Botswana ranks high in retail sector growth
| Friday March 21, 2014 15:59
This is despite the Botswana retail market increasingly getting saturated due to the mushrooming of many malls and entry of numerous international retailers.
According to the influential 2014 A.T Kearney African Retail Development Index, Botswana scored a total of 54.2% to rank 8th from 48 countries in Sub-Saharan Africa measured using major macroeconomic and retail-specific variables for each country.
The report presents a wide array of possibilities for retailers seeking an immediate impact and a growth advantage in African countries measuring four variables that include, country risk and business risk, market attractiveness, market saturation and time pressure.
For Botswana, the highest scores was recorded in the country risk category with a 100% mark due to easy access to financing, low political risk, and high economic performance.Despite having a small population, Botswana also scored highly in market size with 66%, reflecting high sales volumes due to relatively high GDP per capita.
“Botswana packs a punch, as it has one of Africa’s highest GDP per capita rates.
Retail is a major economic activity in Botswana, as it is the country’s second largest job provider and accounts for 29% of GDP.
“Botswana also presents one of the relatively easiest countries for entry, with good land availability, efficient regulations, suppliers, and distributors, and relatively easy import rules.“In Gaborone most formal retail development has been from regional players, primarily based in neighbouring South Africa while local chain Choppies and Netherlands-based retailer SPAR lead the grocery market.
Woolworths and Shoprite both have plans to expand operations across the country, and Wal-Mart (through its purchase of Massmart) also has a presence in cash-and-carry, home improvement, and supermarkets,” reads the report.
Botswana, however scored lowly in the market saturation category (17%) reflecting the increasing number of retail outlet and shopping malls, mostly in Gaborone.
Among the variables considered under market saturation include number of international retailers, modern retail sales area per urban inhabitant and market share of leading retailers.
Due to market saturation in South Africa, retailers in that country have been aggressively eyeing the sub-Saharan market for expansion leading to the mushrooming of many malls in Gaborone in a short space of time.
In the past few years, three malls- Sebele, Rail Park and Airport Junction- have opened shop in Gaborone with most tenants being South African retailers.
Rwanda beats Africa’s other fast-growing economies to score 70% and rank first in the index while Nigeria came second with a score of 64%. Amongst Rwanda’s strongest attributes includes a low market saturation and low country risk. Other countries in the top 10 include Namibia, Tanzania, Gabon, Ghana, South Africa, Mozambique and Ethiopia
According to A.T Kearney researchers, by 2020, nearly half of all Africans will be living in cities and, as disposable incomes rise, consumer spending will grow to about $1-trillion.
“It’s easy to see why many retailers consider Sub-Saharan Africa the “next big thing.”
Its population is nearing 900 million people, mobile phones and the Internet are proliferating quickly across the continent, and it is urbanising at a rate of 3.61 percent, faster than any other region in the world.
“The region’s GDP growth is now close to 6 percent, and seven Sub-Saharan African countries rank among the 10 fastest-growing economies in the world.
A middle class is emerging, and increasingly wealthy consumers are embracing Western brands, products, and lifestyles,” reads the report.