Fitch expects retail spending to strengthen

Pauline Dikuelo | Monday November 21, 2022 06:00

On the mend: Fitch researchers say local consumers are recovering from the COVID-19 knock and demand for electronics is on the rise PIC: PHATSIMO KAPENG

Fitch is forecasting an average annual growth rate of 13.2% in audio-visual, camera, and computer spending by local consumers over the 2022–2026 period. This will take spending from P2.2 billion this year, to P3.5 billion by 2026.

Similarly, household appliances will also experience strong medium-term growth, averaging 9.1 percent annually over the 2022–2026 period, according to the survey.

According to a recent study by Fitch, while consumers in the country are still price-sensitive, demand for premium and budget smartphones is strong.

“Brands such as Tecno, Hisense, Nokia, and Xiaomi offer 4G enabled smartphones around the P2,000 price range and we see this market and range of products to benefit directly from increased demand,” reads the statement.

According to Fitch’s findings, budget smartphones in the country are becoming increasingly available due to a strong presence of South African and local retailers. The uptake in smartphone demand and purchases is seen in the growth of 4G and 5G subscriptions which Fitch researchers expect to open the digital marketing and retail channels to a wider number of consumers.

“Our telecoms team forecasts the number of 4G subscriptions to grow from 23.2% of total mobile phone subscriptions in 2022 to 47.7% by 2026, while 5G subscriptions will rise significantly from 1.3 percent in 2022 to 15.9% in 2026,” the researchers intimated.

The Botswana Communications Regulatory Authority (BOCRA) recently revealed that while it had allocated 5G radio spectrum to the country’s three mobile operators, by October, only one had launched the advanced connectivity due in part to the costs of roll-out and uptake by consumers. Last week, Orange Botswana became the second operator after Mascom to roll out 5G services.

BOCRA officials told BusinessWeek that there were challenges around the cost of 5G devices for local consumers that were also slowing down the roll-out of the faster connection service.

For Fitch researchers, the shift by consumers away from basic handsets is also seen by the substantial drop-off in 3G subscriptions, falling from 53.6% of total subscriptions in 2022 to less than 22.7% by 2026.

Researchers said for consumer-facing companies, as well as e-commerce platforms, the uptake in smartphone usage will substantially open the digital channels for both marketing and retailing to consumers.

“With a young consumer base in Botswana, we see strong growth in e-commerce usage, particularly around the capital of Gaborone, where consumers are concentrated, making last-mile delivery and in-store pick up far less challenging,” the survey reads.

Fitch’s research echoes findings by the Ministry of Finance recently which indicated that while local consumers were still feeling the pinch of COVID-19, retail spending was recovering.

“Consumer spending picked up in August 2022 as retail sales rose by 5.4 percent year-on-year compared to 2.5 percent in August 2021,” the Ministry’s monthly bulletin for August reads. “The stronger growth in retail sales was driven by an increase in passenger car sales, catering, and food sales.”