What Sefalana’s results tell us about the economy
Lewanika Timothy | Monday February 9, 2026 08:49
Beneath all the economic jargon on cash crunches, soft GDP figures and liquidity crunches are consumers bearing the brunt at the margins of society as disposable incomes continue to shrink leaving families struggling to make ends meet.
On one frontier, Sefalana latest results show how households are facing increasing pressures particularly from food inflation coupled with low disposable incomes that face erosion from growing inflation.
Staple food baskets have seen surging increases in prices, with commodities such as milk, meat being hard hit by spiking prices mainly driven by supply chain disruptions and complex capital costs that have eaten into consumer pockets.
The Sefalana Group, which is the country’s oldest grocer with an extensive footprint across the country, recently shed more light on the struggles of the economy and the pressures facing consumers, in their half year results.
For the first time since 2017, the grocer has seen a growth in revenue that is not followed by a growth in profit. This means the grocer sold more but made less from what it sold due to soaring input costs and increased costs of finance.
While revenue boljumpedted to P5.8 Billion for the half year period ended October 2025, EBITDA dropped by 14% to P193 million compared to P224 million in the past year. EBIDTA is an indicator of core earnings.
The grocer noted that consumers were experiencing pains in the pocket, spending less during retail visits while also prioritising essentials instead of luxury items.
“Although we report our highest top line group revenue in our 51-year history, for the first time since 2017, we report negative growth in profit compared to the prior period. “This is largely due to the incredibly difficult economic trading conditions in Botswana following the decline in worldwide demand for diamonds and the related liquidity crunch which has made borrowing significantly more expensive for the consumer, impacting spending power,” Sefalana revealed in a statement on the Botswana Stock Exchange.
Economic data shows that GDP by expenditure in terms of household consumption spending and government consumption spending, incurred a notable sharp decline in the third quarter of 2025. Both household consumption spending and government final consumption declined sharply to 1.3% y-o-y and 0.8% y-o-y in the third quarter 2025, respectively. This contraction reflects the prolonged challenging economic conditions and tightening household and government budgets, reducing overall consumption expenditure.
This tightening of the household purse has been seen in a change in consumer preference from luxury brands to “no label brands” which are usually cheaper, as consumers try and manage shrinking disposable incomes. “Consumer spending has dropped and our customer base is closely managing available spend and prioritising low margin necessities and essentials. “Demand for the higher margin luxury items has diminished resulting in an overall dilution of gross margin” “Consumers are visiting our stores more frequently but basket sizes have begun to fall again. “The consumer is still somewhat cautious and tends to focus more on value packs, necessities, and private label products, rather than luxuries. “This has a drawn-out dampening impact on gross margins,” Sefalana executives said.
Food inflation data shows that the average prices of milk, meat, fish, sugar and various hot beverages rose fastest amongst food items in 2025, putting pressure on consumers’ pockets in a year in which the economy was constrained.
The latest data from Statistics Botswana indicates that in the 12 months to December 2025, the average prices of milk and related products such as cheese were up 8.8 percent, meat 8.5 percent, fish 9.3 percent and hot beverages such as coffee, tea and cocoa were up 14.6% on average.
Average prices of sugar, jam, honey, chocolate and confectionery were up 10.4% in the 12 months to December, while those for mineral waters, soft drinks, fruits & vegetables juices were up by 8.2 percent.
The company’s books also show how the private sector is struggling with not only constrained consumer spending but also with increased financing cost. A typical business cash flow would include cash from sales revenue, and a cost of sales covered by short-term lending options.
When the cost of finance goes up, it’s a direct increase in the cost structure of the business. The main complaint from the grocer came from the depreciation of the Pula by the central bank following observations that the peg wasn’t supported by the true market value of the Pula as foreign exchange depletion continued to drag the Pula.
“In July 2025 the Botswana Pula depreciated 8% against the ZAR following an adjustment made by the Bank of Botswana,” Sefalana executives said. “This has made import of product more expensive. “The majority of products consumed in Botswana is imported from South Africa.
“Consequently, the group’s settlement of creditors in that month cost the business an extra unanticipated P16 million. “Stripping out the impact of this once-off additional cost during the period, the group’s profit would have been less than 3% below that of the prior period.”
In July the Finance Ministry announced that the Pula’s rate of downward crawl would be increased to 2.76% over the next six months, from its current 1.51, depreciating the currency gradually in daily changes amounting to 2.76% up to December last year.
On another front, Sefalana’s gross profit margins are also shrinking, meaning that the cost of sales or the cost of procuring goods before resale are increasing, representing the direct increase in prices by suppliers.
“Group Gross Profit of 6.1% was achieved compared to 6.8% in the prior period, illustrating the increased competitive environment in all the territories in which we operate. “Absolute Group Gross Profit reported of P353m was 2% down on the prior period,” the grocer revealed.
The group also shared that it would defer investment plans to build storage warehouses, a decision which may influence the behaviour of other private sector players as the economy remains flat.
“To support this additional inventory holding, we were expecting to embark on the construction of a 10,000 sqm warehouse in Gaborone North in the prior year. “This new facility with an estimated cost of around P90 million has been put on hold given the increased cost of borrowing. “We will revisit this once the interest rates have normalised.”