Tuesday,July 07, 2020 / 11:13 AM / Content & Header Image by Nielsen

Againstthe backdrop of the unprecedented COVID-19 pandemic, West African consumersentiment has experienced a sharp drop in the Nielsen Consumer Confidence Index(CCI) for Quarter 2, 2020. Ghana's figures show a substantial decrease of 15points to 104, while Nigeria's CCI has decreased by 14 points to 108.

Lookingat Ghana's performance, Yannick Nkembe, Market Lead for Nielsen WestAfrica Expanded Market, comments; "The latest consumer sentiments reflectthe market reality. With the global pandemic affecting the economy and causinggeneral uncertainty all around, consumers have readjusted their confidencelevels and are also more cautious with their spend."

Ghanaianshave significantly dropped their outlook around their job prospects, with lessthan half (45%) saying they will be good or excellent in the next 12 months - a16 point decrease from the previous quarter. In terms of the state of theirpersonal finances over the next 12 months, 60% say they are excellent or good,again a substantial 16 point drop from the previous quarter.

Ghanaianspropensity to purchase has also seen a considerable decrease quarter onquarter, with the number of those who think now is a good or excellent time topurchase what they want or need drop from 52% to 33% in the second quarter.

Only43% of Ghanaians say they have spare cash, down 13 points from the previousquarter. Once they meet their essential living expenses, the highest number ofconsumers (74%) put their spare cash into savings, followed by 73% on homeimprovements/decorating and 56% who would invest in stocks and mutual funds.One of the most significant drops in discretionary spending is on holidays downfrom 58% to 27% - a clear indicator of consumers' mindset shift away fromnon-essential services and their desire to avoid unnecessary travel.

Reality Bites

Whenasked whether they had changed their spending to save on household expensescompared to this time last year, 75% said yes, up seven points from theprevious quarter. To reduce expenses, 53% said they spent less on new clothes,52% on out of home entertainment, with the same figure deferring on thereplacement of major household items.

Whenlooking at the real-life factors that are affecting their outlook, the topconsumer concerns over the next twelve months were increasing food prices(29%), followed by work/life balance (23%) and their children's education(22%). Nkembe comments; "Ghana has previously experienced strong businessprospects and with the relatively earlier easing of restrictions to stimulateits economy, recovery in Ghana is likely to rebound sooner. We expect consumersto revert to previous consumption behaviours, although some of their attitudeswill have fundamentally or permanently changed post the pandemic."

Subdued Sentiment in Nigeria

Intandem with the rest of the world, Nigeria's CCI figure dropped by 14 points.Commenting on the reasons for this, Nielsen Nigeria MD Ged Nooy says; "AsAfrica's largest economy and the largest exporter of oil, Nigeria's economy wasalready under immense pressure before the COVID-19 lockdown due to the collapsein international oil prices. Based on the additional economic pressure as aresult of the COVID-19 pandemic, Nigeria, therefore, instituted a fairly earlyeasing of its 5-week lockdown in early May due to the adverse financial effectson its economy and population."

Lookingat the consumer picture during this time (Quarter 2, 2020) Nigerian jobprospects declined with less than half viewing them as excellent or good, a 14point drop from the previous quarter. Nigerians' sentiment around the state oftheir personal finances also showed a decline with 59% who think they will beexcellent or good over the next year, having decreased 19 points from theprevious quarter. Immediate-spending intentions also declined, with only athird of the respondents saying "now is a good or excellent time to purchase" what they want or need, a 14 point drop from the previous quarter.

Interms of whether Nigerians have spare cash to spend, 32% said yes, versus 50%in the previous quarter. When we look at Nigerians spending priorities, oncethey have met their essential living expenses, 81% said they would put theirspare cash into savings, 73% said home improvements and decorating and 66%would invest in shares/mutual funds.

Seventy-sixper cent of Nigerians said they had changed their spending to save on householdexpenses compared to this time last year. To reduce expenses, 67% said they haddelayed the replacement of major household items (a 10 point increase on theprevious quarter). Sixty-four per cent said they would spend less on newclothes and 56% said less out of home entertainment - both of which areunderstandable given ongoing restricted living patterns.

Inthe next 12 months, Nigerians said their top concern would be attaining awork/life balance (31%), which has seen the biggest increase of eight pointscompared to the previous quarter. This is followed by increasing food prices(23%) and concerns over the economy (19%).

Elaboratingon these results, Nooy says; "Economic recovery has been sluggish and willremain severely constricted due to the oil price crash amidst and beyond thepandemic. For Nigeria's manufacturing and retail sectors to rebound willrequire a sharp focus, as trade opportunities and execution remains severelyconstrained, having further deteriorated during the partially restricted livingperiod."

ABOUTTHE CONSUMER CONFIDENCE AND SPENDING INTENTIONS SURVEY: The Nielsen Consumer Confidence and Spending Intentions survey wasconducted from 27-28 May 20202 in Kenya, Ghana, and Nigeria among 1 500respondents, using mobile methodology. The sample has quotas based on age andgender for each country.

Related News

1.      Nigerian Retail and ConsumerLandscape May Never be the Same Again - Nielsen

2.     E-commerce, Still Vast Roomfor Growth

3.     How Online Nigerian BusinessCan Obtain (and Retain) Customers

4.     5 Things to Know Ahead ofBlack Friday

5.     NBA Star, Andre IguodalaOptimistic Of Growth Opportunities In Nigeria's E-Commerce Market

6.     Magento: The E-Commerce LittleHelper

7.     MTN Plans Sale of Jumia StakeAfter Agreed Lock-In

8.    What Makes Africa's LargestE-commerce Platform African?

9.     Jumia: African E-CommercePlatform Files For An Estimated $500m US IPO, Plans To List On The NYSE

10.  China Isn't Apple's OnlyProblem

11.  Brick-and-Mortar Is JustGetting Started

12.  Investing in the Future ofNigeria with an Online Sales Platform

13.  Singapore Govt Invites JumiaCEO to Speak on Digital Economy and Consumerism in Africa

14.  Jumia Releases 2017 FinancialResult; Highlights

15.  Blockchain Platform PreparesTo Test Cryptocurrency Payment System In Major Shopping Mall

16.  Dream Merchants In UncertainTimes

17.  The Retail Revolution and ThePlace of The Consumer

18.  E-Commerce Platforms ClosingDown in Nigeria: Models or Market Environment

19.  Zinox Acquires Konga inLandmark Industry Deal