Consumer confidence in Africa heightened in August as the global index advanced by 7 points climbing to -3 from -10. This is on the back of improvements in both the current economic conditions and consumer expectations sub-indices which increased by 5 and 8 points respectively.
Sentiment regarding general economic conditions in the city and country grew by 11 and 13 points respectively after falling last month. Similarly, job prospects reversed the losses of July by earning 6 points this month. Furthermore, the purchasing power, household income, personal finance, and household spending indices all rose this month adding onto their gains in July.
Of all countries tracked by the global index, consumer confidence in Tanzania experienced the largest lift, rebounding by 22 points after declining last month. Cameroon was the worst-performer as its consumer confidence index fell by 6 points from 3 to -3.
Consumer confidence in the continent expanded by 7 points this month climbing from -10 to -3 with the incidence of daily coronavirus cases plateauing or diminishing in several countries including South Africa, the country that was hit hardest during the pandemic. Moreover, with countries easing lockdown restrictions, optimism among consumers on the future economic outlook as well as current economic conditions grew. The consumer expectations index finally moved back into positive territory since the Covid-19 outbreak surging to 7 from -1 while the current economic conditions, albeit remaining in negative territory, ascended 5 points from -34 to -29.
As of 24th September, the number of reported Covid-19 cases was 1,429,704 with 34,839 deaths and 1,175,855 recoveries according to the Africa CDC.
With the daily number of Covid-19 cases falling and economies reopening, households are witnessing a revival in their economic conditions.
The declining rate of daily Covid-19 cases coupled with the restarting of economies and favorable macroeconomic conditions was a boost for households. Both the personal finance and household income indices gained 7 points in August while the purchasing power index rose by 3 points. For the first time since March when the pandemic began, these indices moved back into positive territory. Despite an improvement in household discretionary spending by 4 points, the index still lingers in negative territory as the majority of households continue to spend more of their income on essentials. As businesses reopen, the prospect of individuals obtaining work is rising as reflected by the job prospects index which climbed 6 points this month. Households truly felt that the general economic conditions in August were better. After tumbling in July, the indices tracking economic conditions in the city and in the country rebounded by 11 and 13 points respectively. Similarly, the indices focusing on general economic conditions moved into positive territory after the sharp downturn experienced in March.
Consumer confidence in Tanzania bounces back due to low inflation and reduced Covid-19 fears while weak job prospects cause a slump in consumer confidence for Cameroon.
Of the 7 countries considered in the index, Tanzania’s consumer confidence had the best performance in August. After receding 23 points last month, consumer confidence in the country rallied 22 points. This rebound can primarily be attributed to the increase in the index of future expectations which soared by 28 points while the index of current economic conditions grew by 11 points. Data from the National Bureau of Statistics of Tanzania reveal that the inflation rate between July and August decreased by 0.5% compared to a 0.2% decrease between June and July. This decline is attributed to the drop in food prices including the prices for maize grains and fresh fish. In addition to the lower inflation, Tanzania’s are less concerned about the coronavirus. According to the August Covid-19 pulse report for Tanzania, 82% of the respondents were less concerned about the virus in contrast to the 32% recorded last month.
On the other hand, Cameroon’s consumer confidence sunk furthest falling 6 points from 3 to -3. The future expectations and current economic conditions indices retreated by 5 and 8 points respectively. Unlike in Tanzania where fears of coronavirus are subsiding, Cameroon consumers are still relatively more concerned about the virus as illustrated in Cameroon’s Covid-19 pulse report. The report also shows that finding work in Cameroonian cities has become more difficult with 28% of respondents claiming difficulty in obtaining a job this month in comparison to 19% last month. Consequently, pessimism surrounds household ability to meet regular expenses in Cameroon, and the percentage of respondents claiming inability to meet expenses over the next 6 months rose 5% between July and August. More households also expect that their income will worsen over the next 6 months. As a result, consumer confidence in Cameroon fell this month.
The continued recovery in household spending provides positive signs for retailers in the continent
Although the overall consumer confidence improved for the continent, there were still differences in consumer confidence trends across countries akin to last month. This lack of uniformity doesn’t bode well for retailers especially those with operations in several countries as it presents a great level of uncertainty for their businesses. In spite of this, the outlook appears to be positive for retailers. With economies resuming and individuals returning to work, the income situation for consumers is becoming better and subsequently, consumer expenditure is recovering even for discretionary goods which suffered greatly from the pandemic. Therefore, retailers should position themselves to take advantage of these changes in consumer behavior while taking into consideration developments in the countries where their operations are based.
“While there is yet to be a vaccine for the coronavirus, there is a feeling that we are approaching the end of the pandemic. Buoyancy among consumers is on the rise and as governments continue lifting restrictions, the future appears to be bright for retailers in the continent," said Davies Nyachienga, 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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