Tough economic times are eroding consumer spending and retail confidence in Kenya, and sub-Saharan Africa, research by Nielsen Holdings, a global performance management company, shows.
On average, only a quarter of the 9,500 grocery and kiosk traders in nine countries—South Africa, Nigeria, Kenya, Ghana, Tanzania, Uganda, Zambia, Cote d’Ivoire and Cameroon—were confident that spending in their outlets was rising.
In Kenya, 24 per cent of retailers feel customers are buying more from their stores down from over 30 at the beginning of last year.
“The mounting pressure on consumers’ wallets has constrained consumer spending in-stores. In Quarter 1, 2015, on average, 29 per cent of SSA retailers, felt that spend in their stores was increasing, by Quarter 3, 2015 this had dropped to 26 per cent, and has now fallen to less than 24 per cent of retailers who view spend on the increase,” the third edition of African Prospects for Quarter 3 of 2016 reads.
The survey, which provides market intelligence on the performance of consumer packaged good manufacturers and retailers, says consumer confidence in Africa has dropped in line with poor macro-economic conditions hitting South Africa, Nigeria and Zambia hardest.
“The 3rd Edition of Nielsen’s Africa Prospects Indicator (APi) Report shows that for Africa, 2016 is proving to be ‘The Year of Change’ with a fair degree of re-forecasting required from a growth point of view due to the at times volatile nature of the 26 African markets under review,” Nielsen head emerging markets thought leadership Ailsa Wingfield said.
In Nigeria, following the slump in oil prices, fuel and power supply issues as well as the foreign exchange crisis things have worsened. The Naira devaluation has forced cost of goods to shoot up.
Economic uncertainty in South Africa coupled with political tension and lower business and consumer confidence have slowed investment in the continent’s most industrialised economy.
In addition, rising inflation due to severe drought, high unemployment, a weakened currency and increased lending rates have put a squeeze on disposable income.
A weak Kwacha, a six-year low in copper prices, increasing power outages and El Nino-related poor harvests have piled pressure on consumers in Zambia whose inflation rate reached an all-time high in Quarter one 2016 of 22.9 per cent.
Kenya, which has managed to maintain its currency at Sh100 against the dollar for almost a year now has also contained the rate of inflation, which stood at 6.26 per cent last month, partly helped by the low petroleum prices and stable prices of agricultural produce.
In fact, Nielsen’s three indicators for consumer prospects—positive outlook for jobs in the next 12 months, favourable personal finance sentiment and immediate-spending intentions—shows Kenya’s prospects tanked in the third quarter of last year but are rebounding.
Cote d’Ivoire, Kenya and Tanzania maintain the first, second and third place respectively on the latest prospects ranking and currently provide more stable investment destinations than the larger economies of Nigeria, South Africa and Angola that have commodity issues.