Opinions Fri, 26 Jan 2007

Market Queens and Tax Collectors in the Informal Economy

On October 15, 1956 Time Magazine published the story of Nannarella, one of the market queens of Rome. Strawberries and potatoes were her stock in trade. None, including her male counterparts (the captains) was tougher and shrewder. Once she cornered the potato market. Her chief rival a handsome and tall captain, Gigi, infiltrated her camp with his subjects. Disputes and sabotage followed. Nannarella’s trucks met mysterious accidents, potatoes in her warehouse went bad, and she nearly went bankrupt.

A month after they had settled their differences, Gigi, smitten by Nannarella’s beauty, shrewdness and instincts for markets, proposed marriage. Nannarella’s response was instant: “We shall control two sections of the market.” When the mayor of Rome sought to investigate profiteering in the market, Nannarella, then 3 months pregnant with Gigi’s child merely said “Let him. We live by our wits here…” And as for those who complained about her prices, Nannarella said “What do they expect?” “Where are they at 4 o’clock in the morning? If you want to lie abed, you have to pay for that privilege.”

In a news bulletin on Ghana Myjoyonline.com (January 8, 2007), half a century after the Time Magazine’s story, local government officials met in Accra at the 58th Annual New Year School to deliberate on how to raise revenue in markets. Those who gathered and the experts who counseled them concluded at the end of meeting that market queens undermined the “free market economy”. The queens were also seen as impediments to the assemblies’ efforts in collecting market tolls. The officials resolved that assemblies should go home and exert their authority according to Local Government Act 462 of 1993 over the Nannarellas.

Time and again, politicians and experts who depend on misleading concepts, are quick to blame market women and the institutions of social network as economic saboteurs. The Rawlings revolution of the early 1980s targeted market women as the source of Ghana’s economic woes. Like Nannarella, women were molested, their warehouses raided, some raped and publicly humiliated, all at the pretext that some hoarded goods, controlled the market, or were not paying taxes. That exercise had great effect on those who lived through it. Many families were driven into extreme poverty. It was lost on those who dreamed up the scheme and the men who did the rampaging that, when it comes to feeding the nation, it is the market women and their entrepreneurship who stood between a near failed state and famine in the late 1970s and early 1980s. The message of the 58th New Year School workshop, if taken seriously, echoes this distasteful past. The message nurtures a mindset of local government officials that encourage the abuse of market women.

My argument is that it is false that market queens are impediments of the functioning of the market. Second, it is a fallacy to demonize market queens as regressive agents in collecting market taxes. And third, clear minded people would agree that the local assemblies’ efforts in collecting market tools would benefit from the role of market queens as coordinating agents of the market. It is this role that has justified their existence from the markets of Rome to Asafo in Kumasi and Makola in Accra.

It is ironic that in the design of economic policies and in policy implementation, experts in developing economies especially Africa, often ignore the usefulness of local institutions and the social networks that bind. Experts fitted with anthropological lenses, often in a hurry, see nothing but primitiveness and impediments. Those who advocate good governance do not see the merits of traditional authorities. Those who advocate free market do not see small farmers as producing firms and market queens as entrepreneurs. The disconnect between some of the instruments of governing and our social context should be a disturbing fact for all of us.

Schools of business administration have only recently introduced supply chain network as a subject worthy of study. But supply chain network is hardly a novel subject in Techiman’s history as a trading centre that goes back to the 15th century. Market queens and captains (most of them with little or no formal education) form their intricate trading network as well as transportation links to ensure that yams from northern Ghana, plantain from the central forest belt, and smoked fish from south are distributed among wholesalers and retailers across the country in a manner that the state can hardly emulate in the delivery of mails.

Market groupings headed by queens rely on social networks far removed from the formal sector. The market queens play the role of coordinating the supply side of markets. They gather information about suppliers and delivery routes. They oversee good conduct of the large number of small independent sellers. They preside over dispute settlement between sellers, and enforce contractual supply arrangements without having to rely on lawyers and civil servants.

If the truth is to be told, it is public sector corruption, more than the enterprising behaviour of market queens, which do not allow private enterprise to flourish and market forces to operate efficiently in these environments. Yes, to the extent that the market queens influence supply, they may influence prices. But for most products, the final exchange prices are matters of bargaining between individual sellers and buyers, both looking for happy outcomes (or what economists call equilibrium). Moreover, since market queens for the most part are not the sole sellers of a product in the market, they cannot set prices the way a single seller would.

At 24 Nannerella was a market queen with 25 “subjects”. She had an innate feel for market trends. Motherless at five, she learned the trade from her father, taking over the trade after the father went off to war. The Nannarellas of the tomato, yam, plantain, and fish markets earn their position because of their enterprise, shrewdness and social coordinating skills. Her charm apart, the one time plantain market queen of Kumasi Asafo market, affectionately called “Oba to you” (to wit, “Over to you”), had political savvy. The large number of competitive small plantain sellers relied on her attributes and networking skills to ensure the smoothening of offer prices between the boom and lean seasons. She ensured quality control and the smooth functioning of their segment of the market. Market queens collect fees or membership dues which the women are willing to pay because of the understandable benefits they derive from the services provided and their understanding of sanctions.

The Taxmen For revenue hungry local governments it is tempting to see the market queens as the villains. The skillful queens stand between them and the numerous market women who ply their trade from markets to markets. What the local government authorities are overlooking is the assumption that without the queens the individual sellers will pay their market taxes without evasion and at least collection cost. False! It is by no means certain that revenue collection will succeed.

While the law, Act 462, empowers local governments to raise local revenue to support the provision of local services, the law, however, provides no directions on how to maximize equity, social harmony, and revenue collected. It is up to the civil servants and local politicians to devise creative and innovative ways to implement the law in ways that make the best use of traditional institutions and social networks of the market.

In fact, how local governments work with market queens can be a model for organizing different sectors of the informal economy for tax purposes: from the auto mechanics of Kumasi Magazine to the fishmongers and traders of Tema Manhean. I offer the following road map.

If we are to expand the tax base, if revenue collection is to become more effective in these areas, we need to understand more deeply what it is about their social networks that build loyalty and allegiance around the market queens. We must understand what is it that fosters a sense that there are benefits in paying fees or dues to the market queens. And why the same group of agents is unwilling to part with their hard earned money to anyone who shows up at their stalls as a tax collector. The challenge is to harness the culture of market organizations not demonize it. The burden of credibility lies with local governments. They must display greater flexibility and open-mindedness in dealing with an important institution of our markets.

The Benefit Principle The benefit principle of taxation should be the guiding rule here. The view that it is the duty of these market women to pay taxes, or that local governments have the power to collect taxes from the women, is, in this instance, too simplistic and counter-productive. Add to this the fact that most tax collectors are men, and you can see the “genderized” risk of heavy-handedness in tax law enforcement over women “subjects”.

Taxation according to the “perceived” ability to pay can lead to arbitrariness against which women may have no recourse.

Rather, taxation according to the benefits principle in democratic setting has the great merit that it opens up spaces for dialogue. It maximizes cooperation and compliance. The relation between the women and the local government will be seen in quid pro quo terms. The local assemblies as modern-day institutions must work with the traditional councils to demonstrate that there are real benefits that local government can deliver to the market women.

Such deliverables may include providing special market stalls for market queens, adequate public amenities for women, day care facilities at the market for nursing mothers, providing training for market queens in sanitation, using the queens as instruments of fighting child poverty and the vulnerabilities of the kayaye (girl head porters), and using the queens to promote the girl-child education in their local communities. In this setting, market queens and the complex hierarchies of market networks should be seen as important centralizing and coordinating agents if there is any hope of registering the large number of small operators for revenue mobilizing purposes.

Growing up at Mampong Akuapem, Auntie Akua traveled to northern Ghana thrice yearly, often two weeks at a time. If Nannarella was a Catholic, Auntie Akua was a Presbyterian. Both had no formal schooling, but uncanny with market trends. Nannarella’s response to the mayor of Rome resonates with most women who ply their trade in the market: “My child is not going to have the hard time that I had.” Auntie Akua negotiated with growers and other middlemen for supplies and arranged transportation logistics to supply yam to retailers from Amonokrom to Abotakyi to Aburi. And the yam came when her “subjects” knew it will come. At her warehouse, the little boys and girls she fed and clothed to go to school marked the names of her “subjects” on the wall. We marked numbers in tallies. A single stroke was ten cedis, a half-sized tally, five. She was both the wholesaler and the market queen of yams. It was only when I ventured forth to Navrongo Secondary school that I realized the distance Auntie Akua had to travel, the care she had to take to minimize transit losses, and the challenges of managing the supply side of a product as fragile as yam.

To be effective in designing our modern economic management institutions, policymakers must steer between the printed letters of the law, often inherited or adopted from a different social context, and the practical social nature of how our communities and markets function. Hardly a need for a war between tax collectors and market queens, because the important social and economic role of queens in organizing markets pre-dates the modern assembly taxmen. I believe that this understanding would advance our socio-economic efforts smoothly and fruitfully.

Joe Amoako-Tuffour teaches economics at St. Francis Xavier University, Canada. jtuffour@stfx.ca

Views expressed by the author(s) do not necessarily reflect those of GhanaHomePage.

Columnist: Amoako-Tuffour, Joe