Consumer sentiment in Africa improves slightly at the start of Q4 2021

But consumers focus on saving their income rather than spending it means a challenging holiday period for retailers in Africa


  • Akin to last month, Kasi’s global CCI advanced modestly by a single point in October maintaining the optimism observed in recent months. Despite this, there was a divergence in the index of current economic conditions and the index of future expectations with the former dropping by 3 points and the latter rising by 2 points.
  • The household indices also posted mixed results in October. Whereas the household income, city economic conditions and country economic conditions indices all rose during the month, the purchasing power, personal finance, discretionary spending and job prospects indices fell.
  • Focusing on the countries tracked by the index, consumer confidence in Ivory Coast, Kenya and Nigeria heightened with Kenya experiencing the largest gain of 11 points while Cameroon, Ghana, South Africa and Tanzania witnessed a downturn in their consumer confidence indices with Tanzania’s declining furthest by 12 points.

Consumer sentiment in Africa continued the positive path seen in the previous two months as Kasi’s global CCI index increased by a single point climbing to 12 from 11. However, there was a disparity in the changes of the sub-indices that form the global CCI with the index of current economic conditions decreasing by 3 points and the index of future expectations progressing by 2 points.

There was some turmoil in the continent in October that led to the current economic conditions being unfavorable. For example, in South Africa, there were protests in Johannesburg because of the economic policies being enacted by the government as South Africans felt that the said policies were not going to enable the unemployed to obtain decent work with decent pay.

Meanwhile in Nigeria, protests over police brutality related to the #EndSARs (End Special Anti-Robbery Squad) that have been going on for a year affected economic activity. Such protests were witnessed across the continent in October for a myriad of reasons ranging from economic policies, police brutality and military coups. Due to these events, households were pessimistic about the current economic conditions in the continent lest we forget the ongoing Covid-19 pandemic that continues to derail economic recovery.


Households report a reduction in expenditure in spite an expansion in their incomes

The mixed performance in the index of future expectations and current economic conditions was also mirrored in the household indices. Households reported an improvement in their incomes as the household income index moved up by 3 points from 33 to 36 reaching the same level as index’s all-time high recorded in December 2016. There was also positive sentiment across households regarding the general city and country economic conditions as these indices ascended by 5 and 3 points, respectively. Both these indices have been on an upward trajectory since May 2021. Conversely, the job prospects index erased all its gains in September as the index tumbled back down to -47 from -51.

After rebounding in September, the purchasing power index slipped by 2 points while the personal finance index maintaineda downward trend from September, losing an additional point. Lastly, after stalling in September, the discretionary spending index dropped by 2 points this month. So far in 2021, the job prospects index has oscillated within an 8-point range (between -43 and -51)and it has fallen lower in the latter stages of the year. This pattern is an indication that, at an overall level, the prospects for employment in the continent remain subdued and are yet to recover fully to the pre-Covid (2019) levels.

Consumer confidence in Kenya soars as the country lifts all Covid-19 restrictions while Tanzania experiences a reversal in its consumer sentiment

Turning our attention to the countries followed in our index, Cameroon, Ghana, South Africa and Tanzania where the laggards of the month with Tanzania posting the worst performance while Ivory Coast, Kenya and Nigeria all saw their consumer confidence indices heighten with Kenya having the largest growth.

Tanzania experienced a deterioration in its consumer sentiment after being the best-performer last month along with Cameroon which also shed points in its index although to a lesser extent. In fact, Tanzania’s CCI crumbled by 12 points sliding to 5 from 7 hence wiping out all its gains from September. Its index of future expectations and index of current economic conditions followed suit as these indices dipped by 11 and 16 points, respectively. Examining its household indices, there was a mixed performance across the board. On one hand, indices trailing spending behavior and the income situation across households in Tanzania all faltered. The discretionary spending index went through its sharpest downturn since we began tracking Tanzania as the index collapsed by a whopping 57 points causing the index to slide back into negative territory. In similar fashion, the household spending, household income and personal finance indices decreased by 26, 5 and 30 points respectively. This decline can be attributed to the fact that the inflation rate for key household products expanded. According to Tanzania’s National Bureau of Statistics (NBS), the inflation rate for transport items rose by 5.6%, clothing items by 4.9%, restaurants and accommodations services by 5%, and recreational items by 3.7%. On the other hand, the job prospects index swelled by 27 points climbing to -55 from -82. This was also the case for the city and country economic conditions indices which improved by 6 and 1 point(s) respectively. Tanzania finally ratified the Agreement on the African Continental Free Trade Area (AfCFTA) as well as implementing a TSHS 3.6 Trillion (approx. USD 1.56 billion) Economic Recovery Plan both of which may have led to optimism among Tanzanian households especially in terms of job prospects.

Among the group of countries which recorded a surge in their consumer sentiment, Kenya led the pack. Its consumer confidence index soared by 11 points rising to 17 from 6 while its sub-indices on current economic conditions and future expectations also escalated by 10 and 11 points respectively. In October, Kenya lifted all Covid-19 related restrictions including the curfews and restriction of movement of people across certain parts of the country which had seriously affected the operations of businesses particularly those in the hospitality sector. Consequently, there was great jubilation across the country given that Kenyans were now able to resume to the lifestyles they were accustomed to before the pandemic. This euphoria was reflected in the country’s household indices all of which flourished.

Interestingly, the discretionary spending, household income, city economic conditions and country economic conditions indices which advanced by 11, 14, 14, 14 points respectively, all attained the highest-level ever recorded since their inception. The household spending and personal finance indices also strengthened by 8 and 4 points respectively while the job prospects index in Kenya grew by 10 points however, similar to the overall global job prospects index discussed earlier, it remains to be weak.

Weakened job prospects have led to households saving rather than spending hence retailers may face a disappointing last quarter

Despite households reporting an increase in their income during the month of October, it is evident through the spending indicators - the household spending and discretionary spending indices - that, the additional income which households are receiving is not being spent on consumption as both these spending indices have declined this month. Instead, households are saving the additional income they are currently earning, and this is an observation that could be explained by the weakened job prospects index. A weakened job prospects index means that, majority of African households, of which most are employed in the informal sector and are usually casual labourers, believe that they face will face difficulty in obtaining work in the future. Due to this, it is necessary for them to save the additional income they are earning now in case they do not find work in the future thereby foregoing current consumption in favour of saving for the future.

Certainly, this does not fair well for retailers in all spaces, especially as we head into a season where traditionally spending on consumer products would be higher. As a result, revenues and income for retailers may not be at the same levels as they usually are during this season. Therefore, retailers must effectively and efficiently manage their operations to ensure that they are not overstocked as this may add to their costs thus affecting their bottom-line. Nevertheless, it is critical to consider the context within which they operate. For example, retailers in Kenya should expect greater consumption during the holiday season compared to retailers in other parts of the continent where sentiment is depressed.

“As we approach the Christmas shopping season, we must pay attention to consumer sentiment especially with the emergence of the Omicron variant because a resurgence of cases will once again affect business operations which will have a negative ripple effect on households and their behaviour.” Davies Nyachieng'a

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