FUTURE OF THE INFORMAL
WHAT'S THE PROBLEM?
Rapid rural to urban migration has led to one in two people living in South Africa now residing in townships (informal settlements), where poverty is widespread, and unemployment is as high as 60%. Township residents are often unable to find work in formal labour markets, which are concentrated far away in urban centres, and even when they do, due to the distance they spend 40% of their income travelling to work. Many then end up in casual informal roles or setting-up small informal businesses that struggle to survive and reach their potential. This is because they lack access to: market, finance, supply chains and have their low levels of business acumen. Furthermore, with transactions paid in cash, they have no proof of income, making access to finance to grow their micro-enterprises impossible.
This is why we set-up Word of Mouth, a social enterprise re-inventing the way the informal economy trades, to create a local solution to the global livelihood and unemployment crisis in urban areas. Our on-demand digital services marketplace, a first for the informal economy, connects female-led informal micro-enterprises (Members), with customers (Users) living in their local community, while also providing access to formal supply chains, and training so they can grow with their businesses. This provides a new model for sustainable livelihoods for young women, stimulating local trade by creating trust and opportunity where it previously did not exist.
WOM’s marketplace helps connect local township micro-enterprises with and local customers who could not previously find each other. By keeping it local, WOM ensures that less disposable income from the township is spent outside the township economy (current estimates find 70% of income leaves the township.)
All WOM Members are interviewed before joining the platform, and User reviews are submitted after each job completed. This enables WOM to create trust between actors from different social networks, crucial in the absence of formal qualifications and certifications or personal referrals.
Members of WOM's marketplace also have access to a range of benefits. They can order stock through the platform, gaining access to the formal supply chain's often situated over 30-40 km away. By buying stock on their behalf, WOM is also able to benefit from collective bargaining, and pass on discounts to its Members. Members also gain access to training opportunities so that they can grow with
Previous approaches to solving the challenges presented by the informal economy have focused on formalising it or connecting it with the formal economy. WOM is different because we create economic opportunity in the informal economy by building local capacity, and creating new ways for township residents and businesses to connect, trust, and trade with each other.
Our digital platform, and decentralised recruitment, service provision, and user-based quality assurance (post job reviews) makes WOM perfect for scale.
Our marketplace collects valuable data ad insights on the cash economy, that is currently limited, and can
help inform policy.
Previous approaches at furthering an inclusive economy, and creating economic opportunity in informal settlements have focused on formalising the informal economy or by connecting low-income actors with middle-income groups outside these settings. WOM is different because we create economic opportunity in the informal economy by building local capacity, and creating new ways for township residents and businesses to connect, trust, and trade with each other.
Our digital platform is highly scalable ensuring WOM's solution could not just affect the lives of South African's but female-led micro-enterprises across the continent.
By 2025, the digital marketplace is projected to cover its expenses and is expected to realise a return and full sustainability
within five-seven years.
WOM collects highly sought after data on the informal economy. This data can help inform the development of WOM’s training packages, drive policy change, and further support financial inclusion for everyone.
OUR OPERATIONAL MODEL
In addition to the income the marketplace creates for our Members, the operational model supporting the marketplace (Sales, Drivers, Customer Support, etc.) creates local capacity and employment opportunties, often for previosuly unemployed youth.
9 Out of 10 Customers would recommend us
to a friend
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