I was born and raised in Gaborone. Despite being in my mid-twenties I can still recall a time when this city had no shopping malls to speak of. Of course we had African Mall and Main Mall with their quaint rows of shops ranging from butcheries to shoe repairers but we had no real malls. The monuments of consumerism with elevators and escalators; brand name stores sitting side by side on multiple floors; clean air-conditioned walkways; cinemas with multiple screens; high-end clothing stores; and gourmet restaurants were foreign to us Gaboronians. It was only when my family visited South Africa that I would get a taste of the grand retail centres boasting endless options for killing time and burning money.
That began to change in 2002 when Riverwalk Shopping Mall, a sprawling two-story development in the city’s Village area, came on the scene. It was a first of its kind for Gaborone. The floodgates had been opened. The following year Game City was established, immediately branding itself as the largest mall in the country and a regional shopping destination. Even then there was debate over whether this city with its population of only 231, 626 (2011 census) could sustain two shopping malls of that magnitude but these were just the early warning shots of what would become a full-scale retail explosion. Within the past four years at least four other malls of varying size — Airport Junction, Rail Park, North Gate and Sebele Centre — have joined the fray and others have been proposed for development. This all raises the question, as memorably phrased by the economist Roman Grynberg, who was until recently based at the Botswana Institute for Development Policy Analysis: Is Gaborone being malled to death?
The Botswana Property Report, which represents the first piece of researched data on the state of the country’s property market compiled by professionals operating within the country, indicates that consumer spending in Botswana rose dramatically by 247% between 2010 and 2014 while wages rose negligibly by less than 5% during the same period. It’s no coincidence that this boom in consumer spending has occurred at the same time as the explosion of shopping malls in Gaborone.
The report’s author Sethebe Manake says that real estate in Botswana follows a cycle, dipping every six years, but this does not mean that it dips to the same level or that all sectors dip at the same time. The sectors that dip or spike depend on the impact of decisions made at monetary and fiscal policy levels.
“We don’t believe that the retail market responded in any unnatural manner as we have found no external pressure that has led to the growth of the sector; therefore it will respond naturally in the cycle,” she says. “We do believe that the character of retail is evolving which is good for the growth of the economy. The consumer is evolving and as such it is only natural that retail must follow suit.”
South African Brand Dominance
In his op-ed piece ‘Botswana malls in the grip of cartels’, published in Mmegi Online, the economist Roman Grynberg highlights a worrying aspect of Botswana’s retail explosion: The growth in this sector has been driven almost entirely by South African brand name chain stores establishing a presence in the country and pushing local stores to the margins.
As Grynberg explains, in order to secure funding for a shopping mall, developers usually need to bring on board an ‘anchor tenant’ during the proposal stage. These anchor tenants occupy a prime place in the mall and in the case of Botswana they are almost always big South African supermarket chains: The usual suspects are Spar, Pick n’ Pay, Checkers and Food Lover’s Market (The only local challenger to this South African dominance has been the local supermarket chain Choppies).
Grynberg points out that the long-term lease arrangements between the mall owners and anchor tenants at these malls, which last from 10 years and upward, with renewal options of 40 years, are not public. But a review by the South African Competition Commission revealed that ‘Use and Exclusiveness’ provisions in the leases often result in anti-competitive outcomes such as enabling supermarkets to maintain their position of market power.
“They further exclude independent and small retailers from entering certain shopping malls where the main supermarket chains are anchor tenants. In so doing, they may reduce competitive rivalry in different ways, including in terms of prices to consumers,” he writes.
“So what, you say?” asks Grynberg. “This business model has major policy implications for Botswana’s economic and commercial development… The most common way up for young people in Botswana has been getting a job in the government or, if they are business minded, then it is usually in small retail, construction or farming. This has been the way up for many generations of aspiring business people all over the world. Increasingly, government is cash-strapped and there will be no great growth in government jobs in the years ahead. So where will the young people go if the retail sector is closed to them? Back to the village? Not very likely.”
The Global Retail Development Index (GRDI) is an annual study that ranks the top 30 developing countries for retail expansion worldwide by analysing 25 macroeconomic and retail-specific variables to help retailers devise successful global strategies and to identify developing market investment opportunities. According to the 2014 edition of the GRDI, Botswana slipped by a single notch to position 26 in the ranking.
Retail contributed 30 percent of the country’s GDP and provided many jobs, according to the report. It noted, however, that “the market is nearing maturity, with growth slowing despite the increased presence and entry of regional retailers who seek to exploit Botswana’s retail opportunities.”
The Index ranks 30 developing countries through four variables on a 0-to-100-point scale: Market Attractiveness, Country Risk, Market Saturation and Time Pressure. In recent years Botswana’s performance has declined on three out of four variables (see graph below). Worth noting though is that Nigeria is the only African country that ranks above Botswana in the overall ratings.
With various developers eager to build more, there’s already evidence that competition between the existing malls is tightening. Game City, Airport Junction and Riverwalk have all undergone or are currently undergoing expansion.
While there’s no data to support this suspicion, these mega malls seem to be fighting for the same handful of shoppers as the city simply doesn’t have enough people with the disposable income to keep all of them in business. Only time will tell how many of these malls will manage to stay afloat in the long run and whether the impact of Gaborone’s retail explosion on the Botswana economy will be looked upon as a blessing or a curse.
Kibo Ngowi is a journalist based in Gaborone, Botswana who has contributed articles to several nationally-distributed newspapers and the national airline’s in-flight magazine as a freelance writer. He is currently the Deputy Editor of Boidus Focus Newspaper, a monthly publication dedicated to covering issues around Botswana’s building and construction industry. You can reach him via email@example.com
Photo: Opened in 2003, Game City is the largest shopping mall in Gaborone at a size of 51000 square meters and with an 8000 square meter extension currently under construction. Kibo Ngowi.
Read older posts from this section