Paying for an expensive SUV with income from selling kotas …

Kota Festival Soweto 16-17 September 

 

I love channel 702, although my listening is always very disjointed and haphazard as sadly I only listen to it when driving. I was fascinated the other day to hear Sidwell and Fikile being interviewed by Azania Mosaka about the Kota festival coming up in Soweto on the 16th and 17th September.  It got me thinking of GG Alcock’s riveting story about the invention of markets, a concept which is somewhat more commercial and less theoretical than Hobshawm’s notion of the ‘invention of tradition’ – although they might be linked.  

GG Alcock

But we need to take a step back for a bit of background on GG Alcock who in 1999 founded Minanawe (Zulu for ‘you and I’) a specialist marketing company that focuses on the informal market and the informal economy.  

In 2015, Alcock sold Minanawe to the international agency network, Publicis;  but still remains very involved. GG grew up in the Msinga Valley in KZN. His parents, Neil and Creina Alcock were anti-apartheid activists and humanitarians who knew that if they were going to work in rural communities, they needed to live in the community. So from the age of 7, GG grew up in a mud hut with no running water, no electricity, speaking fluent Zulu and his primary school classes led by his mother under a tree. You can read about the Alcocks’ lives in his first book Born White, Zulu Bred published in 2014.  

Alcock and the informal sector

 

Being a bit of a maverick, a fluent Zulu speaker, and deeply steeped in Zulu culture meant that when GG started his marketing company it was a fairly logical step that he would not be looking at mainstream markets but at the informal sector. His work in the area led to a fascinating book Kasinomics: African Informal Economies and the People who Inhabit Them. Here, Alcock writes about several case studies, one of which was how he persuaded Parmalat to market their processed cheese slice to the informal fast-food market, particularly those making kotas.  

What is a kota?

Back to where we started with the Kota. Do you know what it is? It takes its name in slang from “quarter” – ie a township version of the Durban Bunny Chow. Only instead of being filled with curry , rice, beans etc., this hollowed out quarter loaf bread is filled with all sorts of things like “slap” chips, tomato sauce, polony, fried egg, atchar, Russian sausages, even mashed potato. If you don’t know what ‘slap’ chips are, see our post in South African slang.

Value of the informal fast-food market

Parmalat apparently briefed Minanawe to research the township school lunchbox market for their processed cheese. But Alcock persuaded Parmalat’s branding team to go to Soweto and look at the huge Kota market. The country’s informal fast-food market is estimated to be worth R10 billion, employing 200-300,00 people; with about 50,000 kota outlets being run by township entrepreneurs countrywide. Alcock suggested adding a processed cheese slice to a Kota and to vetkoek ?… and so a huge billion rand a year market was created with Parmalat retaining about 85% of it. And according to Alcock in a recent talk, 35% of Parmalat’s gross profits is linked to cheese slices.

Mathabatha Jobo manager of Mbopha’s Place in Alexandra is a good case study. When interviewed on 702 in May 2016 (I told you 702 was my information station!) Mathabatha told Azania that on a good day, they turn over about R50,000 or more. They have a kota that starts from R12.50 and with additions like extra cheese and polony it can go up to R50. Another outlet in Soweto sells 2,400 kotas a day. GG tells the story of an owner of Kota outlets who battled to buy his jeep. When GG nodded sympathetically that it was difficult to raise finance, the fast food entrepreneur said ‘No – it wasn’t that, I wanted to pay cash and when they asked the source of the income and I said “selling kotas”, they thought I was making up nonsense!’

But do the math – this is big money circulating within the informal economy of townships. And it’s a market that Parmalat had not even thought of until Alcock suggested offering Kota outlets free cheese slices and free Parmalat branded menu boards. And so the Kota took a new turn.

Goat trade a multi-million rand market

And more on informal economies. What do you think the main revenue earner for Somalia is? Over 50% (and Al Jazeera says up to 80%) of Somaliland’s export income is generated by the sale of sheep, goats, camel and cattle. 

According to Alcock 300 million goats are sold annually to Saudi Arabia (although Al Jazeera put the number in 2015 at 5.3 million animals ie not only goats). Most leave from the port of Berbera in time for the annual Hajj transported, irony of ironies, via converted oil tankers. This trade is worth $540 million per annum. See Robin Hammond’s fascinating National Geographic article with amazing photographs.  I know it’s an ethical dilemma and a very difficult animal rights issue, but in a country like South Africa with such high unemployment, this could provide a crucial source of income for rural people living on poverty. In fact not only do we not supply goats for export, we actually have to import them – 300,000 goats a year from SADC countries at a cost of R500 million. What a lost opportunity for rural South Africa. I wish I was younger with more energy and connections!

Hawker trade 

 

 And finally to hawkers. I have long been an ardent admirer and supporter of street sellers – whether they are selling vegetables, sweets or accessories so fully support the view that hawkers should encouraged and provided with support and infrastructure (like stalls, power points, water facilities etc.) and be brought into the formal tax structure where relevant.  But without all the accompanying red tape that covers initiatives like this.  

Alcock has studied the hawker industry (although I would love to find out how he gets his stats and figures).  He says there are nearly 500,000 hawkers in the country and the average hawker earns R3000 a month (now how on earth do you gather this information?) He says that most hawkers who sell fruit and veg work in groups, where they pool their money (as much as R1500 per person) for a group of 20 or so who then buy at the market (leaving as early as 4 am) with the pooled money. +/-R30,000 can buy a lot of fruit and veg wholesale.  To transport their produce back to their selling points they hire a bakkie. Once back at the selling points they divide out the produce between all the sellers. What was fascinating about his story was that many consumers prefer to buy at these hawkers stalls rather than at the adjacent supermarket as the food has not ‘slept there’ ie it is fresh. Also the hawkers, many of whom are women, do not compete with each other as each has her own regular clientele. So if one leaves her work station, her neighbor will take over the selling at the ’empty stall’ , and take any money for her friend and co-seller.  

Hair salon market

   And what of the hair salon market generating income and circulating money? According to Alcock, there are approximately 100,000 salons in South Africa with a trade worth R30 billion.

For more fascinating insights, I highly recommend Kasinomics for a quick light but interesting read.