NAIROBI – Consumer confidence in East Africa’s lead economy is falling, a new study has shown.
Kenya’s latest Nielsen Consumer Confidence Index score for Quarter 3, 2018 has dropped a steep 10 points, since the previous quarter, to 94, revealing a volatile consumer mindset and underlying uncertainties.
Nielsen Sub-Sahara Africa MD Bryan Sun comments; “Consumer confidence was upbeat at the beginning of the year. This was due to the political situation settling down, GDP strengthening and the country emerging out of a period of drought.
“However, since no major impact has been felt on ground, consumers are readjusting their expectations. This, coupled with the recent increase in fuel prices, led to a surge in the cost of consumable commodities and the prolonged cold season affected the agricultural sector and led to price increases for certain items. As a result, consumer spending power has weakened with a resultant dampening of overall consumer sentiment.”
This subdued sentiment is reflected in 58% of Kenyans describing the state of their personal finances over the next year as excellent or good – down by 11 points from Q2’18 – and 37% as not so good or bad, up from 23% in the previous quarter. There is also a less positive outlook in terms of Kenyan consumers immediate-spending intentions, which has fallen to 22% of respondents (down from 31% in Q2) who say now is a good or excellent time to purchase what they need or want.
The view around job prospects has remained stable with the same number as the previous quarter (44%) viewing them as excellent or good and almost half (49%) considering them as not so good or bad.
On whether Kenyans have spare cash to spend, only 33% said yes, although this is up from the previous quarter (29%), while the majority (67%) said no. Looking at what their spending priorities are once they meet their essential living expenses, the highest percentage (85%) would spend it on home improvements, followed by putting it into savings (79%) and investing in shares and mutual funds (74%).
Healthcare concerns have come to the fore with 60% saying they would spend their spare cash on paying medical insurance premiums. Personal needs and wants have become secondary choices, with only 49% saying they would spend their spare cash on new clothes and 48% on out of home entertainment.
Elaborating on these results, Sun says, “We see the return of a cautious mindset. Kenyan consumers agree to having more spare cash compared to the last quarter but their willingness to spend has declined. This happens when consumers are uncertain of the future. In such times, only those who provide true value and full worth for the consumer’s spend will succeed.”