(Source - The Africa Report)
KASI’s global CCI advanced by a modest 2 points in August after stalling in the previous month. This follows from a rise in the index of current economic conditions and the index of future expectations both of which increased by a single point.
The indicators on the general city and country economic conditions maintained their positive momentum from last month by gaining an additional 1 and 3 point(s) respectively. Further, the personal finance, discretionary spending, and household income indices all improved this month by 6, 4, and 2 points respectively. Contrary to the positive performance of the aforementioned indicators, the job prospects and purchasing power indices fell by 2 and 3 points respectively.
Examining the countries tracked, there was yet again a mixed performance across the board. Consumer sentiment in South Africa, Nigeria, Kenya, and Tanzania strengthened with Nigeria witnessing the largest expansion of 11 points. Meanwhile, Cameroon, Ghana, and Ivory Coast experienced a deterioration in their consumer sentiment with Cameroon undergoing the steepest decline of 9 points.
After a lackluster performance in July, consumer confidence in Africa strengthened by 2 points climbing from 8 to 10 and reaching double digits for the first time since September 2018. This move in the global CCI reflects the upward movement in the index of current economic conditions and index of future expectations both of which grew by a single point after moving in opposite directions last month.
Households’ optimism on the current state of the economy as well as the future seems to stem from the reduction in Covid-19 cases following the most recent wave faced by the continent which peaked in mid-July before tapering off in the later stages of the month. Another reason for this optimism is the fact that, through the African Union’s African Vaccine Acquisition Trust (AVAT) program, the continent managed to procure an additional 400 million vaccines from Johnson & Johnson which is sufficient to immunize a third of the African population bringing the continent closer to its target of vaccinating at least 60 percent of the people. While this is certainly good news for the continent, procurement is just one piece of the puzzle. The challenge that remains now is ensuring effectiveness in their distribution as well as mobilizing the African people to get vaccinated as this remains to be a challenge in several countries around the world.
According to the Africa CDC, as of 6th October, 4.57% of the African population is fully vaccinated with 6.89% of the population having received the 1st dose. At the country level, Morocco leads the way with 53% of its population being fully vaccinated followed by South Africa at 15.79% and then Egypt at 5.21%. Evidently, there are great variations in vaccine administration across countries which will distort the region’s recovery as the countries with higher immunization rates are likely to see their economies recover quicker than those countries whose immunization rates are lower. So, unless there are strong coordination efforts among the member states to support and enhance immunization efforts in those countries that are falling behind in this respect, such fragmentation in the economic recovery between countries is likely to have implications on regional integration efforts including the success of the African Continental Free Trade Area (AfCFTA).
Job prospects fall to the lowest level in 2021 despite households reporting better economic conditions.
Positivity among Africans was also reflected in the household indicators with the majority of the indices recording gains in August. The general city and country economic conditions continued on their upward trajectory experienced in recent months as both indices expanded by 1 and 3 point(s) respectively. After shedding 2 points in July, both the discretionary spending and personal finance indices clawed back their losses as they rebounded by 4 and 6 points respectively. Moreover, whereas the household income index stagnated last month, the index moved up slightly from 29 to 31 points. On the other hand, households maintained the negative outlook on job prospects observed last month as the index decreased by an additional 2 points falling to its lowest level for the year i.e. 51 points. There was also a downturn in the purchasing power index which sunk by 3 points from 13 to 10 after remaining unchanged since May of this year. In spite of the improved performance in the majority of household indicators this month, it is clear that households still have some reservations about the economic conditions especially when it comes to employment opportunities as the index has hit a new low for 2021.
There is continued optimism among Nigerian households on the country’s future while consumer confidence in Cameroon slumps.
Turning our attention to the countries tracked in our index, Kenya, Nigeria, South Africa, and Tanzania were the countries that reported a higher consumer confidence score for August while Cameroon, Ghana, and Ivory Coast observed a weakening in their consumer confidence.
Among the gainers, Nigeria had the best performance for the month as its consumer confidence index surged by 11 points rising from 22 to 33. This upsurge is primarily due to the heightening in the index of future expectations which increased by 14 points while the index of current economic conditions ascended by a mere 2 points. The macroeconomic situation in Nigeria has become better in recent months. According to the National Bureau of Statistics, Nigeria’s GDP grew by 5.02 percent in Q2 of 2021 with both the agriculture and manufacturing sector recording real GDP growth of 1.3 and 3.49 percent respectively. Overall inflation in the country has also dropped for the 4th month in a row while the government indicated better-than-expected revenue-generating efforts especially on corporate tax and value-added tax due to the fact that economic activity picked up pace in Q1 and Q2 of 2021 compared to Q1 and Q2 of 2020. The elevated macroeconomic situation has created a sense of optimism among Nigerian households. With the exception of its job prospects index which followed the continental downward trend by losing 5 points, all the other household indices recorded substantive progress with the personal finance index leading the way as it advanced by 19 points. The general city and country economic condition indices shot up by 13 and 15 points respectively while the discretionary spending, household income, and purchasing power indices soared by 9, 16, and 8 points respectively.
Contrastingly, focusing on the laggards, Cameroon posted the largest decline for the month as its consumer confidence index crumbled by 9 points decreasing to 5 from 14. This recession in consumer sentiment can be fully attributed to the index of future expectations which sunk by 14 points. Meanwhile, its index of current economic conditions rose by 6 points. Interestingly, Cameroon was also the worst-performing country in August 2020. Unfortunately, for the past two years, Cameroon has experienced serious floods in the month of August (the country’s rainy season) including in its commercial capital of Douala. This year, the floods were so severe that they left hundreds of homes underwater, drainage systems overwhelmed and main roads cut off thereby bringing economic activity to a standstill. Consequently, the majority of Cameroon’s household indices had a poor performance this month with the household income, purchasing power, and discretionary spending indices all lowering by 12, 27, and 3 points respectively. Furthermore, households indicated a pessimistic outlook on general economic conditions for both the city and country as these indices slid by 15 and 19 points respectively. On the flip side, the personal finance index ticked up by 2 points and, unlike the global job prospects index, Cameroon’s job prospect index expanded by 13 points although still languishing in negative territory.
With weak job prospects and suppressed purchasing power among households, affordability must be the primary consideration for retailers.
While consumer confidence in the continent has grown by only 2 points in August, it is great to see that the index has attained double-digit levels for the first time since September 2018. However, it is clear that there are still some cracks in the continent’s macroeconomic situation especially within the labor market as demonstrated by the job prospects index that, so far in Q2 2021, has plunged. As to whether the index will bounce back, that remains to be unanswered given the structural shifts that Covid-19 has brought onto the labor market which was already facing challenges even before the pandemic. But as a greater proportion of the population gets vaccinated and countries continue phasing out restrictions, employment opportunities will indeed arise.
Given the performance of the household indices this month, retailers in the continent should also be more optimistic about the outlook for their companies. The caveat here though is the fact that the performance of CCI diverges at the country level and as such, business performance at the country level is also likely to be varied. Nevertheless, purchasing power for households, even for those in countries with improved CCI, is fairly subdued. Therefore, retailers need to pay critical attention to the manner in which they price their products so as to ensure that they remain affordable for their customers who are facing challenges, not only in terms of employment opportunities but also in making purchases.
“With several conferences and forums being held between the months of September and November at the multilateral stage, it is vital for the issue of vaccine distribution inequity to be addressed as it is very apparent that developing countries are falling behind. More critically, addressing this issue will reduce the risk of new variants emerging in other parts of the world. Therefore, the time to act is now and the opportunity to do so is here.” Davies Nyachieng'a
Contact our team today to explore how our economic 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
コメント