In stark contrast to preceding quarters of decline, consumer sentiment in Kenya is on the rise in the latest Nielsen Consumer Confidence Index (CCI) results for Q1, 2018, having gained eight points to 102.
Looking at the East African outlook, Nielsen East and South Africa MD Bryan Sun comments; “Consumers are feeling more upbeat in light of the political situation settling down, GDP strengthening and the country emerging out of a period of drought. The private sector also has a more positive outlook and the economy is opening up, with the entry of international retail chains in the country, bringing in more investment and having an overall positive impact on the economy. Coupled with government initiatives around manufacturing, universal healthcare, affordable housing and food security; consumers are hopeful of better prospects this year, which is reflected in their confidence levels.”
This has resulted in an increase in positivity towards job prospects among Kenyans, from 42% to 49% and an upturn in immediate spending intentions to 49% of Kenyans who say now is a good or excellent time to spend, versus the 44% who said it was not. Within this context, sentiment around personal-finances unsurprisingly rose by eight percentage points to 67%.
Kenyans are also not shying away from spending, with 27% saying considering the cost of things today and their personal finances this is the time to buy the things they want/need, an increase of four percentage points over the previous quarter. This is despite only 26% saying they have spare cash which is down 11 points from the previous quarter’s 37%.
According to Sun, this stems from the fact that consumers are more optimistic about the future. “The uncertainty of last year is receding and we are seeing a reverse trend from where consumers were holding on to spare cash as they were cautious. The positive outlook for the economy and prospects is encouraging people to loosen their purse strings and will hopefully translate to actual spending.”
Looking at their spending patterns once they have covered their essential living expenses, the majority of Kenyans (94%) put their money into savings, proving that the savings culture is alive and well in East Africa, a cautionary mindset which is perhaps a lingering effect of recent market uncertainty.
Kenyans who have spare cash are also looking to consolidate their long-term financial security, with 74% investing in shares/mutual funds. Long-term investment is also evident in their desire to enhance the value of their existing property assets with 85% saying they would spend their spare cash on home improvements/decorating.
“The Kenyan consumer is hopeful of a brighter future. Now the challenge is bridging this gap. Where sentiment is ahead of actual means, one needs to provide the consumers value for every shilling that they spend,” says Sun.