3.1. Poor locations of wholesale markets
3.2. Technical and infrastructure problems
3.3. Competence and financial capacity of operators
3.4. Arguments against promoting wholesale markets in Africa
A number of factors account for major deficiencies in wholesale marketing systems in Africa. These problems, which need to be addressed in any sustainable attempts to modernize food distributions systems, fall into four main categories, namely those related to the:
This situation arises mainly because many wholesale markets are located along traditional trading routes for particular produce that are unconnected to new road and rail networks, which developed with the demands of the growing city in mind. In some cases the markets are located some distance from river, sea or airport facilities that play a crucial role in the supply and distribution of food to the city. The consequence of this is that infrastructures linking the market to its main supply or distribution routes are not sufficient to cope with growth in demand, particularly in terms of increased traffic.
The location of wholesale markets in city centres also places limitations on the physical expansion of the markets because of inadequate space for developing additional facilities to take account of growth in the volume of produce handled as well as an increase in the complexity of required services.
The poor state of roads, drainage and potable water supply facilities constitute major problems that affect the operations of wholesale markets in many African cities. Communications systems are often very rudimentary and power supply systems are inadequate to meet the needs of packaging, handling and storage facilities as well as the security requirements of markets. Sanitation and waste disposal systems are either insufficient or poorly organized leading to acute problems with hygiene.
In addition to these constraints, poor technical design often makes market buildings unsuitable for handling particular produce and compounds problems with maintaining minimum standards of hygiene. Furthermore, the available space may be unduly limited because of poor design, thus impeding movement and compromising safety requirements for people and goods.
Most wholesale traders are without professional skill and training, a situation which is further compounded by the total lack of specialization in the provision of food supply and distribution services (particularly the need for a clear distinction between wholesale and retail functions). Many wholesale traders also lack sufficient operating capital and have major difficulties in accessing bank credit.
Three main arguments are often advanced against the promotion of wholesale marketing systems in Africa.
i. Higher operating costs for retailers
It is sometimes argued that wholesale marketing systems entail higher transport costs for retailers. It can, however, be argued that a wholesale market can in fact reduce overall transport costs incurred in the distribution of food if its location is carefully selected to reduce the need for retailers to buy stocks from several wholesalers scattered throughout the city. The system can further be supported by an intra-city transport system that ensures a regular flow of suitable haulage vehicles between wholesale and retail markets. This has been done in Abidjan where the municipal authorities have set up a system with several vans (marked “market supplies”) that specialize in transporting goods between markets.
ii. Increased unemployment resulting from creation or expansion of wholesale markets
From a static viewpoint efficient wholesale markets that reduce transaction costs and increase labour productivity can lead to a decrease in the size of the workforce engaged in food supply and distribution. Any associated job losses, however, can be fully or partially offset as a result of increased volume of trade and lower transaction costs due to enhanced competition that encourages rising farm-gate prices and reduced retail prices. Any increase in productivity in an economy creates unemployment if demand for goods remains constant. The essential feature of economic development lies precisely in gains in productivity leading to higher earnings and an increase in demand for goods and services. It is in this context that it is argued that wholesale markets can indeed contribute to economic growth and job creation.
iii. Under-utilization of wholesale markets by traders
The success of new wholesale markets depends on patronage by both wholesalers and retailers. New or improved market infrastructure and available facilities may not be sufficient to attract well-established wholesalers and further inducements in the form of tax and credit concessions may be required. When major wholesalers have been persuaded to invest in the new market (for example in building warehouses, offices, etc.), their participation and that of others will be ensured. It is vital, however, that local government authorities do not use wholesale marketing systems as channels for levying taxes on produce traders. To encourage patronage it may be preferable to simply reorganize wholesale activities at existing sites, but if relocation does prove necessary the potential new sites should be as near to the existing location of wholesalers as possible.
