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Kenya: Consumer Confidence Index Drops by 3%

Ms Baker

Kenyan’s consumer confidence has dropped by three points in the past six months. This has been attributed to persistent political wrangling – creating endless uncertainties and biting inflation that has hit the 14.5 percent mark.

“Majority of the people are continuously losing confidence in the future of the country,” said Melisa Baker, the CEO of TNS RMS East Africa Ltd. “This trend was last witnessed in June 2010 when the country was unsure of whether a new constitution will come to pass or not.”

Baker, who was speaking while releasing the sixth wave Consumer Confidence Index (CCI), said Kenyans are increasingly becoming pessimistic with the country’s economic situation and the majority fear that future inflation rates could get worse as they struggle with current income levels.

She said some of the reasons that could be attributed to this include; the rise in fuel and commodity prices as well as the fact that Kenya is heading into an election year. “The trading of the shilling currently is also an indicator of Kenyans’ confidence level in the economy.”

TNS RMS East Africa Ltd, which is a market research institution, interviewed 1,010 respondents representative of adults aged 18 years and above from across the country excluding the North Eastern province. The survey indicated that overall consumer consumer confidence dropped from 118 in March 2011, to 115 in June 2011. The survey was conducted between 16th May and 2nd June 2011.

The CCI indicates ways that consumers spend or save their money and so predicts market changes. The decline in the index may indicate not so much of a decline in consumer spending but change in its pattern.

Looking at the index per region, “there was a surprise increase in central provinces of 10 points while the Rift Valley and Nairobi had the highest drop with 14 and 13 points respectively,” the CEO said.

Although 65 percent of Kenya’s gross domestic product (GDP) is drawn from its urban setup, the urban population are feeling more pessimistic about the future than their rural counterparts about the future – 42 and 52 percent respectively.

From the survey, 92 per cent of Kenyans feel that jobs are not easy to find at the moment. Though the number is still high, the perception is changing, but at a slower pace from 2009 when TNS RMS started doing the consumer confidence index. “It is interesting to note that this percentage is the same as the one experienced in June 2010,” Baker said.

She added that “this, though, does not change Kenya’s optimism that things will always get better. When asked whether they feel things will be different in the next six months in terms of finding jobs, most Kenyans responded in the affirmative. A slight increase of optimism in the job market from the March 2011 index.”

Business conditions are perceived to be getting worse as seen from the declining number – 6 percent drop from 73 percent in the last wave of March 2011. Just, as in the job market, Kenyans are confident that business conditions will improve in the next 6 months.

Today, Kenya’s inflation is at 14.5 percent and Kenyans confess to the fact that their income cannot keep up with the rate at which inflation is growing. Inflation has risen from 6 percent in March 2011 to the current level. “68 percent of the respondents still have a monthly household income of Sh 7500 or less,” she said.

Nevertheless, the market research said that Kenyan politics determines CCI more than all other factors taken into consideration. Baker thus challenged political leaders to live up to promises of unity. “We measure consumer confidence to find out where the market is going, given where it is now, broadly interpreted as an indicator of the degree of confidence in the market,” she said.

About Robert Okemwa Onsare

Robert Okemwa Onsare
Robert Onsare is pursuing Electronics Technology at the University of Eastern Africa, Baraton. He is a Cluster Strategy trained facilitator by Kenya's National Economic and Social Council (NESC). Mr Onsare has been an incubation student at the University of Nairobi, School of Engineering, FabLab, a venture project of the university and Massachusetts Institute of Technology (MIT). He is a member of the African Technology Policy Studies Network (ATPS) and a published poet. Mr Onsare is based in Kenya.

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