Consumer spending growth in South Africa steadied in 2023, report shows
Consumer spending growth in South Africa steadied in 2023 after the previous year’s post-pandemic surge, but expected interest rate cuts will encourage more purchases in 2024, executives from Visa and Discovery Bank said on Thursday.
Recent retail results show that consumers are under financial pressure as high interest rates increase the cost of debt and inflation pushes food prices higher.
Releasing their latest SpendTrend24 report, Discovery’s banking unit and Visa said that while consumer spending in South Africa outpaced inflation by 19 percentage points in 2022, the two measures were closely matched last year.
Spending on food, including groceries, takeout and dining out, increased in most South African cities, by an average of 8 per cent in 2023 compared to a 16 per cent increase the year before, the report said.
More broadly, in South Africa and four other emerging market countries that were part of the survey - Nigeria, Ghana, Brazil and Vietnam - a larger part of household budgets went on essentials like groceries and fuel, with less spent on non-essentials like travel.
The report also showed that spending is rising among affluent and high net worth consumers, with a slight decrease in the mass segment due to rising living costs.
“Our latest research highlights that throughout 2023, global economies navigated a complex path of post-pandemic revival, framed by persistent inflation and high interest rates,” Discovery Bank’s Chief Executive Officer Hylton Kallner said.
Kallner said the expected interest rate reductions would result in higher disposable income for consumers, although they will continue to prioritise getting the most value for their money.
DP World, an Emirati multinational logistics company based in Dubai, United Arab Emirates, has acquired a majority stake in fuel retailer bpSA.
The company specialises in cargo logistics, port terminal operations, maritime services, and free trade zones. It has acquired key assets of bp Southern Africa’s (bpSA) secondary transport operations. This marks a significant expansion of its business in South Africa.
Global energy giant
As a global energy giant, bpSA has operated in Africa for over 100 years. This through operations from exploration to refining and fuel product distribution.
bpSA has over 500 retail stations.
Logistics COO of DP World in sub-Saharan Africa, Mark Rylance, said: “As a leading provider of smart logistics solutions globally, DP World is proud to partner with bpSA in their landmark decision to outsource their secondary transport. It’s one of the largest logistics providers in South Africa.”
Enterprise development empowerment
On the other hand, through empowerment, a beneficiary of bpSA’s enterprise development, Makwande Supply & Distribution will take over its Durban and East London operations.
CEO 0f bpSA Taelo Mojapelo said: “The rest of the global bp business also outsources its transport operations.
Outsourcing the secondary transport business to specialist entities helps improve our operating standards and efficiency.
“This as third-party specialists have the depth and capacity to invest in world-class technologies, driver training and effective monitoring mechanisms. We have confidence in the calibre of partners we have selected. And we look forward to productive and mutually beneficial working relationships into the future.”
Unlocking new opportunities
Rylance added: “This partnership will reap the benefits of combining bpSA’s established customer networks with our expertise in providing value-adding logistics solutions. I look forward to this partnership unlocking new opportunities for growth and success for both organisations.”
The partnership between bpSA and DP World is also aimed at increasing volumes of trucks on the road. This is where fuel can be transported to various destinations without a hassle. All while creating employment in the logistics and energy sectors.
The company also plays a pivotal role in empowering black-owned companies. This through acquiring diverse services such as printing and branding. Also including logistics, all these services across Southern Africa. —