13 - Breaking into Higher-value Markets in the Craft Sector

Summary

In many parts of the developing world, the easiest entry point into market-based activity is for people to make and sell goods they use themselves and know their neighbours need. In South Africa a highly centralised corporate sector was already mass producing almost every manufactured or agro-processed product that poor people consume, with distribution systems reaching the most remote corners of the country. This limited the opportunities for small-scale producers targeting local markets in poor communities, where they struggled to compete in relation to either price or brand recognition.

South Africa’s high levels of inequality mean that not everyone is poor, however. Different market segments have different levels of disposable income. At the time, the emergence of a black middle class was starting to change the traditional segmentation of local markets and South Africa’s re-entry into global markets also held the promise of new opportunities. So how could entrepreneurs access these wider markets – on terms that would yield better returns?

The Mineworkers Development Agency (MDA)’s strategy shifted from a focus on local markets to explore how best to meet this different challenge. Until this point, support strategies at MDA’s centres had been framed spatially, aiming to support diversification in local markets and tackling common obstacles facing local enterprises in a multi-sectoral way. Accessing higher-value, external markets required greater sectoral specificity, however, and put participation in value chains on our radar.

Market development and value chains

In the wider enterprise development discourse, there was a shift from the narrow focus on business service markets described in the previous chapters to an approach called ‘making markets work for the poor’, (commonly abbreviated as M4P) and focused on market systems, defined widely to include not only buyers, sellers and others directly involved in exchange, but also the institutions, rules of the game, organisations and enabling-environment factors shaping the terms on which exchange takes place.

There was certainly plenty of contestation over what this new M4P approach might mean, with early formulations fitting rather squarely into the hegemonic neo-liberal consensus of the day.