For the last four months, we (a team in UNDP Angola) have been in a deep huddle using a systems approach to make sense of the complexities of informal urban markets while exploring combined interventions that can help shape the future of these markets (read our last blog to learn more here). We moved away from a single point solution mindset and embraced a portfolio logic to tackling complex systemic challenges in the urban market space. By taking a system view to identify the immediate problems within the system, we were able to see underlying patterns and ways we could leverage the system, whilst learning and adapting as the system continues to change.

The process has helped us develop new capabilities. First, to understand the system (sense) in relation to what we want to achieve. Second, to see new possilities and entry points for interventions (position). Third, to develop and begin to deploy and dynamically manage a portfolio of interventions that seek to (in combination) help shift informal urban market systems in Angola (transform).

Profile of the Informal Urban Markets in Angola

Although it is hard to define and measure the informal sector, recent data from the National Institute of Statistics (INE) suggest that, in Angola, 80,8% of the population is employed in the informal sector, and a staggering 90,3 % are women. This underlines that the size and economic importance of the informal economy in Angola cannot be ignored.

Urban Markets in Angola carry unique characteristics, both positive and negative. They are often informal and mostly considered to be very democratic spaces as they welcome people from all backgrounds and walks of life, hence, embracing diversity. Also, these markets are constantly changing at a rapid speed because they are quick to adapt as they continuously respond to their costumers’ evolving needs while, at the same time, comply with informal but socially agreed rules.

However, vendors within these markets are highly exposed to risks. Poor working conditions and infrastructure are part of the everyday struggles in markets and despite their considerable contribution to the Angolan economy, they lack appropriate recognition, social protection and security.

Our intention

By taking into consideration the potential highlighted within these markets, we intend to contribute to showcase and bring to light the positive value that lies within informal markets and help reduce some of the negative aspects that impact vendors and the overall functioning of urban markets. Ultimately, we strive towards the following three development effects:

1. Informal markets being a recognized and legitimate network.
2. Decent work and social protection for people in informal markets.
3. An adaptive and more efficient market system.

It can be confidently argued that this is the right time for action. We have been witnessing many signals of change and many other windows of opportunity have opened. For instance, Urban Markets and Informality are at the top of the list of the Angolan Government´s agenda. Initiatives such as the Plan for the Reconversion of the Informal Economy (PREI, in Portuguese), together with other mechanisms to boost national agricultural production namely PRODESI and PAPE, as well local government actions such as the ones recently deployed in the Municipalities of Lubango (Huíla Province) and Andulo (Bié Province) both targeting fruit vendors (known as kitandeiras or zungueiras), all represent crucial steps to improve informal vendors’ working conditions and recognition. Looking at the local digital sphere, a new space for alternative digital financing mechanisms is also emerging. These initiatives are being led both by the government and the private sector. Initiatives such as the first regulatory sandbox for Fintech, established by the National Bank, where startups are developing innovative digital financial instruments, will reach many segments of the population potentially also targeting urban market vendors.

UNDP’s NextGenCities Program

NextGenCities focuses on building new capabilities that equip UNDP Country Office (CO) teams like ours to ‘see’ the underlying drivers in a system, understand key dynamics in the policy space, and dynamically generate and manage a portfolio of interventions to engage with the complex problems at hand. This is particularly relevant since our traditional projectized, siloed way of working makes it difficult to ‘see’ complex issues and connections that cut across sectors and themes. Challenges like Informality are fast changing, entangled and require constant adaptation hence, single point solutions like simply formalizing the informal economy can be one dimensional and not capable of accounting for underlying causes.

With support of a team of experts, we built a problem space — a visual representation of the informal market system — around 3 critical elements (dimensions) that shape how the system works. These 3 elements are Social Capital, Governance and Value Creation (see our previous blog for more information). This problem space has allowed us to explore 5 key positions in the system where the three elements come together in different ways to produce desirable and undesirable systemic effects: 1) Collective networks managing collective shared infrastructures, goods and services; 2) Capabilities Exchange; 3) Resources management and mobilization; 4) Participation and co-creation of rules and regulations based on existing norms and practices; 5) Regulation for digital solutions.

Based on positions 1 to 3 we then designed a first wave of interventions (experiments).

Portfolio of Experiments: Wave 1

(Experiment 1) Inter-sectorial learning and cooperation between markets: Establishment of “Urban Markets Sprint Teams”, which are composed by market vendors and market administration representatives, that will work together through a knowledge exchange process and a learning by doing approach. Together with representatives of Municipal administrations, they will join forces to upgrade the market infrastructure through more efficient and innovative ways that can be adapted to the reality of each market. We wish to see a Government established Fund that would be available every year to ensure the continuous betterment of the infrastructure in urban markets.

(Experiment 2) Community Kitchen: Most markets are organized around food and cooking is one of the most traditional ways to bring people together. A Community Kitchen can work as a collective managed space that supports low-cost or free meals for the most vulnerable including women and children, while also fostering capacity building, bringing recognition to the local supply chains and food tradition. It can also be a way to explore collective financial instruments and business models.

(Experiment 3) Digital Finance Flows: Exploring and tapping into financial flows can be an important first step to improve everyday efficiency of these markets by making use of alternative models for financial management, such as more innovative digital payment and exchange mechanisms. The key components of this experiment are 1) Understand current money flows: study to obtain new/updated data on the current financial flow system; 2) Introduce digital mechanisms to support the financial management of the system and 3) Potentially introduce a complementary currency to be used within the markets. On the other hand, apart from improved financial management other benefits that can be expected are the generation of actionable data as well as increased trust and transparency within markets.

The approach described above allows us to continuously generate experiments to expand our portfolio and learn more about the system. Consequently, we will soon surface a second wave of experiments. While alternative (non-formal) approaches in markets are going to be tested in Wave 1, for Wave 2 we want to explore how regulation might support the scale up of these approaches.

The key here is to make sure that all experiments that are generated are interconnected and can feed into each other to produce better learning and greater development effects. In order to do this, we follow a set of guiding principles (Figure 4).

These principles and the key mechanisms for implementation will support the coherence of the portfolio and guide its expansion and growth.

On the other hand, while all experiments converge in the key principles, they contribute to the development effects in different ways. For instance, while Experiment 1 deals with Recognition from Government, Experiment 2 is focused on Recognition from Society and Experiment 3 is about building Trust within markets between these markets’ management officials and vendors. So, in a way they are all interconnected, and together they will help us learn about different aspects of the complex informal market system and achieve the expected development effects. (Figure 5)

Final Thoughts

It might be too early to predict how the informal economy will evolve in Angola, but we hope that the experiments we intend to carry out might help contribute to a positive transformation. The next step in the process entails gathering the right partners who are willing to start this experimental journey with us. As we are now equipped with new systems thinking capabilities we will work to leverage these across the Country Office as well as with our external partners to help Angolans tackle pertinent complex challenges such as improving urban market systems.

By: Daniela Lima, Judite Silva & Alberto K. Hungulo ( UNDP Angola)