November 23, 2020
November 23, 2020, 12:00 PM --
In the past month of October, Kasi CCI remained stable at -9. This was because the 1-point increase in the Index of Consumer Expectation (ICE) was offset by a 2-point fall in the Index of Current Conditions (ICC).
Current conditions take a turn for the worse but social issues force the Ministry of Education to keep schools running
Sentiment regarding current conditions dropped suddenly right when the first COVID-19 case was recorded back in March. After an all-time low of -56 recorded in April, the index has slowly been showing higher readings month over month. The largest increase was observed between August and September when the index went from-47 to -38; however, now that conditions have taken a turn for the worse this month, the decrease to -40 may only be the start. As a result of restrictions becoming more lenient with the partial reopening of schools, at least 35 schools across the country have already reported positive coronavirus cases amongst both teachers and students.
Despite mass testing, because most people who have contracted the virus are not showing any symptoms, the spread of the virus is becoming hard to control. Aside from the reopening of schools, bars were allowed to open, and the curfew was also pushed back to 11 pm. The increase in economic activity has come at the cost of Kenyan lives. Currently, the infection rate stands at 18%, with a new record of 100 deaths in a week. According to the World Health Organization, Kenya ended October with 52 612 COVID-19 cases.
While many argue for schools to close, the ministry of education stands its ground with keeping schools open and there is a very important reason behind it. Ever since schools closed down as a result of the pandemic, there has been a drastic increase in the number of teenage pregnancies, child marriages, and cases of Female Genital Mutation (FGM), a practice that’s been long banned but still practiced by a number of tribes. According to KASI’s COVID 19 Pulse data, our respondents share the same fear. When asked what some concerns they have were regarding the current situation, they listed the following: gender-based violence, boys and girls dropping out of school, fears of increased unplanned youth pregnancies, and youth struggling with alcohol or drug abuse.
Rising food prices up the pressure as Kenyans gear up for the much-dreaded second wave of the pandemic
In comparison to September where people had begun to feel like the worse of the pandemic was over, in October respondents are of the opinion that the worse has just hit them. In our survey, 47% of respondents think that the worst of the crisis happening right now and there are still 17% who think that the worse is yet to come. With the number of cases rising each day, that worry might just be justified. Despite some previous indications that Kenyans have become lax with taking precautions seriously, our data indicate that only 3% of our respondents haven’t taken to practicing any prevention methods. The majority of them adhere to one or more methods of prevention such as frequently wearing masks, washing their hands, and practicing social distancing.
In addition to growing health concerns, food prices are also increasing. In October, inflation rose to 4.84% up from the 4.35% observed in September according to data from the Kenyan National Bureau. According to the Kasi CCI sub-index, Kenyans are still only just making ends meet with the propensity to spend on discretionary goods remaining low, the expectation for household income to fall, and the falling sentiment regarding job prospects. Currently, a major concern regarding the spread of the virus is amongst those who are the least affluent. In Nairobi, 60% of the population lives in slums where urban crowded settlements with poor sanity conditions have become a breeding ground for the virus.
External assistance and Kenyan’s cooperative savings provide hope for those suffering to make ends meet
Despite the sudden sharp rise in cases, sentiment remained stable this month and did not plummet back to the low negatives. External aid from the World Food Program is providing aid for more than 400 000 people in Nairobi and Mombasa. Furthermore, Kenyans have the largest cooperative savings and loan movement in Africa. These cooperatives provide loans that help children go back to school and also help some people start businesses. Kenya Cooperative Coronavirus Response Committee said they have helped 44,000 people. They have also put together a co-op kit with some basic food items for vulnerable households which also provides them with sanitizers and soap to help prevent infections. The hope is that aid will continue as Kenyans ride out the second wave such that sentiment doesn’t drop back to the levels it was at when the pandemic first struck.
Muted confidence doesn’t bode well for businesses looking forward to the holidays
With Coronavirus concerns still stealing the show and money being as tight as ever, the holidays may not be as festive this year. Consumers expect to spend less on discretionary purchases and more on necessities. This doesn’t look good for many businesses looking to profit off of bulk Christmas shopping that takes place around this time of the year every year. Already, retail giants Kenya and Carrefour have begun promoting their giant flash Black Friday sales, and discounts are going as high as 90%. Jambo Shoppe is also encouraging online sales hoping that consumers will take to the additional deals being promoted. The idea here is that since physical shopping has become a concern, many consumers might choose to shop online instead and additional sales may encourage that. However, with the current economic situation and the fact that online shopping didn’t become very popular in Kenya despite the pandemic, the holiday season is shaping up to be a challenging one for retailers.
By Tanya Gandhi, 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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