Africa’s consumer confidence slips after 2 successive months of improvement

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KASI’s global CCI (Consumer Confidence Index) fell by 4 points from -3 to -7 this month. This was led by the decline in the index of future expectations which dropped to 1 from 7 whereas the index of current economic conditions stagnated at -29.

While the sub-indices of job prospects and discretionary spending remained unchanged this month, all the other sub-indices backpedalled. The largest reversals were in the index measuring sentiment regarding general economic conditions of the country and of the city, both of which plunged by 11 and 8 points respectively. Household income, purchasing power, and personal finance also decreased by 5, 4, and 2 points respectively.

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Consumer confidence in Africa slips on election concerns | www.brandspurng.com

Focusing on the individual countries within the index, Tanzania experienced the worst dip in consumer confidence this month as its index receded by 22 points cancelling all of its gains from last month. Meanwhile, South Africa continued on its recovery path improving by 11 points in September, which was the largest increase of all the 7 countries being tracked.

Despite the path to recovery consumer confidence was moving on for the last two months, it failed to continue as consumer confidence sunk to -7 from -3 in September. The slump in the consumer sentiment index can be credited to the deterioration of the future expectations index which slid by 6 points while the current-economic conditions index did not change.

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With signs of another wave of COVID-19 in several parts of the world including Africa, and the reintroduction of lockdowns in some areas such as regions in Italy and Spain, the future appears to be bleak and this does not bode well for consumers globally.

According to the Africa CDC, as of 22nd October, Africa had reported a total of 1,674,592 COVID-19 cases with 40,493 deaths and 1,380,448 recoveries.

Optimism among households slows in September amidst growing concerns of globally rising COVID-19 infections and upcoming elections in sub-Saharan Africa

September was a disappointing month for households and consumers in Africa. The occurrence of a 2ndwave of infections has negatively impacted their future expectations due to the possibility of reinstated lockdowns. Moreover, upcoming elections in several sub-Saharan countries notably Tanzania, Ivory Coast, and Ghana is causing uncertainty among households and businesses.

As a result, the sub-indices tracking households performed poorly. Households’ feelings of general economic conditions in both the country and city shrunk by 11 and 8 points respectively. Additionally, household income dwindled by 5 points while the household’s purchasing power and personal financial situation diminished by 4 and 2 points respectively.

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In countries with upcoming elections, resources are being redirected from supporting households to the election process and this has affected the financial position of most households as illustrated in the aforementioned sub-indices. Lastly, job prospects and discretionary spending were unchanged in September suggesting that the future for obtaining meaningful work to support large purchases is not as optimistic as it was last month.

South Africa’s consumer confidence maintains its recovery trend while elections cause consumer confidence to wane in Tanzania

Among the 7 countries tracked in the index, South Africa’s consumer confidence witnessed the largest expansion in September rising by 11 points from -34 to -23. Both its future expectations and current economic conditions indices rose by 11 points.

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About 8% fewer households in South Africa expected their income to worsen over the next 6 months. Furthermore, households that claimed inability to meet regular expenses over the next 6 months fell by 13%. Across the various age groups, consumer confidence among millennials advanced furthest by realizing 11 points in September followed by the baby boomers whose confidence grew by 9 points.

Consumer sentiment in the male population outperformed that of females accruing an additional 9 points over the gains of the female population this month. These trends led to heightened consumer confidence in September for South Africa.

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On the contrary, of all countries, Tanzania’s consumer sentiment was the laggard of the month. As a matter of fact, its decline of 22 points in September means that all of the previous month’s progress was quashed. The index of future expectations fell by 25 points whilst the index of current economic conditions fell by 18 points.

Tanzania’s consumer sentiment has been unstable in recent months and this does not help retailers operating in the country. The decline in Tanzania’s index this month can primarily be attributed to the upcoming general elections scheduled for 28th October. Opposition parties have accused the government of curtailing freedom of expression through various forms of threats and repression.

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These actions have led to some instability in the country thus affecting firms and households. In addition, compared to last month, 28% more Tanzanians have claimed difficulty in finding work within the city in which they reside.

Also, between August and September, general country economic conditions have worsened by 25 points while job prospects have fallen by 29 points over the same period. The dubious electioneering process coupled with weakening future outlook hints at a difficult time ahead for Tanzania’s economy.

The pessimistic outlook among consumers means that retailers are still not out of the woods

For the first time in Q3 of 2020, consumer confidence in the continent has declined. The emergence of the 2nd wave of COVID-19 infections has led to fears of new lockdown measures and this has caused a pessimistic outlook for the future. On top of this, the upcoming elections in some Sub-Saharan economies have compounded uncertainty within households which has affected their consumption and spending behaviour.

Given these occurrences, the short-term outlook for retailers is now murky. The key for retailers at the moment is to employ strategies that ensure their survival during this period of unwavering uncertainty while preparing to take advantage of pockets of opportunity once they present themselves.

Despite this, retailers in larger economies such as Nigeria, South Africa, and Kenya can be more optimistic as consumer confidence performed relatively well in September for these economies in comparison to the others.

The slip in consumer confidence this month encapsulates the uncertainty retailers continue facing in 2020. Therefore, for the moment, retailers must strive to survive by utilizing models that will ensure their businesses can weather the storm,said Davies Nyachienga, Economic Intelligence Group at KASI.

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Africa’s consumer confidence slips after 2 successive months of improvement - Brand SpurAfrica’s consumer confidence slips after 2 successive months of improvement - Brand Spur

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