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What sex work can teach us about business in Kenya

What sex work can teach us about business in Kenya
Just like matatus, which raise fares during peak season or holidays, sex workers vary prices according to changes in demand. PHOTO/Print

Deep within Kenya’s informal economy is a robust but often overlooked teacher of economic practice – prostitution. Sex work, despite its stigmatisation and criminalisation, has much to teach us about pricing, risk management, customer segmentation and innovation. In a nation where more than 83 per cent of its workers are involved in the informal economy, per the KNBS 2022, one can learn from this survival economy how ordinary Kenyans make decisions.

Take a stroll through the streets of Nairobi and other major towns at night, and you can see this parallel economy at work. Sex workers negotiate prices based on various factors, such as time, location and behaviour of the client. A client at 8pm is priced differently from one at 2am, since risk and costs increase with darkness and inebriation. This is behavioural economics in action.

Convicted sex workers call the time between jobs “wastage”, drawing attention to the opportunity cost of spending time with one client instead of another. On a busy evening, they may turn down poorly paying clients in hopes of more lucrative ones around the corner. This is similar to the way boda boda riders may charge more for fares during rain or a traffic jam.

Innovation is also common. Kenyan sex workers often form informal alliances for their safety on the streets and in rooms, to share their client lists, and to negotiate more favourable prices with landlords. Some offer services like texting reminders, discreet transport or even prepaid packages for regular clients. In doing so, they utilise the customer-retention techniques that would bring a smile of pride to an MBA graduate’s face.

This pricing model can be compared to market forces in other economies. For instance, the price of tomatoes falls at night as they near spoilage, similar to sex workers charging reduced prices just before daybreak. This smart pricing is a sign of intelligent inventory management.

Just like matatus, which raise fares during peak season or holidays, sex workers vary prices according to changes in demand, be it weekends or month-end booms. What is remarkable is that such decisions tend to be made not with spreadsheets or coursework, but through observation and trial and error. The principles are in line with conventional business principles: price discrimination, risk pricing, target marketing, and customer profiling.

The takeaway is not that I romanticise prostitution but rather that I acknowledge the genius of survival strategies. If these underground methods are used in other industries, imagine the potential unleashed if the same strategies were used on a larger scale.

On the policy front, Kenya needs to shift its perception of the informal sector from one of pity to one of potential. Introducing mobile pricing calculators, digital customer records, or demand forecasting tools could revolutionise how informal workers earn.

The writer is an Innovations Evangelist and a PhD Candidate; machariamuhoho@gmail.com

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