Is Botswana a 'microwave society'?

BABOKI KAYAWE
Staff Writer | Thursday February 2, 2012 00:00

'If I need a tablet as soon as possible, the market allows me to get it there and there, why wait for a year to raise the P5,000?' she asks whipping back her long black hair. She adds that consumer credit allows many like her, who could not afford large purchases like cars. Mothudi who is in her late 30s says she is not addicted to buying on hire purchase or using her credit card, but 'buys' stuff anytime of the month. Asked whether she does not see it as a lack of proper financial planning, she simply says 'she cant deprive herself of what stores are willing to give to her even if she doesn't have enough to put to her name'  Mothudi is among hundreds of people who leave in the 'microwave society' as financial educator Nelson Letshwene puts it. They want things to come their way as fast as lightning regardless of the costs attached to the speed. And, they come at a prize, a high prize for that matter!

She admits that she lives from one paycheck to the other. What would she do if she found herself in financial crisis days before payday if there was no anything in place from service providers in the market, that is the question she keeps on asking.

'The credit card helps in times like this, I simply use it when emergencies come my way,' says a marketing executive who refuses to be named.  A first year student of Land Management at the University of Botswana, Joseph Matshediso says credit consumption should not be blamed on service and product providers. 'It is an individual choice which requires an amount of discipline,' he says.

Matshediso adds that buying on credit often leads to indebtedness, which is insuperable. He says the financial and telecommunications sectors for instance, are only responding to the market needs and it is important for consumers to look critically into what they are getting themselves into.

'I cant say providers are wrong or right by availing these services, they help those who use them wisely and may result in financial imprisonment for those who use them anyhow,' he quips.   If he wants to buy a certain item, Masthediso says he ensures that he saves for it because he is aware of the extra charges that accompany using the stores' item.

Sbongile Khao, a business consultant at Barokho Investments in the Main Mall says this is a good arrangement for those who need it. However, she is quick to say it requires discipline.  'Financial decisions varies from one individual to the other, I might feel that buying airtime on credit is a very bad financial move but it can help somehow who is having an emergency,' says Khao.

Khao does not believe in having goods that are financed by someone else because at the end of the day, she owes double or triple the amount. She advises the nation to use products and services provided under this arrangement with caution, and says that if it can wait people should save for it and get whatever they needed at a later date.

It is not surprising that at the height of the global economic downfall in 2009, the local banking sector withstood the recession, notching up a 22 percent jump in total assets to P45 billion for 2008 while their contemporaries in the developed world experienced a free fall in profitability.

Mmegi business reporter Thato Moseki wrote in August 2009 that of these assets, total loans and other forms of credit - which comprise about 40 percent of the sector's assets - rose by 29 percent last year, exceeding the 22 percent growth seen in 2007. However, statutory banks, which include the Botswana Savings Bank, National Development Bank and the Botswana Building Society contributed less than 10 percent of the sector's assets, in line with previous years. Deposits in the banking sector also rose by 26 percent to P37 billion, supporting the credit growth during 2008 and also indicative of the sector's comparatively strong constitution, he wrote.  According to the Bank of Botswana's Banking Supervision Annual Report 2008,the local banking sector largely shrugged off the effects of the global financial crisis, which hit world markets in the third quarter of 2007.

Financial expert, Letswene also says credit can never be judged as good or bad. He says everyone is a financial lender these days, citing loan sharks who are not regulated and charge whatever interest rate they desire. He also says that the availability of products and services on hire purchase for instance should not mean that users are forced to get them.

'Financial education is the answer because financial illiteracy and ignorance breeds all this,' Letshwene says. The disadvantage, he says is that people are feeding their indiscipline and will never get to a point where they acquire proper financial discipline. Emotional consumers are most likely to use these products and services more, but maintains that it is everywhere at different financial levels, he adds.

'The Orange P10 airtime facility for instance targets low income earners because those above them are more often than not on contract, whereas the middle class and high income earners could be tempted to get another car because there are loans tailor made for them as well,' he adds.

Letshwene says people usually do not ask themselves the right questions before sealing credit purchase or financing contracts.  He says the first question is whether consumers are aware that they are using other people's money because the lender finances it, it means they are charging an extra more. Secondly, most people do not think in advance whether they will be able to pay and the lender later becomes the enemy.

A lot of people do not understand the language of money and cannot be conversant with it if they do not join the conversation, Letshwene says. He goes on to say money has a very strong energy, which needs to be understood.  'Money can make or break you,' he says. Psychology of money is crucial and people need to interrogate whether they want a particular service or product now, he explains. The idea of buying on credit he says negates an important skill of saving and perpetuates a dysfunctional relationship with it as a facilitator of things humanity need and want in life.

We have become the microwave society that wants things instantly and credit has made it all possible, he points out.