My body of work in the past year has always tried to advocate for the restructuring and development of small businesses, including businesses in the informal sector.
My resolute belief in this sector is based on its ability to fundamentally shift in favour of large habit changes in the orbit of household consumption, and thus mitigate against the potentiality of having a skewed government investment towards a fatalistic short-termism in the sphere of exchange.
Moreover, the impacts of skewed investment have been there for all to see, with too few jobs to catch up with population growth, austerities that have been caused by attempts to reduce public expenditure. I therefore believe that in achieving our plans in the coming years – which can be seen as a phase of economic and social- reconstruction, we need to understand the role of the household and the firm (of any size) in our society as institutions that mediate social and economic relations.
We therefore need to think in more subversive and innovative ways and speak meaningfully to and of growth. We must acknowledge that there is something problematic with how we have conceptually framed empowerment and transformation, which has focused on proxy ownership through trusts, special purpose vehicles, an approach to existing economic interests without creating new opportunities.
Would I be wrong if I mentioned that a new approach is needed that recognises that well established businesses are not going to voluntarily do three main things at the centre of our efforts? These are:
- Opening value chains in a concentrated market like ours to new entrants through government induced bans.
- Regulate income differentials of the top and bottom earners in companies, thus reducing the gap between the high income sector and the low-income sector, i.e. the Gini coefficient.
- Channeling of state investments towards digital and nascent sectors, thus allowing for intentional approaches to dismantling the digital divide thus partner with small private sector players.
In our attempt to speak meaningfully to growth, we must face the reality that our countryโs low-income sector is growing, albeit our ambitions to become a high-income economy. This is validated by our already high Gini coefficient pre-COVID that can be assumed to have increased post-COVID even without any numerical representation.
Statistics Botswana further validates this assumption with their most recent Stats Update of March 2023 where we see a similar increase in village populations of 25 percent in comparison with cities and major towns. ย Therefore, rustically speaking, what would be the major impacts of a growing low-income sector economy? The impacts are rather typical – a sluggish economy becomes harmful to most businesses since consumers are less likely to purchase their products. It may also have a negative effect on the labour market as businesses are less willing to hire more staff in times of weak economic growth.
I believe that in tackling the impacts of a growing low-income sector, we need to resuscitate a rather forgotten sector, the tuckshop sector. In one of my articles,ย โBopudi ba Kgonwa ke ba ba Dinaka,โ I mentioned that โ we missed a very integral characteristic of the sector, its flexibility to adaptability. And therefore, its intermediate contribution to economic growth through dissemination of firsthand consumer behaviour information.โ
Using our neighbours as a case study, South Africa has thus seen to invest in this sector by offering funding in both a cash and revolving credit facility.ย Based on research conducted by the South African Department of Small Businesses, the valuation of the tuckshop market in South Africa is estimated to be worth R40 billion with a typical tuckshop shopper buying 3.6 items and spending R65 on every trip.
In addition, the sector employs 300 000 youth, which is almost the size of our unemployed youth in Botswana, and accounts for 65 percent of all grocery purchases, the market of which is estimated to reach a valuation of R800 billion by 2025. You may wonder why I chose South Africa as a case study even though I believe that our market will always run at parallel with theirs. One thing we have in common is that we both have very high Gini coefficients, thus similarly increasing low-income sectors.
If we were to concentrate on building this sector in towns and villages, we would see the achievements of our national efforts in growing our economy besides the growing low-income sector of the economy. We will see opening of value chains to citizens, channelling of state investment towards digital and nascent sectors, thus allowing for intentional approaches to dismantle the digital divide and thus partner with small private sectors players.
In conclusion, Bogwe gaย boย boleย (Kinship in-law does not stale).
Bame Lesego Boitshoko
