Consumer confidence in Kenya continues to rebound as people adjust to the new normal

Updated: Oct 5, 2020

  • KASI CCI is up 5 points in August led by an increase in the index of consumer expectation. The index of current conditions saw a 4-point fall this month.

  • COVID-19 continues to affect the job sector as unemployment continues to rise.

  • Theft and corruption cause a dip in consumer sentiment regarding current conditions and protests may have become a breeding site for the virus.

Once the chatter of children, now the clucking of chickens...

In August, Kasi’s CCI increased 5 points to -16 from the -21 value of the index recorded in the month of July. While hampered by the 4-point decrease in the index of current conditions which fell from -43 to -47, the 9-point rise (from -12 to -3) in the index of consumer expectation led the overall positive change in the CCI.

Kenyans are continuously hopeful about the overall conditions in their country and cities as both indexes saw an 18-point jump. While cases of COVID-19 cases have increased significantly in the last month, health officials have reported that strict measures for social distancing has allowed the infection rate to be manageable. Kenya recorded 33 016 cases on the 26thof August and recoveries were at 19 296.

COVID-19 continues to take away the livelihoods of many Kenyans as July’s retail chains’ closures are followed by the closing down of hundreds of private schools

While a six-point increase in KASI’s job prospect sub-index was seen, the index value remains at a very low negative value of -64. Kenyans are only confident about meeting daily expenditures without any hope of making discretionary purchases in the coming future. With the pandemic turning more into an economic problem than it is a healthcare one, more and more Kenyans are losing their only sources of income.

A sector taking a significant hit is the private school sector. Currently, 133 private schools have been forced to shut down permanently, sending 95% of more than 300 000 private school staff on unpaid leave. 2 private schools, Mwea Brethren School and Roka Preparatory have been forced to turn their schools into farms, rearing chickens and growing vegetables respectively to stay afloat. This has had its ripple effects in other industries as well.

Jibran Queishi, Standard Bank Head of Africa Research expressed that damage in the job market due to COVID-19 may have prolonged effects as those who have lost their jobs may not immediately be able to find jobs post – COVID-19 – whenever that may be. In fact, another industry sinking is the manufacturing industry. With contraction in consumption for products of all kinds such as the lack of demand for education supplies and school equipment due to school closures, there is less and less work. Chairman of Kenya Association Manufacturers, Muchai Kunyiha says that the entire sector may not employ new staff anytime in the near future as redundancies have become a new norm.

Uncertainties in the current government and unrest in the health sector could be a key contributor to the dip in sentiment regarding current conditions

With the number of COVID-19 continuing to rise, pressure continues to build up in the health sector. Doctors have gone unpaid and hundreds of them are getting infected as well. Currently, in Kenya, more than 700 health workers have been affected by the virus and 10 killed. Moreover, due to the infection rate, there is a lot of pressure on insurance companies as well. As a result, insurance was cut in July. The frustration amongst healthcare workers reached its height when a television expose accused business leaders and government officials of corruption. This new circled the allegation that they were responsible for stealing about $400 million that was allocated to help fight the pandemic. Moreover, thieves who were reported to steal equipment hadn’t even been brought to justice. Protests have begun concerning health authorities as they have become a breeding site for the virus and the fear is that through these protests, the infection rate will peak once again.

Consumers in Kenya still don’t take to shopping online, public gatherings are still few and the entertainment industry still suffers

Virtual shopping never really took over in Kenya and physical shopping remains king. While true, as seen in the KASI COVID-19 Pulse Dataset, people are beginning to frequent stores less often and fewer people are citing “bulk buying” as a lifestyle habit. As the pandemic situation becomes the new norm, more and more people are adapting in many different ways but moving to e-commerce isn’t one of them. The entertainment industry continues to take a hit as bars and clubs remain closed, theatres continue to remain unattractive and tourism isn’t an expense many can afford.

Moreover, with the alcohol ban extended another 30 days, it is expected that the industry will take a serious hit. Not only is it expected to cost billions in terms of lost tax revenues, but it is expected to “lead to supply chain losses of Sh9.1 billion and 57,000 job losses between July-September 2020” according to the Alcoholic Beverages Association of Kenya.

By Tanya Gandhi, 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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