Concerns on the rising cost of living cause consumer confidence to slide.

Evidently, the optimism seen in March among consumers was short-lived as it failed to be sustained into this month implying that the Russia-Ukraine war and the lockdowns that were reinstated in China continue to impact African consumers as they are leading to a higher cost of living and causing a lot of uncertainty among households.


  • Consumer sentiment in Africa tumbled by 5 points in April falling from 10 to 5. This reversal in consumer confidence is associated with the decline in the index of current economic conditions and the index of future expectations as both indices decreased by 1 and 5 point(s) respectively.

  • The household indices also showed the heightened pessimism among households as the purchasing power, personal finance, household income and discretionary spending indices all faltered by 4, 6, 8 and 3 points respectively. Furthermore, the job prospects index remained unchanged while the country economic conditions index collapsed by 10 points. Lastly, while the city economic conditions rose, it was by a single point.

  • Looking at the countries tracked by the index, Cameroon and Ghana were the only countries to record an improvement in their consumer sentiment indices with Ghana having the largest gain of 7 points. Meanwhile, consumer confidence in Kenya, Nigeria, South Africa and Tanzania weakened with South Africa undergoing the largest deterioration of 19 points. In Ivory Coast, consumer confidence stagnated at 10.

KASI’s global CCI receded by 5 points in April after bouncing back in March following a disappointing start to 2022. This drop in consumer sentiment can be primarily attributed to the index of future expectations which shrunk by 5 points while the index of current economic conditions fell by a single point. Ongoing global uncertainty emanating from the war in Ukraine as well as the resurfacing of Covid-19 in China that led to nationwide lockdowns/restrictions in several cities including Beijing and Shanghai continue to have a catastrophic impact on global supply chains which were already in turmoil. While the impact of these crises, particularly the China lockdown, had not been reflected in consumer sentiment for March, it appears that the effects are now being felt by households in the continent as suggested by the index.



Taking into account the importance of these countries in the supply of critical products and nature of globalization, it was extremely difficult for other countries to shield themselves from the negative consequences emanating from these crises. For example, in Africa, while some governments subsidized the increasing cost of fuel, its supply continued to be a problem resulting in long queues and shortages at petrol stations thereby leading to further price increases. More critically, the lockdown in China at the beginning of April meant that production slowed down as workers in China were unable to report to their respective places of work. Consequently, orders for key intermediate and final products could not be fulfilled thereby affecting the operations of producers and retailers sourcing goods from China either directly or indirectly.


These crises are expected to cause a slowdown in the region’s economic growth. According to IMF’s Regional Economic Outlook, economic growth is expected to shrink from 4.5% in 2021 to 3.8% this year. The report also indicates that, while annual growth is projected to improve to 4% in the medium-term, it will unfortunately be too slow to compensate for the losses from the pandemic. To make matters worse, inflation is expected to remain elevated at 12.2% for 2022 which will be the first time since the 2008 financial crisis that the regional average inflation will reach such levels. Certainly, governments in the region have a difficult task ahead of them as it relates to fiscal balancing in the face of rising food insecurity and growing import bills due to higher fuel prices and the weakness in local currencies.


Households’ incomes worsen and perception on job prospects remain flat leading to a reduction in spending among consumers


The frailty in consumer sentiment observed this month was also reflected across the household indices with majority of them crumbling. After rebounding by a whopping 54 points in March, the country economic conditions retreated by 10 points dropping to 13 from 23. However, on the contrary, the city economic conditions index recovered by a single point after tumbling in March by 8 points. This divergence between the city and country economic conditions indices is a pattern that we have witnessed since February of this year and it surely warrants further scrutinization of data at the individual country level to uncover the driver behind the pattern.


Moving on to the other household indicators, there was a slump in household incomes and expenditures as the purchasing power, personal finance, household income and discretionary spending indices all contracted by 4, 6, 8 and 3 points respectively. Finally, after accelerating by 10 points last month, the job prospects index stagnated at -40 which is an indication of the fact that from an overall regional point of view, businesses have opted to take a much more cautious (“wait and see”) approach with respect to hiring of new workers in the face the prevailing uncertainty.


Consumer confidence in Ghana rebounds while severe flooding and landslides in South Africa cause consumer sentiment to contract


Turning to the countries tracked by our index, consumer confidence in Cameroon maintained its positive momentum experienced since February rising by a single point from 9 to 10. Meanwhile, consumer confidence in Ghana bounced back after being the worst-performer last month as the index gained 7 points following a loss of 6 points in March. Kenya, Nigeria, South Africa and Tanzania all saw their consumer confidence indices decline with South Africa experiencing the largest slip of 19 points.


Following a downturn last month, consumer sentiment in Ghana clawed back its losses as its index rebounded by 7 points. This follows from and improvement in both its index of future expectations and index of current economic conditions both of which expanded by 7 and 6 points respectively. In spite of the ongoing uncertainty, there were certain developments within Ghana that spurred some optimism among Ghanaian households. At the forefront is the Electronic Transfer Levy (E-levy) that was introduced last year as part of the 2022 Budget as a mechanism for raising additional funds to finance the government’s activities. While the tax was initially placed at 1.75%, pressure from the opposition as well as other activist groups due to the implications that the tax would have on the livelihoods of the poor considering their reliance on mobile money transactions resulted in the tax rate being reduced to 1.5% in March.


Moreover, in April, due to the lack of preparedness in some charging entities which were yet to fully integrate their operations with the E-Levy management system, it was decided that the levy would be implemented in phases. This reduction of the E-levy as well as the phased approach to its implementation appear to have led to some positivity among households as suggested by the indices. While the overall sentiment on the general country economic conditions did weaken in April by 3 points, the index on general city economic conditions heightened by 11 points. In addition, the purchasing power, discretionary spending, household income and job prospects indices advanced by 6, 1, 20 and 11 points respectively while the household budget dropped by a single point.


As mentioned earlier, consumer sentiment in South Africa fell furthest in April as the index plummeted by 19 points sliding to -15 from 4. Unfortunately, April turned out to be a disastrous month for the country as it experienced severe flooding and landslides that turned out to be one of the deadliest natural disasters in the 21st century for the country and one of the deadliest storms the country has faced since the 1980s. The floods took place in southern and south-eastern regions of South Africa particularly the provinces of Kwazulu-Natal and the Eastern Cape affecting cities such as Durban and its surroundings. This culminated in the death of over 400 people and led to damages of approximately 17 billion rand (US$ 1 billion) as critical infrastructure was destroyed including major roads, communication lines and electrical systems. As a result, its index of current economic conditions plunged by 22 points while its index of future expectations deteriorated by 17 points.


Similarly, the household indices on the economic and financial situation dwindled in April with the exception of the general city economic conditions index. The discretionary spending, purchasing power, household budget and household income indices all shrunk by 16, 17, 45 and 11 points respectively. Additionally, the job prospects index collapsed by 28 points while the country economic conditions index shed 21 points. Clearly, these floods did indeed have a detrimental effect on South Africa’s consumer sentiment as suggested by the indices.


Retailers should seek to position themselves as economically-friendly brands in light of rising cost of living that is affecting households’ purchasing power


Evidently, the optimism seen in March among consumers was short-lived as it failed to be sustained into this month implying that the Russia-Ukraine war and the lockdowns that were reinstated in China continue to impact African consumers as they are leading to a higher cost of living and causing a lot of uncertainty among households. The indices have shown that household incomes and budgets are worsening and consequently, their purchasing power and ability to spend continues to be curtailed. Furthermore, their perception of the economic situation is also pessimistic with the job prospects index stagnating and the country economic conditions index waning.


On this account, the situation will most likely continue to be difficult for retailers in the short-term. While they are also facing production challenges with limited supply and higher input costs, the fact that households are spending less means that sales are likely to drop particularly for those in the discretionary space. Akin to last month, we continue to recommend for retailers to be lean in their operations as they main objective is survival in the face of these challenges. However, this is also an opportunity for some retailers, particularly those in the FMCG space, to market themselves as “economically-friendly” brands. Retailers in this space could reallocate some of the funds that they had planned to use in activities such as research and development to conduct marketing campaigns with a view to attract “price-sensitive” customers whose primary objective is value for money. Offers such as discounts and buy-one-get-one free can be used to attract these consumers and the funds reallocated from R&D or other capital-intensive activities can be used to cushion the business from any potential losses emanating from the offers. Such a campaign, if effectively designed and executed, can allow retailers to gain some market share and to reposition themselves as an economically-friendly brand who price-sensitive consumers can turn to when times are difficult.


“A key concern that will have a serious impact on the continent is the rising dollar. With the Federal Reserve in the U.S. responding to rising inflation by increasing interest rates, the value of the dollar will go higher vis-à-vis the African currencies. As a result, the financing of U.S.-dollar denominated debt for African governments will pose to be a problem and so to will be the cost of doing business and living. Therefore, governments and businesses must plan accordingly and ensure that there is limited risk posed to them with a more expensive dollar.”


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