constraints
2.2 Administrative constraints
2.3 Legislative constraints for traders
2.4 Lack of infrastructure and facilities
2.5 Organizational constraints for traders
2.6 Human and social constraints
Economic liberalization failed to solve most of the pre-reform constraints in FSDSs in Africa but instead caused new problems, mainly because of the hasty withdrawal of government involvement in various activities in the sector as a result of conditions set by the donors. In most cases private operators lacked the capacity to take on those functions from which the state had withdrawn.
While the state previously planned and ensured the supply of food to cities, these activities now take place without any real control or oversight. Operations are uncoordinated owing to the lack of technical capacity to centralize information, analyse situations and regulate action. The constraints, discussed in more depth below, sometimes seem contradictory as they depend on the viewpoint of the particular operator concerned - an issue that only highlights the serious lack of coordination among operators and between them and government.
2.1.1 Producers
2.1.2 Traders
2.1.3 Transporters
2.1.4 Government officials
2.1.5 Market managers
2.1.6 Banks
2.1.7 Chambers of commerce
2.1.8 Consumers
Expensive agricultural inputs
This widespread problem is due in part to agricultural sector reforms undertaken as part of structural adjustment in most sub-Saharan African countries. The elimination of state enterprises involved in the importation and distribution of fertilizer, seed, insecticides and agricultural implements and machinery, and the elimination of subsidies on inputs under the structural adjustment programmes, led to sharp increases in the prices of farm inputs. This resulted in a general reduction in the use of fertilizer, improved seed and insecticides as well as in the purchase of agricultural implements and machinery. Owners of livestock and fishermen experienced the same difficulties as a result of an increase in the prices of veterinary products, nets and outboard motors.
Difficulties encountered in the sale of produce
Producers often complain about the difficulties encountered in selling their produce during the harvest season. Fruit and vegetable producers face this problem even more acutely because, unlike cereals, their produce cannot be stored without at least a minimum level of processing. However, owing to a number of factors, only a small proportion of produce is processed on-farm, meaning that the market has to absorb a very large share of the produce during the harvest season. Since marketing systems and consumers have a limited capacity to absorb this produce, the level of spoilage is high (especially for fruits and vegetables) and producer prices become depressed for most produce (including cereals, fruits and vegetables, meat and fish).
In the case of cereals, the necessity to sell produce during the harvest season when prices are depressed can also be attributed to the obligation to repay loans from traders. Competition from imported goods also contributes to the difficulties in selling local agricultural produce.
Low producer prices and high production costs
Most small-scale farmers complain about low producer prices. This situation, which reflects their weak bargaining position with traders, can be primarily attributed to:
Insufficient working capital
The main problem most traders generally complain about is the lack of capital to expand the scale of their operations. The volume of produce purchased by most independent retailers and collectors, and even some wholesalers based in rural areas, is acutely limited by the lack of sufficient working capital. As a result most of them seldom store produce for long periods, since a fast turnover is crucial to maximizing their earnings. This constraint reduces their bargaining power relative to larger traders and undermines their capacity to maximize profits. Most women micro-retailers barely make sufficient profit to meet daily household expenditures. Consequently, their capital and trading activity stagnate and they are often unable to absorb any unexpected shocks.
Collectors also operate with very little working capital and have to assemble produce from a number of farmers (who often offer trade credits) at the collection stage. This process raises the bulking and transportation costs of domestic agricultural produce, particularly when compared with imports, which are unloaded and transported from the ports in bulk (for example, this is apparent in the case of locally produced rice and that imported from Asia).
Difficult access to bank loans
Another common complaint from traders is the lack of access to bank credit since they are unable to provide the traditional forms of collateral security demanded by most commercial banks. This situation is due partly to the fact that most commercial banks in Africa have used European banking practices as a model. Collectors and rural wholesalers are generally excluded from the banking system because they do not have bank accounts, there is no bank in the area, or because they lack assets that can be used as collateral for loans. Importers are based in cities and therefore are in a more favourable position, although they are often discouraged by excessively high interest rates.
In many countries, the credit components of most donor/state-funded agricultural projects target the producers, with only a few projects taking into account the credit needs of traders. In any case the temporary nature of these projects means that such credit schemes do not offer a sustainable solution to the financing problems of African traders. A number of ongoing programmes involving rural credit funds and credit unions seem to be tailored to reflect socio-cultural conditions in Africa, but the focus remains on producers (for example in the cotton-growing area of Mali). There are, however, some other interesting examples of credit schemes involving women traders such as the credit union developed in the Labé area of Guinea.
Lack of transparency in the allocation of foreign currency
Importers, who are often unaware of the reasons for which their applications for foreign currency were turned down, voice complaints about the lack of transparency in the allocation of foreign currency. In practice there are no clear criteria for deciding which traders are to benefit and the amounts to be allocated to them, thus creating a state of uncertainty for most importers. This situation prevails particularly in Guinea where the government has imposed extensive exchange controls because of the lack of foreign exchange, and also to support the domestic currency, which has been under pressure following devaluation of the CFA franc in neighbouring francophone countries.
Spare parts for vehicles
Most transporters attribute their inability to efficiently maintain haulage trucks to the high cost of spare parts. A high customs duty on imported vehicle spare parts contributes to this problem which is particularly acute for small-scale transporters. Most operators therefore use second-hand spare parts, which are in high demand, or they resort to buying from suppliers who evade customs (this is the case especially in Guinea, Mali and Côte d'Ivoire). This situation not only reduces government revenue but also exposes truck owners to the risk of buying parts of doubtful quality.
Lack of funds for vehicle maintenance
The majority of small-scale transporters do not have the funds necessary for the maintenance of their haulage trucks. Only a few relatively large-scale transporters in, for example, Côte d'Ivoire and Senegal are able to overcome this constraint largely because they have excellent relations with banks and therefore better access to credit. For the small-scale operators who dominate the sector, financing is a major constraint and it is common to find trucks that are out of service for long periods mainly because the owners cannot afford the cost of repairing them.
These problems undermine the efficiency and reliability of the food transport system and acutely affect rural areas and small towns with only one or two trucks.
Low operating budgets
Most government officials complain that budgetary constraints limit their capacity to undertake required surveys and related activities, including handling and analysing records and reports. This considerably reduces the efficiency of various government departments. Technical assistance provided by donors to some governments is intended to alleviate this problem through providing substantial financial and logistical support. Such external assistance, however, is always temporary and does not represent a real solution to the problem of insufficient funding for effective government intervention to improve the performance of FSDSs.
Low wages
In many cases very low salaries also undermine the morale of public servants. This situation encourages moonlighting (especially petty trading), absenteeism and corruption among public servants, thus further undermining the effectiveness of state interventions.
Insufficient revenue obtained from markets
The majority of market managers attribute the lack of funds for investment in market infrastructure to inadequate direct revenues from markets. The problem of low revenue collection rates is caused mainly by inaccurate registers of traders operating in particular markets, inaccurate calculation of the tax base, and the fact that most small-scale retailers are itinerant traders who move from place to place. Another major problem is corruption among some officials responsible for collecting these taxes (as they engage in fraudulent under-reporting of revenues collected).
Lack of reliable guarantees from operators
While various operators in FSDSs complain about the inadequate supply of credit, the banking sector in most West African countries is flooded with excess liquidity. Most bankers attribute this situation to the fact that the majority of operators lack suitable collateral security. Livestock and real estate, which can be used as collateral in Europe, are not considered suitable in Africa. Nomadic husbandry practices render livestock unreliable as security, and real estate is unsuitable because of foreclosure difficulties owing in part to a strong sense of communal solidarity (particularly in rural areas). Banks prefer to lend money to relatively large-scale importers who operate from warehouses at known locations and with assets that can be effectively estimated.
Low operating budgets
Most chambers of commerce in the region are under-resourced and play a rather marginal role in promoting the development of FSDSs. They rely on central government subventions but quite a number are increasingly becoming politically and financially more autonomous. In Burkina Faso, for instance, the chamber of commerce is about to become a private body with a stake in many sectors of the country's economy.
Low household incomes
Most African households have low-income with low purchasing power; therefore, they cannot afford to buy in bulk and are dependent on micro-retailers for their supply of food in very small quantities. Consequently, they pay relatively more for food and tend to sacrifice variety in the diet in favour of the least expensive food available. The implementation of structural adjustment programmes has aggravated this situation by worsening unemployment and under-employment in most African countries. Informal social safety nets that support people who have lost their jobs have generally come under significant pressure as real incomes have declined.
Devaluation, for instance of the CFA franc, has further reduced the purchasing power of most households. In Côte d'Ivoire and Cameroon, for example, rising domestic food production is likely to stabilize household expenditures on food and reduce the negative impact of devaluation. In Sahelian countries such as Mali, Niger and Burkina Faso, however, the rise in food prices following devaluation is a worrying issue in national food security policies.
2.2.1 Traders
2.2.2 Transporters
2.2.3 Government officials
2.2.4 Consumers
Price controls
Price controls are still in force in a number of African countries for many staple foods (rice, sugar, bread, etc.). Widely used practices such as inspection of pro forma invoices, imposition of maximum price and certification of transport costs discourage traders from supplying food to cities. This is particularly so because price control policies aim primarily at protecting urban consumers rather than encouraging efficient distribution of food by traders.
Other official controls
Apart from price controls, traders are also subject to other bureaucratic controls that give rise to various corrupt practices. Health and tax inspectors regularly visit traders, often making unauthorized financial demands from them. The laws underlying these inspections are usually not applied consistently by the officials involved but the affected traders often lack the knowledge, resources and authority to insist on their rights. In many countries customs officials defraud both the state and traders in the collection of customs duty.
Bureaucratic delays
Delays encountered in processing applications for import or export permits and customs and transit formalities are often very costly to traders. Red tape and the low morale of staff, caused by low salary levels in the public service, contribute to these delays. Most traders not only find such delays inconvenient but also complain about having to pay bribes to officials in order to ensure the processing of applications.
Malpractice in enforcement of law and order
In many African countries, officials often use customs and police checkpoints to extort money from traders, hauliers and other travellers. In most cases the affected parties are forced to bribe the officials or be delayed without cause. These activities have been known to occur on train journeys as well (for instance between Dakar and Bamako and from Abidjan to Ouagadougou) and especially at the international border crossings. Traders crossing into Côte d'Ivoire are often told to get down from buses and trains and are allowed to return only after paying stipulated amounts to the border officials. Naturally, traders pass on these extra costs to the consumer.
Misuse of power
Hierarchical control typical of public sector organizations and substantial executive powers exercised by departmental heads often oblige public servants to compromise in performing their duties strictly on the basis of existing regulations. In a number of cases staff who refuse to compromise may be victimized in diverse ways including arbitrary transfer or even dismissal.
Insufficient quality controls
In most West African countries public health departments are often lax in enforcing quality control regulations and associated sanctions. In Guinea, for example, quality control measures centre mainly on imported foods (powdered milk, canned foods, etc.) with particular emphasis on expiry dates. Controls over the quality of locally produced food are virtually non-existent. In the case of meat, quality control tends to be limited to abattoirs with practically nothing being done at the retail stage, so that animals slaughtered outside officially sanctioned abattoirs avoid any control. Consumers are therefore unprotected from contaminated food and also from being charged excessive prices that have no bearing on the quality of food product sold.
Relative ineffectiveness of consumer associations
These associations, which are developing in many West African countries, have no real power in dealing with governments and traders. In many large cities, however, consumers are beginning to react more strongly in the face of poorly presented produce or items that represent health risks. Such reactions remain sporadic but they do indicate a growing awareness of problems of hygiene, price and presentation.
2.3.1 Inflexible trade regulations
2.3.2 Abuse of political power
2.3.3 Absence or inadequate application of fair trade legislation
Despite liberalization of the economies of many African countries, inflexible administrative controls and regulations continue to hamper trading activities. Procedures for obtaining trading licences have been simplified considerably in many countries. There has not been, however, any significant streamlining in the number of documents required to register a trading enterprise and the difficulties involved in completing and processing them.
In many African countries, the right of traders to import and distribute any type of foodstuff tends to depend on a system of political patronage under which they are required to contribute to the ruling parties and to fund prestigious government projects. This phenomenon is relatively recent, dating from the establishment of multiparty systems in the early 1990s. Traders are expected to support and sometimes finance government officials and functionaries of ruling parties in order to avoid being labelled as opposition elements and dissidents and, consequently, being deprived of the licences needed to pursue their activities. In many cases this system of patronage involves "favoured" traders receiving major privileges including preferential treatment in the allocation of markets and the waiving or reduction of customs duty and other taxes. Enforcement of existing commercial legislation is also compromised significantly and there is a virtual breakdown of law and order.
Political patronage also leads to an absence or inadequate application of fair trade and competition legislation. "Favoured" trading companies and traders and "independent" traders are not treated equally, particularly in terms of applying regulations pertaining to imports. The "favoured" are often exempt from established import procedures and given unfair advantages over the "independent" traders, whose businesses either stagnate or decline as a result of this. For example, at the start of trade liberalization in Guinea in 1986, there were over 15 rice importers, about 30 wheat flour importers and over 100 traders importing such staples as sugar, vegetable oil and dairy products. But at the time of this study, rice imports were monopolized by three or four companies who were involved in significant price collusion. The number of trading companies involved in the importation of other staples was also down to a close network.
A similar situation is found in Burkina Faso in certain sectors of the economy, especially in public works and the curing of hides. There is also a danger that liberalization of cereal imports in that country will concentrate the sector in the hands of a few privileged operators.
2.4.1 Producers and processors
2.4.2 Traders
2.4.3 Transporters
2.4.4 Market managers
2.4.5 Consumers
Shortage of storage and processing infrastructures
Because of inadequate storage and warehousing facilities, most domestic agricultural produce is stored on-farm and in traditional storage facilities in villages under conditions that lead to rapid deterioration and substantial losses. The problems encountered in undertaking primary processing, which is predominantly manual, are somewhat discouraging for production and marketing. In most countries small-scale processing plants are located mainly in large towns and cities. The few in the main production zones are usually found where there are donor-funded projects or on large private and state-owned farms.
Post-harvest management of perishables is often hindered by an acute lack of refrigerated trucks for transport, processing plants and cold storage facilities. Only a few countries such as Senegal and Cape Verde have made appreciable progress in processing fruits and vegetables with the assistance of various donor-funded projects.
Lack of adequate, well maintained warehouses
Most traders with warehouses in towns use these premises for wholesale and retail purposes as well as for storage. A variety of food and non-food goods, including rice, sugar, flour, kola, cement and insecticides, are stored together in these warehouses, which are often damp, insect-infested and unsuitable for storing such items as cereals, flour and tubers.
Irregularity of rail transport
Reliable railway services could ease the transport problems faced by food traders. The rail networks developed by the colonial administrations in most African countries, however, were basically meant to facilitate the exploitation of primary export commodities rather than promote efficient FSDSs or indeed contribute to overall economic development. Since independence these networks have not seen any appreciable modification or modernization, and in many countries the railway systems no longer work because they are considered too expensive to operate. Even where the system works (for example the rail network between Burkina Faso and Côte d'Ivoire), its role in developing trade is hampered by major organizational difficulties. Timetables are often unreliable, excessive overcrowding occurs and traders are usually subjected to extortion or delayed for long periods by police and customs officials at border crossings.
Poor state of roads and lack of security
In many countries only the main highways are well maintained, while feeder roads to rural markets and villages in the main production zones are often in a poor state and become quite unusable during the rainy season. This situation leads to considerable delay in transporting food to towns and cities and the frequent vehicle breakdowns on these roads add to transport costs for people and goods. Where the roads are generally satisfactory, there can also be security problems. Armed gangs are known to set up roadblocks to extort money from traders, sometimes threatening their lives. Such occurrences are common in Côte d'Ivoire (on the Ferkéssédougou-Abidjan road) and are on the increase in Burkina Faso and Niger.
Poor state of market infrastructures
A number of markets in cities in West Africa are in a deplorable state. The most striking example is the central market in Bamako, which was destroyed a few years ago and has never been rebuilt. Traders are now crammed onto the surrounding streets, making the city centre virtually impassable during the day. Many wholesale markets are in a similar state. For example, at the Sikasso wholesale market produce is unloaded on the road beside a foetid pond with fruits rotting on the street. Most markets are dirty and have no public toilets. Such unhygienic conditions pose health risks to consumers and traders especially when food supplies are involved.
Lack of cold rooms in markets
Inadequate infrastructure at the point of purchase (mainly markets) often means lack of hygiene and hence poor quality food. The lack of cold storage facilities, for instance, not only increases the loss of fresh produce (meat, fish, vegetables and fruits) for sellers but also causes considerable problems for consumers. To avoid contaminated produce, consumers often have to go to special markets (for example, to buy meat from abattoirs, fish from fish markets and vegetables from special markets located near market gardens). This usually involves going to such markets early and at considerable extra cost in time and transport expenditure.
Lack of cleaning services and sanitary facilities in markets
Poor sanitation at markets also poses serious health risks to consumers. The Treicheville market in Abidjan, for example, is like a cesspool of dirt with abandoned produce in an advanced state of decomposition. Consumers have to walk through the mud and filth, while viewing flies on most food items - a major disincentive if consumers have any other option such as supermarkets or smaller stores. The fact that most markets do not have clean, functioning toilets and showers also causes difficulties for traders and consumers as well.
Lack of refrigerators in consumers' homes
This is a major problem for most housewives, since it means that they cannot store fresh or cooked food and must shop daily for small quantities so that whatever is cooked is consumed. Opportunities to save on bulk purchases are therefore very limited.
Poor organization of the category
In Africa, chambers of commerce in most cases represent only relatively large importers of cereals and other staples, while they are expected to promote the interests of traders in general. Other traders and collectors operate in the informal sector and therefore fall outside the sphere of the chambers of commerce. There are very few trade associations and unions, the most active in West Africa involving exporters of fruits and vegetables to Europe. This general lack of organization for traders adversely affects their capacity to collectively seek improvements in the conditions under which they operate. It is very much a case of each person for himself.
2.6.1 Traders
2.6.2 Government officials
2.6.3 Consumers
Lack of accounting and management skills
Apart from large-scale importers, very few African traders keep proper trading accounts. Turnover of capital is central to the informal accounting and management conventions adopted in these businesses. The accounting period is therefore not one year but coincides with the time taken for a complete turnover of capital (which may be between one and three months for wholesalers and sometimes one week for collectors). This implies that the sale of stocks and the relative profits are calculated with this period as the accounting basis. Expenses are often met as they arise and are taken into account in an ad hoc manner in calculating sale prices. For most Muslim traders, their primary concern in computing profits is to determine the level of tithes (levied on their capital) that is to be distributed to the poor in accordance with Islamic law. This is often done on an ad hoc basis taking into account the trader's bank balance, cash on hand and an estimated value of existing stocks.
This informal accounting and management system has the advantage of being simple and does not require the trader to present annual accounts to the tax authorities. However, it leads to bankruptcy for many traders, as accumulated losses, which erode their capital base, cannot be recognized early enough.
Lack of commercial skills and incentives
Most trading businesses in Africa are family businesses with the majority of employees being members of the family. This practice is often used to avoid the risk of embezzlement. In some cases, however, such family employees lack basic numeracy and salesmanship skills as well as any technical know-how related to the particular food trade. They also tend to be poorly paid and therefore lack any incentive to perform effectively (with their board and lodging usually taken care of, the only remuneration they receive is pocket money).
Family pressures and the difficulty in building up trading capital
The informal social safety-net systems existing in Africa require income earners to financially support members of the extended family or even the entire village. Traders, transporters and other operators in the FSDS therefore face considerable difficulty in building up their trading capital, except where they are relatively far removed from the financial demands of the particular social group.
Lack of technical skills
In most regions, government officials have very poor technical skills. Many of them also lack a clear understanding of the role of the state in facilitating market development and therefore continue to operate on the basis of pre-liberalization administrative control under which the state exercised substantial control over various sectors of the food trade.
Conflicts of authority
Conflicts often arise among the ministries of trade, agriculture and finance, banks and chambers of commerce on issues pertaining to particular aspects of the FSDS. These conflicts commonly arise over the handling and supervision of procedures for importing and managing food security stocks. They often revolve around particular individuals seeking to exploit their political clout to extend their sphere of influence. In cases involving management of food security stocks or food aid, the contending agencies may include the ministry of social affairs and even the armed forces and some international organizations. This situation blurs the lines of departmental responsibility and creates inertia on how to proceed in promoting an efficient supply and distribution of food.
The social burden of a large family
The large size of African families, with relatively low levels of income, creates significant problems for family heads in meeting increased family expenditures on food. Bulk purchases of foodstuffs represent a cost-minimizing strategy that most of these families cannot adopt because of their low incomes and lack of suitable storage facilities in the homes. The alternative, which is relatively more expensive, amounts to making regular purchases in small quantities from micro-retailers. This factor also affects the choice of food purchased by the household. In Burkina Faso, for example, most consumers prefer imported rice (which is considered bulkier) to local rice leading to production of the latter being less competitive (Cheyns, 1996).
Socio-cultural influences on choice of dishes
The cultural background of the members of a household significantly influences the type of meals consumed, ingredients used and cooking methods adopted. For special events and celebrations, housewives have to cook particular meals requiring special ingredients even if this means going to several markets in a town or city (for example sumbala or dolo prepared in the home region of a particular tribe).
