The Kasi Index of Consumer Sentiment (ICS) has tracked consumer sentiment in 20 African countries from 2016. The index is based on simple economic questions about current conditions and future expectations related to purchasing power, personal finances, household income and employment. It is one of the best economic indicators available in Africa today.
Our team has tracked the evolution and shifts in consumer sentiment during election cycles in 5 countries including Kenya, Ghana, South Africa, and Nigeria. Election cycles are major events in Africa with significant impact on business performance and overall confidence. Depending on the context of the election, consumer behaviour and business sentiment shift before, during and after the elections.
While election outcomes are usually predicted by polling done around the election periods, it is interesting to find out if consumer sentiment can also be used as a good predictor for election outcomes in Africa. Our research team look the change in sentiment over the 12 months preceding the elections to predict the outcome of the election. We looked at mean (average level over 12 months) and standard deviation (volatility over the 12 months) as measures. We define the outcomes as follows - Change when the incumbent party or candidate loses and Status quo when the incumbent party or candidate wins.
Ghana - Kasi ICS successfully predicts two consecutive election outcomes.
In Ghana, elections were held in December 2016 and December 2020. Our calculations are based on consumer sentiment a year before the election. In 2016, the consumer sentiment index on average was +6 points while the volatility was 102%. The average ICS was positive, and volatility was very high (greater than 100%) which led to a change. Later in the year, a new president from a new party Nana Addo Dankwa Akufo-Addo of the New Patriotic Party (NPP) took over from the incumbent John Dramani Mahama of the National Democratic Congress (NDC). In the same month, consumer sentiment shot up by 24 points to +33 points. His election was a sign of hope and sentiment post elections increased for 3 months and then shifted downwards.
In 2020 consumer sentiment was highly affected by the emergence of Covid19 pandemic. During the year, average ICS was -17 points and volatility was 78%. The volatility did not meet the 100% threshold; thus, the country maintained its status quo. The incumbent president, Nana Akufo-Addo, won a second term in office.
Kenya - Kasi ICS successfully predicts two consecutive election outcomes.
In Kenya, elections were held in August 2017 and 2022. Our calculations a year before the election highlighted that the average consumer sentiment was +2 points with a volatility of 46%. Though the volatility was slightly high, it did not meet the 100% threshold for change. The country maintained its status quo and the incumbent president, Uhuru Kenyatta won majority vote.
The 2022 election which was a close race between Deputy President William Ruto and Former Prime Minister Raila Odinga, the country recorded an average consumer sentiment of +6 points. The volatility in consumer sentiment across the year was very high (140%) highlighting change in the incumbent party. The elections saw incumbent President Uhuru Kenyatta step down after serving the maximum two terms allowed by the Kenyan Constitution, Deputy President William Ruto and his new party United Democratic Alliance took over.
South Africa - Kasi ICS successfully predicts 2019 election outcome.
In South Africa, elections were held in May 2019. Our calculations a year before the election highlighted that the average consumer sentiment was -1 points with a volatility of 86%. Though the volatility was slightly high, it did not meet the 100% threshold for change. The country maintained its status quo and the incumbent party African National Congress (ANC) won the election with 57.50% of the vote, but with a reduced majority from the previous election. The Democratic Alliance (DA) came in second with 20.77% of the vote, and the Economic Freedom Fighters (EFF) came in third with 10.73% of the vote.
The election was held against the backdrop of a number of challenges facing South Africa, including a struggling economy, high unemployment, and widespread corruption. The ANC's victory was seen by some as a vote of confidence in President Cyril Ramaphosa, who had been elected party leader in December 2017. Ramaphosa had promised to root out corruption and improve the economy, and he had made some progress on these fronts.
Nigeria - Kasi ICS successfully predicts the election outcome.
According to Kasi Consumer Sentiment Index, Nigeria experienced positive consumer outlook in 2022 with an average of +26 points. Based on our predictions, the country will maintain a status quo because the volatility of consumer sentiment index was 24% which was quite low.
In the just concluded elections in Nigeria, the incumbent APC President Muhammadu Buhari was term-limited and could not seek re-election for a third term. The presidential candidacy was a tight race between All Progressive Congress’ (APC) Bola Tinubu, Labour Party’s Peter Obi and Atiku Abubakar of the opposition Peoples Democratic Party. Our prediction that the country will maintain a status quo were correct as the incumbent party’s Bola Tinubu was declared President.
In conclusion, the Kasi Consumer Sentiment Index (ICS) has demonstrated an ability to predict election outcomes based on the observed patterns of sentiment and volatility. The findings suggest that when there is a high volatility in consumer sentiment, it often leads to a change in the incumbent party, indicating a desire for change among the electorate. Conversely, when volatility is low, it appears to favor the incumbent party, indicating a preference for maintaining the status quo.
Furthermore, the combination of the average ICS and volatility provides additional insights into electoral predictions. When the average ICS is negative and volatility is low to average (less than 100%), it suggests that despite negative sentiment, the incumbent party is likely to win. This result may indicate a perception among voters that the current administration is still preferable to any potential alternative.
Conversely, when the average ICS is positive and volatility is high (more than 100%), it signals a potential loss for the incumbent party. In such cases, the positive sentiment among consumers may not be enough to overcome the desire for change expressed through increased volatility. This indicates that even though there is overall positive sentiment, the demand for a different political direction is stronger.
Contact our team today to explore how our Political intelligence can empower your decision-making process. Win with confidence with Kasi insights : https://www.kasiinsight.com/thehub
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