‘Payment exchange’ – a good idea, in part

I heard a new proposal recently from a distinguished ‘market man’ whose opinion I rate highly.

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He started by saying that South Africa’s markets are destined to follow the pattern of businesses all over the world – the big get bigger and the small either get swallowed up or vanish. I’m inclined to agree, as many of our markets under the current municipal dispensation are already teetering on the brink.

But, said my friend, the way to save our markets lay in divorcing them completely from any political or municipal control and establishing an independent organisation that would take over the function of paying the farmers.

In other words, market agencies would no longer have trust accounts and all payments to farmers would be done via a single trust account managed by this ‘Payment Exchange’, as my friend called it. The 5% market dues normally paid to municipalities would go to this body which, after covering its expenses, would allocate the balance towards a ‘market development fund’.

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This would be feasible, suggested my friend, with the correct application of modern technology. The market agents would continue exactly as they do now, the only difference being that payment would come from the Payment Exchange.

An obvious benefit of this idea is that it removes the temptation of theft. For the vast majority of agents this is not a problem, but the few who do succumb cause considerable disruption to the trade.

There are drawbacks to this idea. I’m a strong believer in the relationship between agent and farmer, and the act of payment is one of its cornerstones. By removing this service, the relationship is inevitably weakened.

I also don’t like placing too much power in too few hands, which is what would happen with a Payment Exchange.
So I’m not entirely convinced that this is a good option.

What I do like about his proposal is the general idea that we make markets independent of politicians. Naturally, those in power don’t like this idea at all, but unless it is implemented, South Africa’s markets are destined to struggle for survival and the smaller ones might well vanish from the scene.