Confidence from consumers in six major urban centers in Africa on the rise ahead of the holiday season.
The KASI Consumer Confidence index, the KIC Score rose slightly 1 point to +8 from +7 in October. The current economic conditions metric rose up 5 points to -15 while the economic expectations metric remained flat at +17. The increase was across the board, in fact, the November readings in the KIC score range from +3 (Abidjan) to +15 (Douala). This is a somewhat a tighter range than the October readings, where the KIC ranged from -2 (Abidjan) to + 22 (Douala). In November, confidence from residents in every city was up. Douala in Cameroon remained the city where residents are most bullish.
Consumer spending driven by a growing urban middle class is good news for retailers as we enter into the busiest period of the year.
Douala (Cameroon) represents the best opportunity for retailers
Consumers in Douala remained bullish in November ahead of the holiday season. Despite a 5 point drop over October, the KIC score remains positive at 15 points ahead of all the other cities. The majority of respondents are planning to make purchases and spend more over the coming months. This is good news for retailers and service providers as they look to tap into the growing urban middle consumption. Consumer confidence on future economic conditions remained strong at +15 points. Overall, consumers in Cameroon represent the best opportunity for retailers and service providers this holiday season. Douala shows a low volatility and positive sentiment trend in our opportunity matrix.
Nairobi (Kenya) remains a strong market for retailers ahead of the busy season.
Consumer confidence in Nairobi rose 2 points to 7 points ahead of the holiday season. This represents a 6 points increase compared to last quarter. The majority of consumers expect to spend more over the coming months including on large purchases. The consumer spending is driven by the rising urban middle class and the resilience of the Kenya economy. The KASI findings on urban consumption is in line with research by Nielsen, as shown in their October survey, which indicated that Kenya’s consumer confidence score was at +20. Note that the KIC score was +5 back in October. Overall Kenya remains a growth market for retailers and service providers. Nairobi shows a low volatility and moderate confidence trend in our opportunity matrix.
Abidjan (Ivory Coast) is turning the corner despite weak showing
Consumer confidence in Abidjan turned positive to +3 points ahead of the holiday season confirming a 3-month trend. This represents a 9 points increase compared to last quarter. The majority of consumers expect to spend more over the coming months including on large purchases. The consumer spending is driven by the rising urban middle class and the flow of investments going to Ivory Coast. The government plans to spend US$60 billion on infrastructure projects between 2016 and 2020. Overall Ivory Coast is still a long term play for retailers and service providers. The short to medium may not yield to great results but the long term is promising. Abidjan shows a high volatility and negative confidence trend in our opportunity matrix.
"Consumer’s confidence for the country, city and their own outlook is improving on the continent despite the headwinds faced by some countries in Africa. Retailers and service providers can tap into this willingness to spend” said Trudi Makhaya, Economist and KASI Advisor.
The KASI Opportunity Matrix summarizes consumer confidence volatility and trend over the past 6 months to rank the cities and show the best opportunities for retailers, manufacturers and service providers.
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