Santanomics: Where is Kigali’s Christmas economy?

With just a day to Christmas, you haven’t received any gifts. You’re also not planning to buy any, either.

Assuming most of us have this Dutch Uncle tendency, where does it leave Kigali City’s Christmas economy? Elsewhere, Christmas is about commerce and the numbers prove it.

For instance, a festive season market survey conducted by PWC in 2014 found that the US was the largest Christmas market in the world, spending more than $240 billion during the 2013 holidays, above UK, Germany, France and Brazil combined.

You won’t see China on this list because the Asian superpower is not strong on religion.But while it doesn’t participate in Christmas as a consumer, China does well as a supplier,producing and selling gifts and other decorative items worth billions. To prove this point, go checkout the Chinese Supermarket, T2000, in Kigali’s downtown! It’s a hive of activity.

The big spenders are the likes of Ireland, which topped 2013 rankings of Christmas spending per person, with shoppers parting with around $1,200 during the holiday season, according to the PWC market survey, dubbed, ‘Santanomics: The economics of the festive season.’

In countries like Brazil and Russia where per capita incomes are low, expenditure per individual is tepid but the two countries are among the top ten in terms of aggregated Christmas spending which often starts as early as October, fueled by marketing hype.

People in the Euro-zone area with robust economies and higher per capita incomes, the spending per person is between $600 and $800 during the season; that is higher than the GDP per capita of most countries on our continent.

So, it is possible that because we are still largely poor, that is why you are not receiving any gifts, this Christmas. But, poor or not, it could simply be the absence of consumer data which doesn’t necessarily mean that Africans don’t spend big in Christmas season.

A 2012 survey on anticipated personal spending on Christmas gifts, compiled using aggregated data from IMF, Gallup, Deloitte and HSBC featured only one African country; South Africa where individuals said they would spend slightly more than $300, higher than spenders in Ukraine, Greece and Netherlands where individuals planned to spend less than $200.

I believe that, in many African countries, individuals spend more than the reported $300 in South Africa because, personally, I know friends who have put away $1000 for fun, this festive season, to spend on house parties and items like food, beverages, clothing and entertainment.

That is much higher than the $800 spent in the most generous countries such as Luxemburg, USA, Switzerland, UK and Ireland, during Christmas.

So, to trace Kigali’s Christmas economy, we need proper market surveys. But the one of the biggest barriers to such market surveys is that our economies are still cash-heavy, meaning most expenditure by individuals is hard to be traced.

If I pay cash for a bunch of bananas at the market, that expenditure will not be captured because the market vendor’s sales reporting system is memory based.

These are some of the issues that a cashless economy would help us resolve. Unlike cash transactions, digital payments using tools such as credit cards or even mobile money, leave behind traceable tracks which can be aggregated into a wealth of data.

In developed economies, such data is available because most shoppers are doing so, online and paying for their supplies using credit cards. In many shopping centers, cash is frowned upon and will often be treated with suspicion, likely, as dirty money from drug sales.

In Rwanda, companies are still unnecessarily, spending hundreds of millions on mass product campaigns to market products that are only affordable to a fraction of the population.

With accurate consumer data, companies would have a clear picture of income trends and spending tendencies to design targeted marketing campaigns that speak to the individual rather than the masses. They would spend less on marketing operations, that way.

In Europe, thanks to individual consumer data, it is not uncommon to receive a call from your bank’s sales agent, interesting you in a mortgage product or a new car on promotion, because they have already analyzed your financial capacity.

Imagine if we had all the data on Kigali’s festive season economy! It would certainly unlock hundreds of entrepreneurial opportunities. Today, one of the main reasons why most of our startups fail is the absence of reliable local data on consumer behavior.

Product sales projections fail because they were built on false assumptions. Businesses are closing because they were established in the wrong places. I know three businesses that have relocated twice, this year; in the pursuit of a strategic location to do business within the city.

Clearly, people are in business, but few know where their core clients are. Like nomads, they move shop from one place to another, hoping to bump into their clients.

Investing in sector-specific market surveys is something the Ministry of Commerce should invest in, moving forward to facilitate start-ups with more evidence-based data.

Happy holidays!

Email: kenagutamba@gmail.com

The views expressed in this article are of the author.

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