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Uncertainty hovers over East, West African markets

By , ITWeb
Africa , 07 Dec 2018

Uncertainty hovers over East, West African markets

Kenya's latest Nielsen Consumer Confidence Index (CCI) score for Quarter 3, 2018 has dropped a steep 10 points, since the previous quarter, to 94, revealing a volatile consumer mindset and underlying uncertainties.

Nielsen Sub-Sahara Africa MD Bryan Sun comments; "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. However, since no major impact has been felt on ground, consumers are readjusting their expectations. This, coupled with the recent increase in fuel prices, led to a surge in the cost of consumable commodities and the prolonged cold season affected the agricultural sector and led to price increases for certain items. As a result, consumer spending power has weakened with a resultant dampening of overall consumer sentiment."

According to the reports, this subdued sentiment is reflected in 58% of Kenyans describing the state of their personal finances over the next year as excellent or good - down by 11 points from Q2'18 - and 37% as not so good or bad, up from 23% in the previous quarter.

"There is also a less positive outlook in terms of Kenyan consumers immediate-spending intentions, which has fallen to 22% of respondents (down from 31% in Q2) who say now is a good or excellent time to purchase what they need or want," it adds.

The view around job prospects has remained stable with the same number as the previous quarter (44%) viewing them as excellent or good and almost half (49%) considering them as not so good or bad.

Wallets under pressure

Nigeria's latest CCI for the third quarter of 2018 has shown a four point decline to 118, while Ghana's CCI for the same quarter has risen five points to 113, all-in-all a fairly stable picture for West Africa.

Sun says; "The combined effects of the slowdown in economic growth, the strain of continued high inflation, and the current political climate with the upcoming elections, have led to a drop in consumer confidence in Nigeria. Consumer wallets are currently very stretched, with consumers struggling to make ends meet. The sentiment around minimum wages being too low, has also taken its toll on confidence levels and is being reflected in consumers' spending habits."

Nigerian consumers who say now is a good or excellent time to purchase what they need or want has declined to 43% (down from 48% in Q2'18). This declining sentiment is also reflected in their views around job prospects, which has dropped five points, compared to the last quarter, to 56% who view them as excellent or good and 37% who view job prospects as not so good or bad.

While Nigeria showed a slight slump in confidence; Ghana's CCI figure has risen to 113, up from 108.

Sun says; "A slight respite in inflation and better performance by the industrial and export sector, plus the government's focus on job creation has led to a slight boost in consumer confidence in Ghana. Given the upturn, consumers have become slightly more open with their wallets and are more willing to spend. Where the upturn in sentiment is clearly reflected, is within Ghanaian consumers' immediate-spending intentions, which has increased from 34% in the previous quarter, to 48% who say now is a good or excellent time to purchase what they need or want."

IT spend

IT spending in EMEA is projected to total US$973 billion in 2019, an increase of 2% from the estimated spending of US$954 billion in 2018, according to the latest forecast by Gartner.

"2018 is not a good year for IT spending in EMEA," said John Lovelock, research vice president at Gartner. The 5.8 percent growth witnessed in 2018 includes a 4 percent currency tailwind driven by the Euro's increase in value against the US Dollar."

"IT spending in EMEA has been stuck and will remain stuck until the unknowns surrounding Brexit are resolved," Lovelock added.

Until then, the slow growth of the overall EMEA market is masking the divergent growth rates across the segments in the region, according to Gartner.

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