The kadogo economy refers to Kenyan informal markets of fast-moving consumer goods serving low-income populations. These typically involve kiosks/stands that sell commodities at their lowest divisible level and at affordable prices.
Though commonly neglected in corporate networks, they remain robust and post the highest growth rates in the retail sector. All the same, their efficiency can greatly be improved through automation.
First things first
In a past blog article, we discussed how business process automation increases effectiveness, efficiency and security. It also enables businesses to focus on their core functions while support functions remain well-executed.
Most informal businesses however, are locked out from these opportunities. This is largely due to inadequate information and inaccessible formal systems.
This need not be the case as modern solutions to the unique problems facing the kadogo sub-sector exist.
Kadogo peculiarities
By virtue of their trade in very low priced goods, they mostly handle bulky and low denomination currency. They also make numerous, small transactions for the same reason.
Additionally, their clientele typically involves low-income earners who frequently purchase items on credit. This usually functions on trust built by long-standing community relations.
Given these characteristics, the kadogo economy can adopt automation services such as:
- Mobile money- This way, customers can transfer money from their mobile phone account and into the business’ phone account.
- Not only is this a safer and more convenient way of storing cash, but it also allows better record keeping of financial transactions.
- Kenya leads the world in mobile money penetration, with approximately 96% of households owning an account.
- Therefore, traders can be sure that most of their customers already have access to the service.
- Mobile P.O.S- On top of the aforementioned telecommunications platform, traders can install Point of Sale (POS) apps on their phones.
- These are more superior as they offer additional benefits such as automatic generation of financial reports which greatly assist with inventory management, tax compliance, performance evaluation, etc.
- The financial reports will also assist in management of debtor accounts so that traders can easily keep track of customers who purchase on credit.
- Furthermore, modern POS systems allow the sending of payment reminders and promotional messages to clients.
In fact, the business can link its Till Number to its bank account via the POS app. This way, customers can make transfers at no charge. Additionally, the business will not need to finally ‘move money from the phone to the bank.’
We hope that more kadogo traders will embrace business process automation so that their economy continues to develop quantitatively and qualitatively.