Consumer confidence stumbles in March amid growing fears on the macroeconomic outlook

Updated: May 20


April 28, 2021, 18:00 PM--

  • KASI’s global CCI slipped once again this month by 4 points following a deterioration of the index of future expectations which fell by 7 points while the index of current economic conditions improved by 2 points.

  • The general economic conditions in the country index experienced a drastic decline of 38 points attaining the lowest level recorded for the index since its inception. Meanwhile, the purchasing power, job prospects, and discretionary spending indices rose by 2,2 and 1 point(s) respectively. The remaining indices on general city economic conditions, personal financial situation, and household income stagnated.

  • Ghana and Tanzania were the only countries to record an increase in their consumer sentiment in March with Ghana having the largest gain of 8 points. All the other countries tracked witnessed a fall in their consumer confidence indices with Nigeria undergoing the biggest drop.


Consumer confidence in Africa continued on a downward trend in March as the index contracted by an additional 4 points after receding in February. Despite an increase in the index of current economic conditions, the magnitude of the drop in the index of future expectations outweighed this increase causing the overall global index to decline. The index of current economic conditions rose by 2 points while the index of future expectations sunk by 7 points.


It has now been a year since the pandemic struck the continent and unfortunately, we are still not out of the woods - as it stands, the continent has recorded over 4.5 million cases with over 120,000 deaths. To make matters worse, the current inequity in vaccine distribution between the north and south is an indication that inoculation will be protracted. This in turn means that economic activity will remain subdued which is bad news for all economic agents especially governments.


In the African Economic Outlook 2021 by AfDB, several countries in the continent are experiencing grave debt vulnerabilities which, even though these vulnerabilities were present prior to the pandemic, have been seriously exposed as a result of the pandemic. With weakened economic activity - hence lower tax receipts - and depreciating currencies, the ability of governments to finance existing debt obligations is in question. As such, there is the need for governments and their creditors to develop mechanisms and utilize available tools to enable governments to adequately manage their debt obligations and avoid economic catastrophe. As it stands, the coping mechanisms at play are not sufficient to enable governments to have enough resources required to support households and businesses, therefore, causing the negative sentiment.


Poor general country economic conditions in the continent are a primary concern among households.


The sub-indices tracking economic and financial situations for households posted an underwhelming performance in March which is a reflection of the slump in the global CCI. Households indicated modest increases in their purchasing power, job prospects, and discretionary spending as these indices climbed by 2, 2, and 1 point(s) respectively. Furthermore, the personal financial situation, household income, and general city economic conditions indices stalled at the previous month’s level. Rather strikingly, the index on general country economic conditions encountered its largest-ever single month downturn as the index dipped by 38 points. Consequently, the index fell to the lowest level ever recorded since the inception of the index at -28. Prior to this, the lowest point for the index was at the onset of the pandemic in April 2020 when it fell to -26. This severe decline in the general country economic conditions index reinforces our earlier discussion on the negative outlook among households on the ability of governments to manage the economy in light of the existing debt vulnerabilities.

Consumer confidence in Ghana moves into positive territory for the first time since November 2018 while Nigerians report a negative outlook.


Apart from Ghana and Tanzania, all the other countries tracked in our index observed regression in their consumer confidence indices. Nigeria was the worst-performing country in March as its index crumbled by 13 points from 27 to 14. Its index of future expectations plummeted by 14 points while its index of current economic conditions contracted by 7 points. The macroeconomic situation in Nigeria has been strenuous. Inflation in the country hit a 4-year high rising by more than 18% in March with food prices up almost 23%. The country continues to struggle with the fall in the price of oil, its main export, as well as a weak local naira currency which is increasing the cost of imports. According to the Lagos Chamber of Commerce and Industry, it is critical for the government to tackle several key issues including high transportation costs and the rising cost of energy and logistics. Additionally, a rise in unemployment has affected the country. The poor state of the Nigerian economy can be seen in the sluggish performance in the sub-indices focusing on Nigerian households’ economic and financial situation all of which disintegrated in March. Similar to the global sub-indices, Nigeria’s index on general economic conditions for the country also slid by 30 points.


Ghana’s consumer confidence registered the largest increase among the countries tracked. Its overall index advanced by 8 points from -5 to 3 making it the first time for the index to move into positive territory since November 2018. The index of future expectations also rose by 8 points (from 5 to 13) while the index of current economic conditions climbed by 6 points (from -28 to -22). In March, the Ghanaian government issued its first post-Covid Eurobond of $3 billion at an average rate of 8 percent to meet its financing needs. Moreover, the government signed a bilateral trade agreement with the United Kingdom estimated to be worth $1.6 billion in one of the latest bilateral trade deals since Britain left the EU. This agreement is suggested to provide better market access opportunities for banana, cocoa, and tinned tuna producers in Ghana given the removal of tariffs. Also, according to AfDB, favorable gold and cocoa prices, and a budding recovery in construction and manufacturing will be key to sustaining economic growth in Ghana. As a result, all the sub-indices looking at the economic and financial situation for households heightened in March apart from the general economic conditions in the country index which, akin to the global trend, faltered.


‘Value for money' will be a key consideration for consumers in the midst of a fragile economic situation.


What is clear from the analysis thus far is fact that households are extremely concerned about the general economic conditions in their countries. These concerns have led to an overall pessimistic outlook for households and will certainly elicit changes in the behavior of consumers. The key consideration among consumers especially in the face of dampened economic prospects will be ‘value for money'. At the moment, every cent counts. So, brand loyalty may not be a priority for the majority of the consumers in the continent. Therefore, retailers shall have to tailor their marketing strategies in a manner that provides value for money to their prospective customers meaning products that satisfy the consumer's needs and wants at a reasonable price, and that is easily accessible and effectively promoted. In terms of accessibility, retailers need to continue tapping into various eCommerce and digital strategies including e-payments given the ongoing pandemic as there will be a segment of consumers who are wary of physical transactions.



“Any additional funding received by countries must be effectively allocated to support and cushion the small informal traders who are the backbone of the continent’s economy. The evidence thus far suggests that this has not been the case. Until this situation is rectified by the relevant actors, the lives and livelihoods of the most vulnerable will be in great danger.”

By Davies Nyachieng'a, Economic Intelligence Group at KASI.


#Covid19 #Economy #Kenya #Cameroon #Nigeria #Ghana #IvoryCoast #Tanzania #SouthAfrica

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