Thursday, May 23, 2024

“Made in America” bling replace diamonds as drivers of Botswana’s economic growth

It’s Saturday night and Neo, 25, is getting ready to go out. She pulls out a David Tlale dress, puts on a pair of fake Christian Louboutin heels, and throws her iPhone, keys and gloss into her Chanel bag before closing the door of her upscale rented apartment.

Neo may be a fictional character, but her story is real and gives an insight into how consumer spending has replaced diamonds as the key driver of Botswana’s economic growth. It is a story of how Botswana youth’s undying love for “Made in America” luxury goods is fueling the country’s current consumerist wave which has spawned a legion of attendant problems.

Botswana is currently experiencing a youth bulge. According to the latest statistics, about 50 percent of the population is under 25 years old.  The proportion of youths in the country’s demography goes even higher when considering that Botswana’s threshold age of youth is 35 years.

This group represents not just a young and aspiring workforce but also a significant consumer base for marketers of international luxury brands. This is the group with the critical mass to determine Botswana’s household expenditure patters. Botswana’s Y generation are voracious consumers and with higher affinity for foreign brands and products. The country’s demographics suggests that this generation will be driving consumer spending going forward. This will most likely be accompanied by a transformation of purchasing processes and decision making, especially across the urban areas driven by a rise in modern trade outlets and lack of financial literacy.

International retailers are already rubbing their hands gleefully in anticipation of more money from Botswana’s profligate youths. A 2015 survey by AT Kearney Africa Retail Development Index (ARDI), which ranks the top 15 African countries according to market attractiveness for retail expansion, puts Botswana at the top, second only to Gabon as the most attractive retail market in Africa.

Now the story gets even scarier:

A research paper by Paul Ugor : African Youth cultures in a globalised world states that, “studies in Botswana and Zimbabwe have found that youths exposed to US television programmes were likely to buy clothes seen on US music videos.”

Another study: Endangered childhoods: how consumerism is impacting child and youth identityby Jennifer reveals how modern-day youths are immersed in cultures of consumption such that every aspect of their lives is touched by a buy-and-consume modality. “Young people are receiving an endless barrage of material messages encouraging purchasing behavior and consumption that impacts their self-image….. Girls especially are targeted by marketers to sell them a whole line of products they ‘need’ to emulate a feminine ideal.”

These reports are supported by figures from statistics Botswana which underline Botswana’s growing consumerism. Figures showing an increase in Real Gross Domestic Product (GDP) reveal the highest growth recorded in hotels and restaurants, vehicle dealers and retailers.

Even the World Bank in 2015 warned Botswana that “weak capacity by the private sector to create jobs, low wage growth, and increasing household debt pose the highest risk to Botswana’s new growth and diversification trajectory, which is driven by the services sectors such as retail and vehicle trade.”

The World Bank cautioned that Botswana consumer spending had replaced diamonds as the key driver of economic growth. This has spawned another problem: growing national household debt.

This brewing crisis has not been lost on switched on legislators. In her key note speech during the launch of Liberty life Mind My Money financial literacy program last year, Specially Elected Member of Parliament, Borolo Kenewendo, said government is concerned about the notable increase in household indebtedness and its causes.

“The 2015-2020 Financial Inclusion Roadmap outlines financial literacy as one of the key Implementation Priority Areas to promote financial inclusiveness in Botswana.

Lack of understanding of financial products was identified as a specific barrier to access by both consumers and product providers,” she further alluded.

In closing she urged businesses and individuals alike to commit themselves to educate themselves, especially through available platforms such as the Mind My Money, so that they may lead better lives and be productive, functioning members of society unencumbered by the heavy load of unwarranted debt.

Mind My Money financial literacy program is a personal journey to financial freedom put together by experts who understand money and the ages and stages we go through.

Through the interactive learning process, the program provides knowledge on how to manage income, tackle debt, save and plan for future investments.


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