Monday, October 25, 2021

Black Friday spotlight pockets of Botswana consumers

The status quo of an average Motswana’s livelihood grew overtime to take the shape of a tough living, but then came Black Friday and the observed buying mania made the notion of that ‘hand to mouth’ life appear superficial. Either that or the Black Friday spending is the one that was cosmetic.

The question post Black Friday is what financed the day’s spending frenzy? In other words where did Batswana dig money out of when there has previously been the sense that their pockets are under immense constraint. The slow growth of personal incomes over the period between 2013 and 2017, as is indicated by several reports including that of the Central Bank, gave credence to this supposed reality. This is on the other hand against the continual rise in the cost of living. A previous analysis by this publication based on Statistics Botswana’s Consumer Price Index (CPI) report deduced that necessities such as food, transport, housing, water and electricity take up more than half of their income. Given such presupposition a conclusion was drawn that the take home money of ordinary folks is simply to survive.        

Though a muted reality, consumerism was identified to be one of the driving forces behind Botswana’s economy. This is particularly so in the retail sector, where in fact black Friday is dominant. The surge in household debt, which today remains a cause for concern, painted Botswana to be credit driven society. Previous Bank of Botswana reports have indicated that household indebtedness grew at a faster rate than the rise in personal incomes. It was also indicated that financial intermediation (transformation of deposits into credit) was lower in Botswana compared to comparator countries like South Africa, Mauritius, Malaysia and Chile; hence the flow of savings into banks was significantly lower than the outflow of loans to prospective borrowers. Since 2015 to date the Central Bank has been tinkering with the bank rate, lowering it to an unprecedented low, which means that the financial intermediation has likely not improved. The mismatch between household borrowing and saving posits that the nation is munching on credit to keep the spending going.

Last week Friday at Game store one had to push their way through the throng of consumers that had filled their trolley baskets with various consumer goods ranging between big and small purchases. On some trolley baskets were big purchases such as a television set, microwave, lawn mower and smaller ones like iron, kettle and laundry basket. On a typical day such a mixed goods purchase would not be seen but on the past Friday it was observed. Consumers meandered inside store into to pay for their Black Friday goods. Given the nature of purchases on such a day as well as the restricted pocket, one could be led to conclude that an ordinary folk’s monthly salary wasn’t sufficient to cover the total payment, which suggests that a portion of money spent may have been borrowed. As the only store that opened for almost 24 hours Game store lived up to the hype of Black Friday and it was particularly evident with the customer traffic inside the store. It would appear that allure of goods discounts was difficult to down by the masses of consumers and whether or not the spending was based on rational decision making is a different subject for another day.

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