‘What goes up must come down’ applies to Kenya’s latest Nielsen Consumer Confidence Index score (Quarter 4, 2016), which has dropped 11 points from the previous quarter to 109. It should be noted, however, that this is still a positive result, as it is above the 100-point level which indicates overall optimism within the CCI and is despite the drought situation in the country, which has resulted in rising food prices.
Nielsen East & West Africa MD Abhik Gupta adds further context; “Compared with some of the more volatile economies in Sub-Saharan Africa, the Kenyan economy is growing at a relatively strong and stable rate, with GDP growth of 6.2%, and Kenyans are generally feeling positive about the future. However, in the fourth quarter, growth and projections for 2017 slowed, fuelled by the implementation of capped interest rates, rising food inflation and unemployment concerns, particularly among the young. Nearly one in every five Kenyan youths of working age is unemployed.”
This means that after robust gains in the third quarter, immediate-spending intentions declined most, dropping 11 percentage points to 42% of respondents who said now is a good or excellent time to spend. Personal-finance sentiment returned to second-quarter levels, declining six percentage points to 66% favourable, and the outlook for jobs declined for the second consecutive quarter, dropping four percentage points to 52%.
In terms of what they would use their spare cash for, the highest number of Kenyans are seeking to bolster their financial future, with 85% saying they would put it into savings. As with previous quarters, enhancing the value of tangible assets remains a priority, with 79% set to use their spare cash on home improvements and decorating. Long-term financial security also remains a concern, with 67% investing in shares/mutual fund.
Looking to the future Gupta adds; “It's important to realise that the set of factors influencing confidence are multifaceted and go beyond economics and business. There continues to be wide variation in confidence across countries, as confidence is affected more by local conditions than global ones.”
In line with this, and despite the drop in its CCI score, Kenya remains the top-ranked prospect in Africa, based on the Nielsen Africa Prospects Indicator (APi), which integrates macroeconomic, business, retail and consumer factors. Within that overall APi ranking; Kenya is first on the Macro Index which factors in economic growth performance, in relation to the size of the economy and second on the Business and Consumer indices.
Overall, The World Bank forecasts Kenya’s 2016 GDP growth at 5.6%, a robust performance against the 1.5% average for SSA. Strong agricultural output, a resurge in tourism, as well as increased FDI resulting in infrastructure projects has also created Kenya’s far more diversified economy which bodes well for its future prospects. In addition, a positive build up to the elections in August, 2017 will also help to stabilise and improve CCI in the next quarter.
Courtesy: Nielsen Africa (@NielsenAfrica)