Therefore, it is critical for retailers to pay attention to the household data in Q1 2022 as well as analyze their previous records so as to effectively and efficiently map out their operational strategy for the year.
Consumer confidence in Africa surged by 6 points in December climbing to 18 from 12. This rise in consumer sentiment can be attributed to the growth in the index of future expectations which increased by 8 points while the index of current economic conditions stalled at -17.
With the exception of the job prospects index which declined by 11 points, all other household indices advanced. The discretionary spending index experienced the largest growth of 12 points while the purchasing power, household income, and personal finance indices progressed by 9, 8, and 7 points respectively. Households also reported an improvement in city and country economic conditions as these indices ascended by 9 and 7 points respectively.
Examining the countries tracked by the index, Kenya was the only country whose consumer sentiment did not change in December. All other countries witnessed a heightening in their consumer confidence indices with Tanzania and Ivory Coast recording the largest gains of 13 and 11 points respectively.
Kasi’s global CCI moved up by 6 points in December rising from 12 to 18 marking a new record-high since the inception of the index which is an exceptional performance considering the deterioration of the index caused by the Covid-19 pandemic that resulted in the index plummeting to an all-time low of -28 in April 2020. This positive sentiment among African consumers is associated with the increase in optimism among households on the future as the index of future expectations expanded by 8 points in December. On the other hand, the index of current economic conditions remained unchanged for the month.
The emergence of the Covid-19 Omicron variant in late 2021 did not have severe implications for Africa compared to other parts of the world such as the U.K., U.S., and Canada where the governments were forced to reimpose restrictions on cross-border movements as well as limiting the number of people allowed in gatherings including sporting events so as to curb the rise in Covid-19 related infections. Some of the travel restrictions reinstated were directly against African countries for instance the ban by the European Union on travelers arriving from Southern African states. In spite of this, African governments opted against the reinstitution of restrictions domestically citing that taking such measures would be detrimental to an already struggling economy as well as the need for us to learn to live with Covid-19 as it is here to stay. Consequently, households across the continent had a positive outlook on the economy as the direction taken by governments meant that their livelihoods would not be disrupted by the omicron variant.
According to the Africa CDC, as of 9th January 2022, the continent had reported a total of 10,066,092 cases with 231,445 deaths and 8,949,469 recoveries. Vaccination remains to be low in the continent with only 10.09% of the population being fully vaccinated and 14.92% being partially vaccinated.
Discretionary spending and purchasing by households soar during the festive season.
The household indices also reflected the positive sentiment seen in the global consumer confidence index. The purchasing power, personal finance, and household income indices all strengthened in December by 9, 7, and 8 points respectively. Households were also enthusiastic about the economic conditions for the city and country as these indices extended by 9 and 7 points respectively with the city economic conditions index climbing to 34 from 25 and the country economic conditions moving up from 24 to 31. The largest gain was in the discretionary spending index which swelled by 12 points rising from 11 to 23. This echoes the notion that, during the festive season, households’ expenditure on discretionary products is higher relative to other periods of the year. Interestingly, similar to the global CCI, all these indices attained new record highs since we began collecting the data. Once again, this is certainly a remarkable performance considering the impact that Covid-19 had on these indices in 2020. Unfortunately, the job prospects index failed to follow the same pattern as the rest of the household indices as it faltered by 11 points falling to -56 from -45. Evidently, job prospects remain weak in comparison to the other indices which have rebounded from the Covid-19 induced downturn and have since achieved new record highs.
Tanzania experiences a surge in consumer sentiment while Kenyan consumers report no change in their confidence.
Among the countries tracked by the index, all countries apart from Kenya experienced an improvement in their consumer sentiment. Tanzania and Ivory Coast led the way as their indices increased by 13 and 11 points respectively while in Kenya, consumer confidence did not change as the index stayed put at 19.
Tanzania recorded the largest advance in consumer confidence this month as its index moved up by 13 points from 4 to 17. This follows from the expansion of its index of future expectations which soared by 13 points climbing from 13 to 26 while its index of current economic conditions shot up by 11 points from -17 to -6. The tail-end of 2021 was great for Tanzania as there was a resurgence in tourist arrivals as well as growth in foreign direct investment (FDI). According to the Bank of Tanzania, travel receipts edged up by 53.7% to USD 1,324.3 million, consistent with an increase in the number of international tourist arrivals which rose by 31.5% to 892,541, signaling a gradual recovery in tourism activities. Moreover, the Prime Minister’s office for investment disclosed that the total value of foreign investments in Tanzania in the period March-November 2021 reached USD 4.144 billion which is 300% more than the USD 1.013 billion in FDI in 2020. All this translated into optimism among Tanzanian households as the purchasing power, household income, personal finance, and discretionary spending indices escalated by 12, 12, 10, and 23 points respectively. The country and city economic conditions indices also rocketed by 20 and 13 points respectively. Despite this positive economic news for the country, its job prospects index stalled at -39.
Contrastingly, consumer confidence in Kenya languished at 19 following 4 successive months of improvement. Its index of future expectations and index of current economic conditions moved in opposite directions with the former ticking up by 2 points and the latter descending by 7 points. Whereas Kenya lifted all Covid-19 related restrictions in October 2021, the emergence of the omicron variant did not bode well for the country’s tourism sector in December as some countries such as the UAE have banned all inbound and transit passenger flights from Kenya while others like the U.S. have issued a travel advisory against non-essential travel to the country. As such, the tourism and the hospitality industry, which was one of the fastest-growing sectors that pushed Kenya’s economic growth in the third quarter to 9.9 percent following the lifting of the containment measures, faced headwinds in its recovery. Consequently, the household indices for Kenya posted underwhelming results in December. The discretionary spending and personal finance indices did not change while the household income and purchasing power advanced by 4 and 6 points respectively. Additionally, the city economic conditions index languished at 41 while the country economic conditions index increased by a single point. Finally, in a similar fashion to the global job prospects index, Kenya’s job prospects crumbled as its index sunk by 14 points from -50 to -64.
Retailers should expect great results for December 2021 however, waning job prospects could mean that these results are short-lived.
It is apparent from our analysis that 2021 has concluded with households having a positive outlook for the future. Furthermore, as it has been illustrated by the increase in discretionary spending and household spending, the savings that we observed at the start of Q4 2021 were actually made by households with the aim of spending these savings during the festive season and not for emergency purposes due to weakened job prospects.
In view of this, it is our expectation that retailers will have a fantastic December in terms of their revenues. This is likely to be the case for retailers in all countries as the majority of the countries tracked by our index reported a boost in their consumer confidence and, following a study conducted by Kasi where a positive correlation was established between consumer confidence and consumption, the growth in consumer sentiment will raise consumption. Nevertheless, the challenge that remains for households and retailers is the sluggishness in job prospects. If job prospects continue to dwindle, then households may opt to save and this means that the expansion in sales that retailers would experience this month will be short-lived. Therefore, it is critical for retailers to pay attention to the household data in Q1 2022 as well as analyze their previous records so as to effectively and efficiently map out their operational strategy for the year.
“The fact that the consumer confidence index has hit an all-time high is an indication that households in the continent have accepted that Covid-19 is now part and parcel of our everyday lives and the emergence of new variants is unlikely to disrupt their livelihoods. Now, as we begin 2022, it will be critical to monitor consumption behavior as this will serve as a good indicator on the trajectory which the economy is likely to take in 2022.”
Contact our team today to explore how our consumer intelligence can empower your decision-making process. Win with confidence with Kasi insights https://www.kasiinsight.com/thehub
#Covid19 #CCI #Jobprospects #Economicconditions #Nigeria #Kenya #SouthAfrica #Cameroon #Tanzania #IvoryCoast
תגובות