January 25, 2021 16:00 PM
KASI’s global CCI stagnated in December as the index of future expectations receded by a point while the index of current economic conditions advanced by two points
The job prospects and purchasing power indices all fell by a single point in December while the household income index deteriorated by 4 points. Also, both the general city and country economic condition indices worsened by 2 points. On the other hand, the personal financial situation and discretionary spending indices increased by 7 and 5 points respectively in December.
Nigeria, Kenya and Ivory Coast all experienced positive moves in their consumer sentiment indices with Kenya’s CCI having the largest gain of 8 points. The remaining countries witnessed a drop in their consumer sentiment indices with Tanzania undergoing the worst decline of 13 points after being the best performing country in the previous two months.
Consumer confidence in Africa lingered at 4 points in December after rebounding in November. The index of current economic conditions maintained its positive momentum from last month by progressing an additional 2 points this month rising to -23 from -25. Conversely, the index of future expectations reverted to its upward trend that began in October as the index decreased by a single point in December from 15 to 14.
In spite of the discovery of Covid-19 vaccines, African states are yet to receive any of the vaccine doses unlike their western counterparts. According to a study conducted by an alliance of campaigners including Oxfam and Amnesty International, it is revealed that 9 out of 10 people in poor countries will be unable to access the vaccine this year. The results show that rich nations representing just 14 per cent of the world’s population have acquired 53 per cent of the most promising vaccines including all of Moderna’s doses and 96 percent of Pfizer/BioNTech’s doses. Canada tops the chart with enough vaccines to vaccinate each Canadian five times. While Covid-19 infections in Africa have not been as dire as those in Western nations, the hoarding of vaccines by the rich countries does not bode well for the continent.
As of 23rd January 2021, the number of Covid-19 infections in Africa stood at 3,418,514 with 84,637 deaths and 2,878,234 recoveries according to the Africa CDC.
Households report mixed feelings about their economic and financial situation as Covid-19 restrictions are re-introduced.
Unlike in November where households were much more optimistic about the economic situation, the outlook for households in December was mixed. Though households reported an improvement in their personal financial situation as well as a hike in their discretionary spending, all the other indices underwent reversals in December. The general economic conditions indices for both city and country back-pedalled by 2 points as some African countries, most notably South Africa, reinstated lockdowns on the back of rising cases caused by a faster-spreading new variant. The re-introduction of Covid-19 restrictions was also observed in developed countries including the U.K and some states in the U.S. such as California. Given the heavy reliance of African states on these economies, the re-enactment of the restrictions was detrimental for the African economy. The job prospects and purchasing power indices slid by a single point while the household income index sunk by 4 points.
Kenya’s consumer confidence soars while that of Tanzania weakens after undergoing two successive months of growth.
Consumer sentiment performance differed across the countries tracked in our index. Ivory Coast Kenya and Nigeria all realized gains in their consumer sentiment indices for December with Kenya achieving the highest growth of 8 points compared to Nigeria’s 4 points and Ivory Coast’s 3 points. The boost in consumer confidence for Kenya can be primarily attributed to the index of future expectations which surged by 8 points whereas the index of current economic conditions grew by 5 points. Kenya’s indices focusing on household personal finance, income and discretionary spending rose by 13, 11 and 13 points respectively while its economic condition indices for the country and city moved up by 8 and 12 points respectively. On the flip side, the purchasing power and job prospects indices both dropped by 2 points. Although concerns surrounding Covid-19 and its risk of infection diminished as illustrated by Kenya’s fear and infection indices from the Covid-19 pulse survey, there was an increase in the percentage of Kenyan households who found it difficult to find work in the city within which they reside while the percentage of households finding it easier to find work also slipped.
Cameroon, Ghana, South Africa and Tanzania all saw a contraction in consumer confidence for their economies. After two successive months of being the best-performer, Tanzania’s consumer sentiment underwent the largest reversal in December as it retracted by 13 points from 37 to 24. This downturn can be fully attributed to its index of future expectations which decreased by 24 points while its index of current economic conditions progressed by 15 points. The general country and city economic condition indices plummeted by 41 and 36 points respectively while the household purchasing power and income indices also plunged by 11 and 44 points respectively. Meanwhile, Tanzania’s indices on discretionary spending, job prospects and personal finance all ascended by 14, 16 and 11 points respectively. Tanzania’s National Bureau of Statistics reported a rise in the annual inflation rate and in the monthly inflation rate of 3.2 percent and 0.8 percent respectively which, in the midst of a pandemic, negatively affected confidence among Tanzanian households.
Despite an improvement in discretionary spending, the future for retailers in this sector remains unclear due to negative job prospects and a poor economic outlook among households.
From the data, we can see that retailers in the discretionary goods space experienced an increase in business activity due to the Christmas holiday shopping season. However, it is difficult to gauge whether this improvement in discretionary spending will continue in 2021 considering the fact that the holiday season is over and also job prospects, purchasing power and perceived economic conditions for the continent weakened in December. As such, retailers in this space must remain cautious and wait for more data before ramping up their stock for these products. Given the divergence in performance of consumer sentiment across the countries, it is worthwhile for businesses to pay closer attention to the economic situation of the specific country or countries in which they operate so as to have clearer insights thus facilitating better decision-making.
“The lack of movement in the consumer confidence index certainly elicits mixed signals about the continent’s economic situation. Until the vaccine is sufficiently administered in all parts of the world and we witness a rise in global demand, economic activity in Africa will be subdued. Unfortunately, the emergence of new variants of the coronavirus means that economic recovery may be prolonged.” said Davies Nyachienga, Economic Intelligence Group at KASI.
About the methodology
KASI Consumer Confidence Score (KASI CCI) is a composite index compiled from a seven-question survey that runs monthly via our consumer polls in the countries covered. The data output is based on a fresh, randomly selected representative sample of city dwellers aged 18-64. Released the first week of every month, KASI CCI provides a focused view on consumer perceptions in seven African urban centers (Ghana, Nigeria, Kenya, South Africa, Cameroon, Ivory Coast, Tanzania) where most spending in the continent is concentrated.
For each question, the final metric will be a ‘balance measure’ of the percentage of positive responses minus the percentage of negative responses. The overall metric will be an average across all the questions.
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