December 20, 2020, 12:00 PM --
Job prospect remains grim as monthly COVID-19 cases and deaths at an all-time high
Optimism surrounds Kenya for the coming new year with projections that the economy should rebound quickly
The pandemic has definitely impacted the retail sector heavily; however, e-commerce uptake now visible as Kenyans adjust to this new norm
November saw a mere 1-point increase in the KASI Consumer Confidence Index (CCI) in Kenya. This was particularly led by the 4-point increase in the index of current conditions which increased from a value of -40 to -36. The index of consumer expectations saw a 1-point increase from an index value of 3 to 4.
Job search remains grim as monthly COVID-19 cases and deaths at an all-time high
The index of current conditions only saw a mere 4-point increase this month. This increase was primarily led by the increased optimism about making large purchases for which the index increased 6 points. A 1-point increase was also seen in the job prospect index; however, the index value still remains significantly low at a value of -61. After the sudden rise of COVID-19 cases and an increase in unemployment, Kenya’s economy hasn’t been able to bounce back to the level of employment it was at before. Though Kenyans remain optimistic, job search is still difficult. According to our COVID-19 Pulse survey, 65% of our respondents this month still feel that job search has become more difficult with only 4% saying they feel it has become easier.
Despite the rise in sentiment regarding current conditions, the value still remains negative. This is likely due to the sudden sharp rise in coronavirus cases ahead of the holiday season. November was declared the worst month for Kenya ever since the beginning of the pandemic. With a total of 28000 new cases and 456 deaths recorded in November alone, Kenyans are worried this number will only rise with the approaching holidays. KASI fear index saw a drastic increase this month with the index reading at 68.98% compared to the 47.55% recorded in October. Additionally, according to our survey, 54.67% (in comparison to 47.36% in October) of our respondents think that the worst of the crisis is happening right now with 6% less in comparison to last month thinking that the worst of the crisis is over now. The total number of cases in Kenya sat at 83 316 cases by the end of November according to Africa News.
Optimism surrounds Kenya for the coming new year with projections that the economy should rebound quickly
Future expectations rose 1 point in November staying at a positive level of sentiment. This rise was driven by the expectation for conditions within the country to improve, household income to increase, and thus, the ability to meet regular expenses. Additionally, Kenyans remained optimistic about increasing expenditure on discretionary products. However, the rise in the index was dampened by the expectation for general conditions to fall within respondents’ cities for which the index fell 4 points. According to our COVID-19 Pulse data, Kenyans think it will be still around 6 months before things go back to normal.
Currently, Kenya is seeking a loan of $2.3 billion from the International Monetary Fund (IMF) to aid in COVID-19 relief and support citizens and businesses that are suffering as a result of the pandemic. Funding constraints had forced the government to scale back on some projects earlier on in the year. These are projects under President Uhuru’s big four agenda to boost the major industries such as housing, manufacturing, health care, and farming. Thus, in addition to the loan from the IMF, the government is also discussing a $1-$1.5 billion loan from the World Bank. This loan will be used with the agenda to aid in bringing the country back on track. Economic expansion is expected to be under 1% this year compared to the growth of 5.4% recorded in 2019. There is, however, optimism surrounding the rebound of the Kenyan economy with the projection that real GDP should rise to 6.9% year on year in 2021 according to World Bank projections.
The pandemic has definitely impacted the retail sector heavily; however, e-commerce uptake now visible as Kenyans adjust to this new norm
According to a report published by Cytonn, the retail sector in Kenya suffered a great loss as large industry giants such as Shoprite, Deacons, and Tuskys had to scale down. However, there were also injections into the industry as new international retailers entered the market and local retailers such as Carrefour significantly expanded. Such expansions by local retailers were able to cushion some of the losses faced in the industry as they took up prime retail spaces left behind by those that went out of business. Not surprisingly, while the Kenyan market has been resisting the uptake of e-commerce thus far, there has been an increasing trend towards the use of online platforms. Online shopping was very uncommon in the first 6 months of the pandemic as Kenyans stuck by their traditional brick and mortar shops. However, e-commerce has seen an 8.6% growth according to a survey done by the National Bureau of Statistics. As a result, there has also been an increase in the use of mobile wallets. Overall the retail sector performance has decreased to 6.7% year on year compared to the 7% recorded in 2019.
By Tanya Gandhi, Economic Intelligence Group at KASI.
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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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