(GABORONE, Botswana: June 18 (Xinhua) — Botswana’s growing consumer spending power, low country risk and an unsaturated market have ranked it as the best new destination for global retailers in Africa.
According to the 2012 A.T Kearney Global Retail Development Index (GRDI), Botswana at position 20 enters the rankings for the first time and is the only country in sub-Saharan Africa to make the list of the top 30 most attractive markets for retailers among developing nations, highlighting the country’s long-term growth prospects.
The 2012 GRDI, the 11th annual edition, presents a wide array of possibilities for retailers seeking an immediate impact and a growth advantage in developing countries. In the report, the AT Kearney consultant, Phillip Bode, says Botswana has a growing, stable economy with growing consumer spending, low country risk and stands as a precursor to the steady development of sub-Saharan Africa.
“The country has become a middle-income nation over the past three decades and is projected to have 7 percent GDP growth for 2012, well above sub-Saharan Africa’s expected growth rate.
“Botswana’s government is dedicated to shifting away from a dependence on diamonds to increasing investment in the private retail sector. Most retail expansion has been from regional players, primarily based in neighboring South Africa,” reads the report.
The annual GRDI ranks 30 developing countries on a 0-to-100- point scale and four variables which include country risk and business risk, market attractiveness, market saturation and time pressure.
For Botswana, the highest scores were recorded in the country risk category with an 88 percent mark due to easy access to financing, high credit ratings, low risk of economic terrorism, crime or violence.
Under the market attractiveness category, which considers factors such as business efficiency, urban population, and retail sales per capita, Botswana scored 44.4 percent, with a 100 percent score awarded to economies that are highly attractive.
Botswana’s 16,000 U.S. dollars Gross Domestic Product (GPD) per capita, one of the highest in Africa, played a crucial part edging up the retail sales per capita.
On market saturation, the report suggests that the local market still holds significant opportunities for retailers as Botswana’s score stood at 42 percent, with zero percent representing a market that is totally saturated.
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. In a recent report, property developers, Primetime said Gaborone’s retail property sector has reached saturation point, with the existing malls and other facilities expected to increasingly split business among themselves.
“Retail is already saturated in Gaborone and we can expect the major malls to experience split trade. “It is at times like these, that it is important to be especially careful in one’s investment strategy,” the executives said in a commentary accompanying PrimeTime’s interim results.
The analyst says expansion into Africa is challenging for retailers, primarily because they have to compete with a long established, active, and informal trading sector that African consumers are accustomed to.
Brazil took the No. 1 spot for the second year in a row driven by a growing middle-class economy, high consumption rates, a large, urban population, and reduced political and financial risk. Chile ranked second, China came third and Uruguay and India were in fourth and fifth place, respectively.
Countries in the index are selected from 200 developing nations based on risk, population size (2 million or more) and wealth or GDP per capita of more than 3,000 dollars. (Xinhua)
