Kenyan consumer confidence experiences the side-effects of Covid-19
Given the current global Covid-19 storm sweeping the world, Kenyan consumer confidence for quarter 2, 2020, was unsurprisingly down 11 points to 88 - a significant drop from what we have seen in the past for Kenya, as per the latest Nielsen Consumer Confidence Index (CCI) survey for quarter 2, 2020.
Nielsen East Africa MD Faith Wanderi comments: “Before the Covid-19 lockdown Kenyan food inflation rose from 1.1% (Q1’19) to 10.6% (Q1’20) with sharp declines in household spending in March and April 2020. The implementation of certain lockdown measures, with restrictions on road, rail and air movement, aimed at curtailing the spread of the Covid-19 pandemic, has undoubtedly had a significant impact on consumer sentiment.”
Evidence of this seen in the Quarter 2, 2020 CCI results is that immediate spending intentions declined, with only 15% of Kenyans saying now is a good or excellent time to purchase what they need or want - down from the previous quarter’s 24%. Kenyan outlook around their personal finances for the next year has also seen a substantial 20-point drop to 34% and only a quarter of consumers have a favourable view of their job prospects in the coming year, down by 11 points compared to the previous quarter.
In terms of disposable income, 20% of Kenyans say they have spare cash, down by 7% from the previous quarter.
Once they meet their essential living expenses, the highest number say they spend spare cash on home improvements (79%), followed by putting it into savings and investing in shares and mutual funds (both at 67%). However, we have seen a significant drop of 13% for those who would put spare cash into savings compared to the previous quarter. 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 from the 58% recorded in the previous quarter.
The top action they have taken to achieve savings is delaying the replacement of major household items (68%) followed by looking for better deals on loans/insurance/credit cards (62%), spending less on new clothes (57%) and cutting back on out-of-home entertainment (55%).
Looking to the future, by far the biggest concern of Kenyans over the next 12 months is increasing food prices followed by work/life balance and the economy. Elaborating on the overall Kenyan CCI results, Wanderi says, “As consumers spend more time under the pandemic induced restrictions, we have seen consumers adopt new behaviours, many of which we can expect will continue even post the pandemic. Manufacturers and retailers will need to adopt a range of agile and innovative responses that meet the new shopper reality amidst this sea of consumer change.”
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