Why in-depth study is needed before investing billions in market buildings

Alarm has been raised recently, that many structures put up in several urban areas to serve as modern markets are not attracting business. Those who were allocated stalls in these markets are abandoning them. As a result, many of these markets are remaining empty or are highly under-utilised.

The traders’ main complaint is lack of customers. People, circulating to these markets and who form potential customers, are few. Thus, traders are selling little or nothing, suffering losses.

In urban economics, there is a famous dictum saying: location is location is location. Business is maximized when located at sites with maximum accessibility. The authorities who invest in these markets may be constrained by land availability in areas that are already heavily populated. Thus the choice, sometimes, of sub-prime sites, in the hope that the modernity of markets will attract business. This is not happening, or is not happening fast enough. Clearly, a building is not all there is to making a market thrive.

A market like the Mahakama ya Ndizi, in Mabibo, Dar es Salaam, is thriving in compromising circumstances, because of location and the brand it has created for itself, as your one-stop centre, if you want to buy raw bananas from upcountry.

Public authorities envisage a situation where traders will abandon doing business in open air on streets and other open spaces, and operate from these modern buildings. Yet there is contradiction in this idea. Modern markets can only accommodate a few traders compared to those who are targeted. Thus business on the street and other unauthorised areas will continue, even if some traders moved to these modern markets.

What can we learn from experience? In the late 1990s, as part of the UNDP-supported National Income Generation Programme (NIGP), two modern markets, one at Temeke Stereo and the other at Makumbusho, in Dar es Salaam, were constructed to accommodate street traders. They started off badly, with traders complaining of lack of customers, much as the number of stalls provided were few. There were also many complaints related to the management of these markets, including the rent charged, and responsibility for cleanliness.

In 2010, a Pension Fund’s money was sunk into constructing the Machinga Complex. It targeted to accommodate 4,500 traders, taken off the streets.

Today, more than a decade later, it remains underutilised with traders claiming, among other things, lack of customers; yet business is going on briskly a short distance away, at Karume, largely in the open air or in makeshift stalls.

Karume has also established itself as the ultimate centre for mitumba, secondhand clothes, shoes, bags and what have you.

When you observe how street traders operate, you realise that they follow potential customers. They know where there is business potential and locate themselves there. Their philosophy seems to be: “You follow them, they do not follow you”. Yet, in constructing modern markets, there seems to be a belief that customers will follow traders.

This may not happen until the market has established itself over a long period and has gained some reputation, perhaps in terms of market segmentation; meaning, getting itself a niche, in the wide spectrum of the market potential.

Besides, there is the habit of the traders and customers themselves. Having got used to displaying their wares on the ground free of charge, they may be reluctant to move indoors, where, moreover, there are regulations to observe, and rent and other charges to pay. It is not uncommon to find traders displaying their wares on the ground surrounding a market, to the chagrin of those who chose to trade from inside. Habits die hard, unless there is ardent public education and serious regulation enforcement, this habit is likely to continue.

Aspects of design need to look into as well. Traders in some new markets have complained of having one electricity meter of the whole building. Sharing the cost of electricity among many users of different needs can be challenging. Rent too seems to be determined on the basis of returns on the capital invested and not on the turn over realized by the tenants.

Clearly in-depth studies need to be made before investing huge sums into these markets since, once constructed, they cannot be moved. When the buildings remain vacant or underutilised, they become a liability costing much to look after, without generating adequate revenue. This is necessary to stem obsolescence.

Predictive models depicting the usability of the market, given existing and near future conditions; as well as revenue streams, need to be made. The focus should not just be on the building, but also on its potential use, to avoid sinking money into what becomes white elephants.