Kenyan consumer spending slowed between July and September this year amid worsening economic conditions and a gloomy economic outlook.
The Nielsen Consumer Confidence Index (CCI) score for the period dropped 10 points from previous quarter to 94, revealing a volatile consumer mind-set and underlying uncertainties.
“Consumer confidence was upbeat at the beginning of the year. This was due to the political situation settling down, GDP strengthening and the country emerging out of a period of drought,” says Nielsen Sub-Sahara Africa managing director Bryan Sun.
“However, since no major impact has been felt on ground, consumers are readjusting their expectations.”
This, coupled with the recent increase in fuel prices, he said led to a surge in the cost of consumable commodities and the prolonged cold season affected agriculture and led to price increases for certain items.
“As a result, consumer spending power has weakened with a resultant dampening of overall consumer sentiment,” he said.
According to the survey, 58 percent of Kenyans polled described the state of their personal finances over the next year as excellent or good—down by 11 points from the second quarter of the year.
A further 37 per cent described as “not so good or bad”, up from 23 per cent in the previous quarter.
“There is also a less positive outlook in terms of Kenyan consumers immediate-spending intentions, which has fallen to 22 percent of respondents (down from 31 per cent in quarter 2) who say now is a good or excellent time to purchase what they need or want,” says the study.
However, the view around job prospects has remained stable with the same number as the previous quarter (44 percent) viewing them as excellent or good and almost half (49 percent) considering them as not so good or bad.
The study show only 33 percent of Kenyans have spare cash to spend although this is up from the previous quarter (29 percent), while the majority (67 percent) said they lacked cash to spend.
Once essential expenses are met, spending priorities shift with the highest percentage (85 percent) spending on home improvements, followed by putting it into savings (79 percent), and investing in shares and mutual funds (74 percent).
Healthcare concerns have come to the fore with 60 percent saying they would spend spare cash on paying medical insurance premiums.