Difference between revisions of "Baraholka (Kazakhstan)"

While informal trading contracted over time in Southern and Eastern Europe as the implementation of privatisation reforms and transition policies allowed for formal trading mechanisms to materialise, weak state capacity, corrupted privatisation efforts and an unsuccessful transition policy led to the proliferation of ''baraholkas''. Beginning in the early 2000s, well-connected entrepreneurs formed limited liability partnerships (Tovarishchestvo s Ogranichennoi Otvetstvennost’iu, or TOO) and utilised abandoned shipping containers to assemble open-air trading centers (''torgovye tsentry'') in the area that had become known as ''Baraholka''. In Almaty’s ''Baraholka'', the bazaars were constructed on land that that was reportedly acquired illegally in the 1990s. Between 2004 and 2012, the number of registered bazaars in Almaty oblast increased from 66 to 85, while the number of individual trade spaces grew from 8,480 to 18,880 (Agency of Statistics of Kazakhstan 2014<ref>Agency of Statistics of Kazakhstan. 2014. ‘Kolichestvo Torgovykh Rynkov.’ http://stat.gov.kz/faces/wcnav_externalId/homeNumbersDomesticTrade?_afrLoop=19971894701203543#%40%3F_afrLoop%3D19971894701203543%26_adf.ctrl-state%3D1dj2ihdn3w_96</ref>). By the late 2000s, Almaty’s ''Baraholka'' contained between 25 and 35 independently owned bazaars. An informal system of commerce was effectively institutionalised throughout Kazakhstan as a result of the construction of TOO-owned bazaars, and the state’s failure to modernise trade processes, streamline customs procedures and strengthen public institutions for small and medium sized enterprises. Almaty’s ''Baraholka'' is the poster child of this system.

While informal trading contracted over time in Southern and Eastern Europe as the implementation of privatisation reforms and transition policies allowed for formal trading mechanisms to materialise, weak state capacity, corrupted privatisation efforts and an unsuccessful transition policy led to the proliferation of ''baraholkas''. Beginning in the early 2000s, well-connected entrepreneurs formed limited liability partnerships (Tovarishchestvo s Ogranichennoi Otvetstvennost’iu, or TOO) and utilised abandoned shipping containers to assemble open-air trading centers (''torgovye tsentry'') in the area that had become known as ''Baraholka''. In Almaty’s ''Baraholka'', the bazaars were constructed on land that that was reportedly acquired illegally in the 1990s. Between 2004 and 2012, the number of registered bazaars in Almaty oblast increased from 66 to 85, while the number of individual trade spaces grew from 8,480 to 18,880 (Agency of Statistics of Kazakhstan 2014<ref>Agency of Statistics of Kazakhstan. 2014. ‘Kolichestvo Torgovykh Rynkov.’ http://stat.gov.kz/faces/wcnav_externalId/homeNumbersDomesticTrade?_afrLoop=19971894701203543#%40%3F_afrLoop%3D19971894701203543%26_adf.ctrl-state%3D1dj2ihdn3w_96</ref>). By the late 2000s, Almaty’s ''Baraholka'' contained between 25 and 35 independently owned bazaars. An informal system of commerce was effectively institutionalised throughout Kazakhstan as a result of the construction of TOO-owned bazaars, and the state’s failure to modernise trade processes, streamline customs procedures and strengthen public institutions for small and medium sized enterprises. Almaty’s ''Baraholka'' is the poster child of this system.

Quantifying the ''Baraholka''’s impact on Almaty’s economy is challenged by methodological discrepancies: differing definitions of which bazaars are part of the ''Baraholka'', limited self-reported statistics and the high level of undocumented migrant workers. In 2012, the World Bank estimated that the ''Baraholka'' contained 15,450 trade spaces, directly and indirectly employing 250,000 people, or  5.1 per cent of local employment (Kaminski and Mitra 2012: 57<ref>Kaminski, B. and Mitra, S. 2012. Borderless Bazaars and Regional Integration in Central Asia: Emerging Patterns of Trade and Cross-Border Cooperation. Washington, DC: The World Bank.</ref>). In 2013, the Chamber of Entrepreneurs of Kazakhstan (PPK) reported, in a private report given to the author, that the ''Baraholka'' contained only 20,000 traders and 11,000 trading spaces across thirty-five markets, and yet in an interview with the author, the PPK highlighted that trading alone constitutes 70 per cent of Almaty’s economy.

Quantifying the ''Baraholka''’s impact on Almaty’s economy is challenged by methodological discrepancies: differing definitions of which bazaars are part of the ''Baraholka'', limited self-reported statistics and the high level of undocumented migrant workers. In 2012, the World Bank estimated that the ''Baraholka'' contained 15,450 trade spaces, directly and indirectly employing 250,000 people, or  5.1 per cent of local employment (Kaminski and Mitra 2012: 57<ref>Kaminski, B. and Mitra, S. 2012. Borderless Bazaars and Regional Integration in Central Asia: Emerging Patterns of Trade and Cross-Border Cooperation. Washington, DC: The World Bank.</ref>). In 2013, the Chamber of Entrepreneurs of Kazakhstan (PPK) reported, in a private report given to the author, that the ''Baraholka'' contained only 20,000 traders and 11,000 trading spaces across thirty-five markets, and yet in an interview with the author, the PPK highlighted that trading alone constitutes 70 per cent of Almaty’s economy.

Beyond Almaty, ''baraholkas'' continue to fulfill an important economic role in regional supply chains, trade and employment. In 2013, it was estimated that ''baraholkas'' generated 51 per cent of total retail trade turnover and occupied 67 per cent of all retail trade spaces (Ministry of Trade 2013<ref>Kazakhstan, 2013, http://www.minplan.gov.kz/economyabout/9206/54353/</ref>). Between 2004 and 2014, according to the Agency of Statistics, while the number of registered bazaars throughout the country fell from 935 to 752, the number of trading spaces increased from 150,497 to a high of 189,177 in 2012, before falling to 174,149 in 2014. During the same ten-year period, the total square footage occupied by trade spaces grew from 4.4 million to 6.6 million cubic meters (Agency of Statistics 2014<ref>Agency of Statistics of Kazakhstan. 2014. ‘Kolichestvo Torgovykh Rynkov.’ http://stat.gov.kz/faces/wcnav_externalId/homeNumbersDomesticTrade?_afrLoop=19971894701203543#%40%3F_afrLoop%3D19971894701203543%26_adf.ctrl-state%3D1dj2ihdn3w_96</ref>). This suggests that bazaars were consolidated and expanded. By 2012, 818 registered bazaars employing 968,000 individuals operated throughout the country (Today.Kz.  2015<ref>Today.kz. 2015. ‘K mayu v Almaty polnost’yu snesut baraholku’, 3 May, http://today.kz/news/life/2015-03-03/606950-k-mau-v-almaty-polnostu-snesut-baraholku/</ref>). Furthermore, nearly 70 per cent of informal workers in Kazakhstan are employed in the market-services sector, primarily in trade and food services (Rutkowski 2011: 7<ref>Rutkowski, J. 2011. ‘Promoting Formal Employment in Kazakhstan’, The World Bank, May 15, http://www.iza.org/conference_files/InfoETE2011/rutkowski_j1928.pdf.</ref>).

Beyond Almaty, ''baraholkas'' continue to fulfill an important economic role in regional supply chains, trade and employment. In 2013, it was estimated that ''baraholkas'' generated 51 per cent of total retail trade turnover and occupied 67 per cent of all retail trade spaces (Ministry of Trade 2013<ref>Kazakhstan, 2013, http://www.minplan.gov.kz/economyabout/9206/54353/</ref>). Between 2004 and 2014, according to the Agency of Statistics, while the number of registered bazaars throughout the country fell from 935 to 752, the number of trading spaces increased from 150,497 to a high of 189,177 in 2012, before falling to 174,149 in 2014. During the same ten-year period, the total square footage occupied by trade spaces grew from 4.4 million to 6.6 million cubic meters (Agency of Statistics 2014<ref>Agency of Statistics of Kazakhstan. 2014. ‘Kolichestvo Torgovykh Rynkov.’ http://stat.gov.kz/faces/wcnav_externalId/homeNumbersDomesticTrade?_afrLoop=19971894701203543#%40%3F_afrLoop%3D19971894701203543%26_adf.ctrl-state%3D1dj2ihdn3w_96</ref>). This suggests that bazaars were consolidated and expanded. By 2012, 818 registered bazaars employing 968,000 individuals operated throughout the country (Today.Kz.  2015<ref>Today.kz. 2015. ‘K mayu v Almaty polnost’yu snesut baraholku’, 3 May, http://today.kz/news/life/2015-03-03/606950-k-mau-v-almaty-polnostu-snesut-baraholku/</ref>). Furthermore, nearly 70 per cent of informal workers in Kazakhstan are employed in the market-services sector, primarily in trade and food services (Rutkowski 2011: 7<ref>Rutkowski, J. 2011. ‘Promoting Formal Employment in Kazakhstan’, The World Bank, May 15, http://www.iza.org/conference_files/InfoETE2011/rutkowski_j1928.pdf.</ref>).

Today, traders who own the containers from which they trade lack legal title to the land on which their containers stand and are therefore not entitled to compensation in the event of forced expulsion. They continue to operate informally, following an unwritten set of rules, norms, values and practices. Traders purchase and sell goods based on trust and oral agreements, without written documentation of transactions and inventory. Gross earnings and tax deductions are calculated on pocket-sized notebooks with a cell phone calculator. All transactions are conducted in cash. Employment in the bazaar is gained through informal social connections, ''svyazi'', and the most successful traders maintain formidable relations with the bazaar security personnel and other traders. Whereas formal retailers market goods for fixed prices that account for the products’ value chain, goods in the bazaar can be sold for prices that are barely above face value. For traders, the tradition of ‘price haggling’ in the bazaar means that there is no universal model for wage compensation: an individual can earn zero, or over 10,000 KZT in a given day depending on the quantity of goods, and at what prices, they are sold for. (The exchange rate in was approximately 280 – 300 KZT per $USD in 2015).

Today, traders who own the containers from which they trade lack legal title to the land on which their containers stand and are therefore not entitled to compensation in the event of forced expulsion. They continue to operate informally, following an unwritten set of rules, norms, values and practices. Traders purchase and sell goods based on trust and oral agreements, without written documentation of transactions and inventory. Gross earnings and tax deductions are calculated on pocket-sized notebooks with a cell phone calculator. All transactions are conducted in cash. Employment in the bazaar is gained through informal social connections, ''svyazi'', and the most successful traders maintain formidable relations with the bazaar security personnel and other traders. Whereas formal retailers market goods for fixed prices that account for the products’ value chain, goods in the bazaar can be sold for prices that are barely above face value. For traders, the tradition of ‘price haggling’ in the bazaar means that there is no universal model for wage compensation: an individual can earn zero, or over 10,000 KZT in a given day depending on the quantity of goods, and at what prices, they are sold for. (The exchange rate in was approximately 280 – 300 KZT per $USD in 2015).

Despite their economic impact, President Nursultan Nazarbayev has called for the ‘installation of order’ in all bazaars. Beginning in 2011, former Akim (mayor) of Almaty, Akhmetzhan Esimov, among others, undertook an initiative to ‘install order, eliminate chaotically assembled trade centers behind the red line and impose a civilized appearance’ (Zakon.Kz 2013<ref>‘Hesmotrya ni na shto, my budem navodit’ na barakholke poryadok – Esimov’, 2013, zakon.kz, http://www.zakon.kz/4564750-nesmotrja-ni-na-chto-my-budem-navodit.html</ref>). Esimov emphasized that the ''Baraholka'' attracted illegal migrant workers, smuggled goods and was a fertile ground for fires and infectious diseases. By 2014, the combination of forced closures by the local government led Akimat, along with a series of destructive fires, eliminated twenty-six bazaars in the ''Baraholka''.  By the end of 2015, the Akimat plans to close an additional twenty markets. In April 2015, ''Zakon.kz'' declared that the liquidation of 28 bazaars in the ''Baraholka'' signified the ‘end of an era of uncivilized trade’ (Mutalipov and Ashimzhanov 2015<ref>Mutalipov, D. and Ashimzhanov, Ya. 2015. ‘Novaya Barakholka v Almaty zarabotaet na sledyuoshchei needle’, 7 April, http://www.zakon.kz/4701788-novaja-barakholka-v-almaty-zarabotaet.html. </ref>), declaring that Almaty residents would be able to enjoy a more civilised retail experience on the territory of the ''Baraholka'', on which the Akimat was constructing modern trade centers.

Despite their economic impact, President Nursultan Nazarbayev has called for the ‘installation of order’ in all bazaars. Beginning in 2011, former Akim (mayor) of Almaty, Akhmetzhan Esimov, among others, undertook an initiative to ‘install order, eliminate chaotically assembled trade centers behind the red line and impose a civilized appearance’ (Zakon.Kz 2013<ref>‘Hesmotrya ni na shto, my budem navodit’ na barakholke poryadok – Esimov’, 2013, zakon.kz, http://www.zakon.kz/4564750-nesmotrja-ni-na-chto-my-budem-navodit.html</ref>). Esimov emphasized that the ''Baraholka'' attracted illegal migrant workers, smuggled goods and was a fertile ground for fires and infectious diseases. By 2014, the combination of forced closures by the local government led Akimat, along with a series of destructive fires, eliminated twenty-six bazaars in the ''Baraholka''.  By the end of 2015, the Akimat plans to close an additional twenty markets. In April 2015, ''Zakon.kz'' declared that the liquidation of 28 bazaars in the ''Baraholka'' signified the ‘end of an era of uncivilized trade’ (Mutalipov and Ashimzhanov 2015<ref>Mutalipov, D. and Ashimzhanov, Ya. 2015. ‘Novaya Barakholka v Almaty zarabotaet na sledyuoshchei needle’, 7 April, http://www.zakon.kz/4701788-novaja-barakholka-v-almaty-zarabotaet.html. </ref>), declaring that Almaty residents would be able to enjoy a more civilised retail experience on the territory of the ''Baraholka'', on which the Akimat was constructing modern trade centers.

Despite the disruption, trade in the ''Baraholka'' increased by 9 per cent in 2014, as consumers continued to rely on it for affordable goods during times of economic stagnation (Esenkulova 2015<ref>Esenkulova, R.  2015.  ‘Eshe 20 rynkov snesut v Almaty v 2015 godu’, Tengrinews, 19 February, http://tengrinews.kz/kazakhstan_news/esche-20-ryinkov-snesut-v-almatyi-v-2015-godu-270345/</ref>).

Despite the disruption, trade in the ''Baraholka'' increased by 9 per cent in 2014, as consumers continued to rely on it for affordable goods during times of economic stagnation (Esenkulova 2015<ref>Esenkulova, R.  2015.  ‘Eshe 20 rynkov snesut v Almaty v 2015 godu’, Tengrinews, 19 February, http://tengrinews.kz/kazakhstan_news/esche-20-ryinkov-snesut-v-almatyi-v-2015-godu-270345/</ref>).