Baraholka

From Global Informality Project
Jump to: navigation, search
Baraholka
Informal practice commonly found in Kazakhstan
Kazakhstan map.png
Map of Kazakhstan, where Baraholka commonly takes place.
Kazakhstan flag.png
Flag of Kazakhstan.
Entry written by Dena Sholk.
Dena Sholk is affiliated to Independent scholar and alumni of Georgetown University.

Original text by Dena Sholk

In Russian, a baraholka is a pejorative term for an outdoor, open-air flea market where second-hand goods are bought and sold. The Russian words for ‘market’, rynok or bazaar, are more neutral synonyms. Related terms include the noun barakhlo, which refers to low quality junk, and the verb barakhliit’, which is to hoard or to collect items of little value.

In Kazakhstan, Baraholka refers to a series of bazaars located along the Northern Ring road in the outskirts of Almaty. Almaty’s Baraholka gained notoriety in the late 1990s as a regional hub for informal trading. The Baraholka was one of many open-air markets that mushroomed across the former Soviet Union: others include Moscow’s Cherkizovskii rynok (Cherkizon), the Hippodrome in Tashkent, Uzbekistan, and Dordoi in Bishkek, Kyrgyzstan. The dismantlement of Soviet institutions and supply chains left millions of former Soviet citizens unemployed and devoid of retail outlets. Desperate to make a living, many of them began trading anything they could find – from pots and pans from local factories to Japanese cell phones. In Kazakhstan, ethnic Kazakhs, Dungans and Uighurs revived relations with their kinsmen in Xinjiang, in northwestern China, and began shuttling goods by car across the border to Almaty’s Baraholka where they would resell them at a premium to other traders. These traders, who came from all parts of the former Soviet Union, Turkey and Korea, resold goods purchased from the Baraholka in their local markets at a mark-up. For most of the 1990s, this system of informal purchasing, transporting and reselling of goods by individuals defined the supply chains. Almaty’s proximity to China, and connection to rail, road and air networks, made it a central location for a wholesale trading hub. In Almaty’s Baraholka, the volume of trading activity was such that traders did not need storage facilities – they worked side by side out of wooden crates.

Photograph showing a group of men around an exit of a Baraholka.

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[1]). 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[2]). 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.

Photograph depicting a Baraholka.

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[3]). 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[4]). This suggests that bazaars were consolidated and expanded. By 2012, 818 registered bazaars employing 968,000 individuals operated throughout the country (Today.Kz. 2015[5]). 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[6]).

Photograph of a man taking products to a Baraholka.

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).

Photograph depicting a man transporting products through a Baraholka.

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[7]). 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[8]), 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[9]).

Local authorities have, to a certain extent, succeeded in civilising baraholkas. Since January 2013, traders have been required to register as individual’noe predprinimatel’stvo, or an IP (which is the equivalent to a LLC), and are accordingly obliged to pay taxes on 6 per cent of generated revenue, as well as social security contributions, at six monthly intervals. Authorities also attempted to require the use POI (point of sale) terminals by 2017, but were forced to delay this initiative due to the absence of Internet in most bazaars.

Notwithstanding state-led efforts to modernise the Baraholka’s infrastructure and eliminate open-air trade, baraholkas in general and Almaty’s Baraholka in particular will continue to exist given their importance in job creation, supply chains and in providing an affordable retail outlet for consumers. Kazakhstan’s ‘formal’ economy is not as yet conducive to small business creation. Reducing the Baraholkas requires institutional reforms to the formal sector: individuals will continue to opt for informal employment in Baraholka as long formal sector opportunities are less attractive. Despite the stigmatisation of Almaty’s Baraholka, and all of Kazakhstan’s baraholkas, they will endure.

References and Bibliography

  1. Forbes.kz. 2014. ‘Dariga Nazarbaeva uznala pro Almatinskuyu Barakholku’, 22 January, http://forbes.kz/process/businessmen/dariga_nazarbaeva_uznala_pro_almatinskuyu_baraholku
  2. Kaminski, B. and Mitra, S. 2010. Skeins of Silk: Borderless Bazaars and Border Trade in Central Asia. Washington, DC: The World Bank.
  3. Kuehnast, K. and Dudwick, N. 2004. Better a Hundred Friends than a Hundred Rubles? Washington, DC: The World Bank.
  4. Myagchilova, A. 2012. ‘Est’ li v Kyrgyzstane jelanie borot’sya s korruptsiei?’ http://www.polit.kg/newskg/495
  5. ‘O Strategicheskom plane Ministerstva ekonomiki i biodjetnogo planirovania Respubliki
  6. Kazakhstana na 2014-2018 gody’, Ministerstvo Ekonomiki I Biudgetogo Planirovaniya Respubliki
  7. Roberts, S.R. ‘Waiting for Uyghurstan’, http://www.youtube.com/watch?v=mqX_3aUWujg&playnext=1&list=PL75BEB9E7EF394CD3&ature=results_video
  8. Spector, R. 2008. ‘Bazaar Politics: the Fate of Marketplaces in Kazakhstan’, Problems of Post-Communism, 55 (6): 42-53
  9. ‘V Almaty torgu’iushchikh na barakholke predlagaiut sdelat’ sobstvennikami novykh rynkov,’ 2014, Zakon.kz, http://www.zakon.kz/4598834-v-almaty-torgujushhikh-na-barakholke.html.

Notes

  1. 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
  2. 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.
  3. Kazakhstan, 2013, http://www.minplan.gov.kz/economyabout/9206/54353/
  4. 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
  5. 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/
  6. Rutkowski, J. 2011. ‘Promoting Formal Employment in Kazakhstan’, The World Bank, May 15, http://www.iza.org/conference_files/InfoETE2011/rutkowski_j1928.pdf.
  7. ‘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
  8. 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.
  9. 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/