TransUnion survey finds consumers battered but resilient
Mbongeni Mguni | Monday October 31, 2022 06:00
Local consumers are generally yet to recover from the COVID-19 knock on their disposable incomes, while inflation and interest rates are trending at historic highs and have further worsened the situation amongst households. Unemployment, which was already high prior to the pandemic, has also risen in recent years.
TransUnion’s research, done in September and also covering South Africa and Kenya, found that in Botswana, 35% of surveyed consumers expected that their incomes would decline in the next three months, compared with 28% in Kenya and 19% in South Africa.
The major reason behind the expectation of lower household income in Botswana was the loss of jobs, followed by starting a new business, wage or salary reduction, and closure of business.
Despite the negative outlook, Botswana tops the three surveyed countries in terms of consumers reporting that they expect to be able to pay at least one of their bills or debts in full.
“Credit risk in Botswana is among the best in Southern Africa and consumers here are generally less risky,” TransUnion Africa’s director of Financial Services, Research and Consulting, Weihan Sun told the credit bureau’s recent conference. “More consumers in Botswana expect to be able to pay their debt and that is linked to the less risky profile.”
According to the study, most of the local consumers reporting that they could not pay their debts or loans in full, plan to pay a partial amount or use money from their savings. A lower number of them plan to pay their bills by borrowing from friends and family.
TransUnion’s survey also found that in the past three months, 38% of local consumers had cut back on discretionary spending and cancelled subscriptions and memberships. Nearly 20% of local survey respondents had cancelled or reduced digital services in the last three months. The figures across the different questions generally compare more favourably to South Africa and Kenya.
More than half of the local consumers surveyed in the last three months had cut back spending on retail items such as clothing and electronics, a figure higher than South Africa and Kenya, while survey respondents across all three countries had significantly cut back on larger purchases such as vehicles.
However, looking forward, the TransUnion survey suggests that 77% of local survey respondents expect household incomes to increase in the next 12 months, compared with 74% in South Africa and 81% in Kenya.
Sun said the survey was critical in providing lenders and other financiers with trends in consumer sentiments.
“This was the first time we did the survey in Botswana and it gives us insights into how consumers in Botswana are behaving and how they are reacting to the market conditions,” he said. “It indicates how household incomes are changing, how consumers are budgeting and other factors.”