Metshelo head for bumper savings season

December is a very busy month across the wholesale and retail sectors, as consumers empowered by the 13th cheque seek to stock up on the festive bargains offered.  Metshelo groups, however, are in a class of their own, using the savings they have pooled throughout the year to empty aisles in wholesale and retail stores.

More in the basket for metshelo

Trolleys full of foodstuffs, decorations and kitchen utensils have become commonplace since the beginning of the month.  While this is normal every year end, this year in particular, the food prices have been friendly for metshelo members. More for less is the name of the game, thanks to a benevolent inflation rate that persisted throughout the year.

This is the harvest season as the ‘dividends’ from the past 11 months are shared among members of the cooperative saving groups.  Recognisable by their beaming smiles, a motshelo member, usually accompanied by another – probably the treasurer or stock controller with a notebook under the arm – are currently sweeping the shelves clean as they ‘stock’ up for the festivities. 

By most accounts, grocery metshelo are the most popular after financial metshelo, which involve members pooling loanable funds to themselves and outsiders.

This will be their best year for metshelo as the prices for food and non-alcoholic beverages overall are almost the same as last year, having gone up by just 1.2 percent, according to Statistics Botswana. The flat inflation rate, plus promotional prices that most retail stores have this time around, have translated into a double blessing for the social savings groups.

According to available data, as at October 31, bread and cereal prices were down by 0.3 percent compared to October 31, 2014, while oils and fats were down by 2.4 percent over the same period.

The prices of vegetables in October were 1.5 percent cheaper than their October 2014 levels. Meat prices on average are only 1.3 percent higher than their level last October, while milk, cheese and milk products are three percent more expensive this year.

In fact, according to Statistics Botswana, the only items that have significantly gone up since last October are the prices of fish, which are 7.5 percent up, while sugar, jam, honey, chocolate and confectionary goods are about five percent more expensive.

Retailers are ecstatic

Shuhud Nasoordeen, the finance manager of one of the leading wholesalers in the country, Trade World, describes motshelo as a ‘great initiative’.

According to Nasoordeen, the volume of purchases recorded in their stores since the start of December, has been massive.

“Metshelo groups play a critical role in the retail sector as they buy in bulk.  We also have costumers who have been shopping with us for close to 14 years now,” he says.

Nasoordeen says Trade World always runs promotions and specials around the festive season as a way of rewarding the loyalty displayed by the motshelo groups and other customers.

“We give away gifts and organise free transport for those who are unable to move their goods. “It is a very busy season and we are compelled to engage extra staff in order to provide quality service to these buyers,” he says.  

Pressed on the numbers behind the sales, Nasoordeen rather prefers to say: “It is always fascinating to see happy metshelo members sharing the items”.

Sefalana Group finance director, Mohamed Osman shares Nasoordeen’s view on the invaluable role metshelo play in the wholesale and retail economy.

“Without a doubt the community saving groups are contributing significantly at this time of year and boost the economy,” he says.

“Purchases made by these groups range from basic commodities that have a shelf life, to cleaning aids and some luxury items.

“We try our level best to ensure these groups are able to get what they want and at a great price.

“We gear up our stores accordingly in anticipation of this additional trade.”

According to Osman, an increase in the volume and value of purchases can be seen from the end of November and this is a seasonal trend. “We plan based on last year’s sales and add a growth factor to this,” he explains.

“We are prepared every year and stock up on the most frequently sold products to meet the increase in demand.”

2015 wasn’t all rosy

Though inflation rate was low this year, most Batswana found themselves with less disposable income due to the absence of significant wage increases and the impact of high inflation from previous years.

In addition, banks tightened their credit output due to liquidity issues within the banking system and the difficulty of finding credible customers. Many existing bank customers have multiple loans outstanding and are thus poor candidates for further funding in the absence of significant wage review.

The year was thus difficult in terms of the survival rate of metshelo, as many members struggled to keep up with the monthly commitments, often falling away or in the case of financial metshelo, over-borrowing from the group.

Financial metshelo groups suffered significantly as borrowers struggled to repay and deep into December, many are unsure whether the usual ‘sharing of dividends’ will take place as monies are still outstanding.

Nango Masala has been part of financial metshelo for close to a decade now.  She says interest rates among metshelo in 2015 declined to between 20 and 25 percent from 30 percent, to cope with the strain on borrowers.

“Lending was satisfactory, but repayments were a big issue. It seems people did not have money this year,” she says.

Moreover, the fact that most metshelo tighten their lending towards August, in preparation for the November cut-off and loan collection period, did not save the situation.

“People use our services mostly during Easter and Independence holidays. There is a worrying trend thereafter as it gets really hard for them to repay,” Masala explains.

She adds: “We give out little money after August, but it really has been a difficult year for us. We hope next year will be better.”