A report by Nielsen Holdings Plc has revealed that the Consumer Confidence Index (CCI) for West Africa presented a more positive picture in the fourth quarter of 2020.
In the NielsenIQ CCI, it was disclosed that Nigeria and Ghana recorded a slow by improved readings in the period under despite the devastating effect of COVID-19 pandemic on their respective economy.
While Nigeria had an index of 114, Ghana recorded 123 and according to the West African Managing Director of NielsenIQ, Nigeria, as the largest economy on the continent, “has managed to keep its COVID-19 infection rate relatively low in proportion to its 206-million population.
“However, its macro-economic prospects have been dampened by lower oil prices, increased food prices and rising inflation, together with a 50 per cent VAT increase in 2020. Despite these challenges, Nigerian consumers remain upbeat about their prospects.”
In the report, it was stated that there has been improved confidence around job prospects, with 58 per cent of consumers saying they will be good or excellent in the next 12 months – a 3-point increase from the previous quarter.
In terms of the state of their finances over the next 12 months, 78 per cent say they will be excellent or good, showing a substantial 11 point increase from the previous quarter.
Nigerians’ propensity to purchase has unfortunately seen a 13 point decrease to just 27 per cent of Nigerians who think now is a good or excellent time to purchase what they want or need, the study showed.
In terms of whether they have spare cash left after paying for essentials, 26 per cent of Nigerians say yes, down seven points from the previous quarter.
Once they meet their essential living expenses, however, the highest number of consumers (78 per cent) put their spare cash into savings, followed by 73 per cent who spend it on home improvements and 61 per cent who invest in stocks and mutual funds.
Squeezed wallets
Despite their more positive medium to long term outlook, their wallets remain tight with 80 per cent of Nigerians saying they have changed their spending to save on household expenses compared to this time last year.
To reduce expenses, the highest number of consumers (73 per cent) said they have deferred the replacement of major household items, 63 per cent are spending less on out of home entertainment and 56 per cent less on at-home entertainment.
Looking ahead, the top Nigerian consumer concerns over the next 12 months are their children’s education and welfare at 22 per cent, increasing food prices (16 per cent) and the economy at 11 per cent.
Within this context, these drops reflect consumers’ confidence in the macro picture in terms of food inflation and overall economic performance.
A subdued outlook
Looking at Ghana’s performance, increased consumer confidence during the last two quarters has seen its overall index rise to 123.
Fortunately, Ghanaians are still fairly optimistic in terms of their job prospects with 67 per cent saying they will be good or excellent in the next year. In terms of the state of their finances over the next 12 months, 74 per cent say they will be excellent or good
Ghanaians propensity to purchase has also seen a considerable decrease half think now is a good or excellent time to purchase what they want or need.
Only 46 per cent of Ghanaians say they have spare cash and once they meet their essential living expenses, the highest number of consumers (68 per cent) put their spare cash into savings.
This is followed by 57 per cent who say they invest in shares and mutual funds and 56 per cent on home improvements.
Curtailed spending
When asked whether they had changed their spending to save on household expenses compared to this time last year, 73 per cent of Ghanaians said yes.
To reduce expenses, the highest number (49 per cent) said delaying the replacement of major household items followed by 48 per cent spending less on new clothes and 47 per cent less on out of home entertainment.
When looking at the real-life factors that are affecting their outlook, the top consumer concern over the next 12 months is work/life balance (12 per cent), followed by increasing food prices, job security and tolerance towards other religions – all at 11 per cent.
Looking at the future outlook for Ghana, Nooy comments; “Ghana is likely to outperform the regional economic growth average in 2021 which bodes well for increased domestic demand and consumption levels.
“To benefit from these improved circumstances retailers will need to meet radically altered consumer, demands, needs and behaviours that will impact where they shop, what they buy, why they buy and how much they are willing to spend.”
