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West Africa consumer confidence shows divergent sentiment

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DISPARATE consumer sentiment across West Africa means that while Nigeria’s Consumer Confidence Index (CCI) for the second quarter of 2018 has risen a very healthy nine points to 122, Ghana’s CCI for the same quarter has fallen 12 points to 108.

In terms of Nigeria’s performance Nielsen sub-Saharan Africa MD Bryan Sun comments: ‘The stability of forex rates and a steady Naira has led to stable retail prices of most manufactured goods and imported staples, resulting in a recovery in confidence levels in Nigeria. The improvements seen in the economic environment are reflected in the overall enhanced sentiment, with 83 percent of Nigerians describing the state of their personal finances over the next year as excellent or good.’

He goes on to explain that this has resulted in a more positive outlook in terms of Nigerian consumers immediate-spending intentions, which has risen to 48 percent (up from 38 percent in Q1) who say now is a good or excellent time to purchase what they need or want. This increasingly positive sentiment is also reflected in their job prospects, with 67 percent viewing them as excellent or good (up from 56 percent in Q1’18) and 29 percent as not so good or bad.

More cash, more spend

Looking at whether Nigerians have spare cash, a majority of 54 percent said yes, up nine points from the previous quarter, while 46 percent said no. Looking at what their spending priorities are once they do have spare cash, the highest number 86 percent would put it in savings followed by 82 percent on home improvements, 72 percent on new clothes and 67 percent would use their spare cash for both out of home entertainment and investing in shares and mutual funds.

When asked about the changes in their spending to save on household expenses, compared to this time last year, 80 percent of Nigerians agreed that they have changed their spending habits. In terms of the actions they took to save money last year, the highest number (66 percent) said they spent less on at home entertainment, followed by 57 percent who took less holidays, 42 percent who spent less on new clothes and 39 percent who delayed the replacement of major household items.

Some of the major concerns driving this more cautionary mindset include 19 percent who think economy is their biggest concern over the next six months, whereas 12 percent consider food prices and 11 percent said work/life balance is their biggest concern. When asked what their second-biggest concern would be over the next six months, 19 percent said food prices, 13 percent said work/life balance and 12 percent mentioned job security.

Growing uncertainty in Ghana

From a stable confidence level in Q1’18, Ghana dropped 12 points this quarter to 108, the lowest since quarter 3, 2016. Sun comments: ‘Though consumer confidence in Ghana has declined in Q2’18, it still leans on the positive side, 100 being the neutral point on the index. The declining economic growth in Ghana, subdued performance in the non-oil and industrial sector, and poor agricultural performance has led to declining confidence levels this quarter.’

He adds that this uncertain sentiment is reflected by the six-point drop in Ghanaians, down to 79 percent, who describe the state of their personal finances over the next year as excellent or good, and 17 percent (increase of 10 percent from Q1’18) who say that state of their personal finances is ‘not so good’ or ‘bad’.

‘It’s therefore no surprise that Ghanaian consumers’ immediate-spending intentions have declined, with only 35 percent of respondents (down from 48% in Q1’18) who say now is a good or excellent time to purchase what they need or want, versus the 61 percent who said it was not,’ reports Sun.

This declining sentiment is also reflected in Ghanaians’ job prospects, which has dropped 11 points to 54 percent who view them as excellent or good and a 10 point rise to 39 percent who think their job prospects are not so good or bad compared to the previous quarter.

Disposable income

Looking at whether Ghanaians have spare cash to spend, there was an even 50/50 split between those respondents who said yes and no. Looking at what their spending priorities are once they do have spare cash, the highest number 78 percent would spend it on home improvements, 77 percent would put it into savings and 61 percent would spend on new clothes.

When asked about the changes in their spending to save on household expenses, compared to this time last year, 61 percent of Ghanaians agreed that they have changed their spending habits. In terms of the actions they took to save money last year, the highest number (49 percent) said they spent less on at home entertainment, followed by 48 percent who took less holidays, 32 percent who delayed the replacement of major household items and 31 percent who spent less of new clothes.

The factors driving this more cautionary mindset are embodied in Ghanaians biggest and second- biggest concerns over the next six months. The highest number of respondents (14 percent) said health is their biggest concern, followed by work/life balance (13 percent), and food prices and the economy (both at 12 percent).

When asked about their second-biggest concern over the next six months, 16 percent of respondents said work/life balance, 12 percent said their kids’ education/welfare, and food prices and higher fuel prices both recorded 11 percent.

Elaborating on these results, Sun says: ‘Despite the decline in confidence levels, Ghana’s outlook is still positive. A strong domestic demand and favourable performance on oil, cocoa, and gold, coupled with ongoing investment in the country, gives hope for a brighter second half in 2018 for the country, resulting in a revival of consumer sentiments and spend.’

 

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