With Kenya having passed the second peak in the country’s COVID-19 pandemic during November 2020 and the accompanying successful mitigation of case numbers and deaths; the NielsenIQ Consumer Confidence Index (CCI) for Quarter 4, 2020 saw a slight improvement of 1 point to 98, albeit it with pockets of sign improved sentiment.
NielsenIQ Managing Director East Africa Faith Wanderi comments; “Consumer sentiment understandably improved in the last quarter of 2020.
Most notably, in terms of longer-term outlook on personal finances and job prospects. However, the daily reality faced by Kenyan consumers including highly constrained disposable income has also led to a resultant focus on reducing household expenditure.”
The latest CCI data reveals that 34% of Kenyans think their job prospects will be excellent or good, down five points from the previous quarter. They are also fairly optimistic about the state of their finances over the next 12 months with a four point increase to 52%% of those who say they’ll be excellent or good versus Quarter 3, 2020.
Within this context, there is also an increasing propensity to purchase amongst Kenyan consumers – up two points to 21% to say now is an excellent or good time to buy what they need/want.
In terms of disposable income, 28% of Kenyans say they have spare cash, up by seven points from the previous quarter. Once they meet their essential living expenses, the highest number say they spend their spare cash on savings (74%), followed by 71% on home improvements and 61% percent are looking to secure their future by investing in stocks and mutual funds.
The current environment has also caused Kenyans to tighten their financial belt, with 65% saying they have changed their spending to save on household expenses compared to this time last year, up just one point from the previous quarter.
The top action Kenyan consumers have taken to achieve savings is looking for better deals on loans, insurance and credit cards (55%) followed by 54% spending less on new clothes and 52% spending less on out of home entertainment
Looking to the future, the biggest concern for Kenyans over the next 12 months is 16% about their work life balance followed by increasing food prices (15%), followed by and 13% saying they are concerned about their children’s education and welfare
Long term promise, short term challenges
Elaborating on the overall Kenyan CCI results, Wanderi says; “Despite Kenya coming in as the top future prospect in Nielsen’s latest Africa Prospects Indicator (APi) report; short term challenges remain with the World Bank projecting that the economy will have contracted by between 1 and 1.5 percent in 2020, as ongoing COVID-19 containment measures and behavioural responses restrict activity in Kenya and its trading partners.
“Against this backdrop, retailers will have to move quickly to assess factors such as product assortment for constrained retailers and consumer wallets, as well as determine optimal pack options, providing smaller sizes and cash outlays for constrained shoppers, and value for money/ family sizes for insulated shoppers.”