consumer confidence august 2010 10.9.10

8/8/2019 Consumer Confidence August 2010 10.9.10

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14th

September2010

KenyaConsumer

Confidence

August

findings

Post-

Referendum

MelissaBaker

CEO


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Introduction


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Why measure Consumer Confidence?

Sentiment is one of the key drivers in many markets financial, consumer, durables, the stock market

and so on.

What is it?

A view of where a market is going - given where it is now.

Broadly interpreted as an indicator of the degree of confidence a person has in a market.

Changes in consumer confidence impact on the ways that consumers spend or save their money

and so predict market changes

A decline in the index may indicate not so much of a decline in consumer spendingbut a change

in its pattern.

For example, a fall might portend

a fall in durable spending (cars, appliances),

a more cautious approach to adopting credit

and a rise in savings,

whilst comfort goods (chocolate, alcohol, books, home furnishings etc) may benefit - retail

therapy.

Thus useful data for manufacturers, banks and the Government.


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Consumer Confidence Indices: USA example

University of Michigan has a monthly Consumer Confidence Index for the USA --- it is the

INTERNATIONALLY RECOGNIZED STANDARD

Many media commentators regard this as economically crucial,

and in the US, every blip and dip of the University of Michigans monthly consumer

survey is chewed over obsessively by market pundits (BBC Business website).

Many other countries have an index, but this is the first for Kenya


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Kenya index

Our index is an enhanced adaptation of the USA index, which takes into account some

of the issues facing a developing economies like ours

Thus we have added whether income is keeping up with inflation and the

impact of crime and corruption into the questions

We have also added questions about personal economic circumstances rather

than just perceptions of business conditions, since given the inequality in Kenya,

the two may not necessarily relate


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Sample

The survey was representative of Kenya adults.

The sample is a national representation of adult Kenyans aged 18 and above and is drawn inproportion to the population size per province (Census 1999)

Data weighted to reflect the population distribution of Kenya


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Questionnaire for consumer confidence

I am now going to read you a set of statements about Kenya. Some people agree with the

statements and others do not. For each statement, please could you tell me whether you agree

or disagree with it.

Jobs are easy to find at the moment

Business conditions are generally poor at the moment

You expect business conditions to improve in the next 6 months Your income is keeping up with inflation at the moment

You expect your economic circumstances to improve in the next 6 months

You expect inflation to increase over the next 6 months

You have been asked for a bribe in the past 6 months

You expect your household income to improve in the next 6 months

You have been a victim of crime in the past 6 months

Note that in one-third of the cases we included a negative statement of each of these to check

and balance the scores

Each of these statements is given a score based on its imputed importance in contributing

towards the level of confidence a consumer has in the country and economy


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Statement Weight

Jobs are easy to find at the moment 9.5

Business conditions are generally poor at the moment -2.5

You expect business conditions to improve in the next 6 months 7.2

Your income is keeping up with inflation at the moment 6.8

You expect your economic circumstances to improve in the next 6 months 8.7

You expect inflation to increase over the next 6 months -5.3

You have been asked for a bribe in the past 6 months -7.2

You expect your household income to improve in the next 6 months 8.6

Jobs are hard to find at the moment -2.6

You expect your economic circumstances to worsen in the next 6 months -15.4

You expect that jobs will be easier to find in the next 6 months 11.8

Your economic circumstances are good at the moment 4.4

You feel positive about Kenya and its future 1.8

You have been a victim of crime in the past 6 months -8.1

Constant to add 41.1

Consumer confidence index scores


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Demographics


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9

5

7

6

3

9

5

/

F

5 3

35

5 5

55+

3

p

d

D

g

phcP

f

(

)

CONSUMER

B

:T

p

=

5


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Respondent income profile

15

27

18

14

11

6

6

0

00 or less

01 000

001 00

01 10 000

10 001 1 000

1 001 0 000

0 001 0 000

0 001 100 000

Majority (60%) of the respondents have amonthly household income of Kshs 00or less.

4 % of the Kenyan population live underor very close to the poverty line of $ aday (approximately Kshs 4 amonth)*.

* Exchange rate $1 = Kshs81 for30. days per month

Average MHI = Kshs. 8,874

Base: Total Sample n= 1504


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7

1

1

1

5

7

5

H

/

1

CONSUMER

B

:T

=15

B

:

=7

3


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Consumer Confidence Index


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Overall confidence index improved since October 2009despite a dip at 3rd wave

100

120115

136

50

60

70

80

90

100

110

120

130

140

150

Wave1average Wave2average Wave3average wave4averageOct 09 Mar10 Jun 10 Aug10


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Average score on statements over time and August indexBiggest improvements in Nairobi and Coast

39 38

4346

36 33 34

43 41

52

44 45 46 46

31 39 28

49

38 36 40

5650

5450

4650

56

144

132126

109

128

152

165

0

20

40

60

80

100

120

140

160

180

airobi entral oast astern anza / alley Western

Wa e1a era e Wa e2a era e Wa e3a era e

Wa e4a era e wa e4 index


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Jobs


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9693

91 92

0

10

20

30

40

50

60

70

80

90

100

T tal

Disg ee Oct '09 Disg ee Ma '10

Disag ee u e '10 Disag ee August '10

% that disagree that jobs are easy to find at the momentM st feel j bs a e ha d t fi d cu e tly cha ge

92% feel that j bs a e NOT easy t fi d at

the m me t

The cha ges a e ma gi al a d the e d es

seem t be a st g egative feeli g

t wa ds cu e t j b availability.

Oct 09 Ma 10 u 10 Aug 10


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% that agree that jobs will be easier to find in next 6 monthsMore than one third of Kenyans have positive futureoutlook onjobs, with this % growing

15

22

27

37

0

10

20

30

40

50

60

70

80

90

100

Total

Agree ct '09 Agree ar '10 Agree June '10 Agree August '10

37% feel thatjobs will be easier to find in the next 6

months.The levels have gone up by 10% from the

last wave.

Kenyans have started to feel optimistic about thefuture of thejob market

ct 09 Mar10 Jun 10 Aug 10


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Business conditions and

economic circumstances


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% agree that business conditions are generally poor at themomentMajority feel business conditions poor. No change since

last wave

81

7476 75

0

10

20

30

40

50

60

70

80

90

100

otal

gree Oct '09 gree Mar '10 gree June'10 gree ugust '10

75% believe that business conditions are generally poor at the moment

No significant change has been noticed.

Oct 09 Mar10 Jun 10 ug 10


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% agree that business conditions will improve in the next 6monthsMore than half believe that conditions will improve, up

36

48

39

52

0

10

20

30

40

50

60

70

80

90

100

otal

ree Oct '09 ree Mar '10

ree June'10 ree u ust 10

52% feel that business conditions will improve in the next

6 months. More people feel optimistic(13%increase)

Oct 09 Mar10 Jun 10 u 10


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% who agree that Your economic circumstance is good at themomentKenyans negative about economic circumstances

Current economic circumstances still look

bad

Oct 09 Mar10 Jun 10 Aug 10


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% agree that your economic circumstances are to improve inthe next 6 monthsOptimism about future economic circumstances up

33

46

42

58

0

10

20

30

40

50

60

70

80

90

100

Tota

Agree Oct '09 Agree Mar '10 Agree une'10 Agree august '10

There is an increase of 16%In optimism eve s about future economic

circumstances

Oct 09 Mar 10 un 10 Aug 10


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% agree that you expect your economic circumstance toworsen in next 6 monthsMore believe their economic circumstances will improve

38

26

35

23

0

10

20

30

40

50

60

70

80

90

100

otal

ree Oct '09 ree Mar '10 ree June'10 ree au ust '10

si nificant drop of12% amon those who expect their economic

circumstance to worsen in the next 6 months was witnessed betweenJune and u ust. ood indication that optimism levels are pickin up

Oct 09 Mar10 Jun 10 u 10


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% agree you expect your household income to increase innext 6 monthsbig change in those expecting income to increase over

time

33

47 48

62

0

10

20

30

40

50

60

70

80

90

100

otal

gree Oct '09 gree ar '10 gree J ne'10 gree a g st 10

contin o s pick p of optimism levels abo t ho se hold income

improving (14%increase).

Oct 09 ar10 J n 10 g 10


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Inflation


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% disagree that your income is keeping up with inflation atthe momentMost feel income not matching inflation, no change

81

69 71 70

0

10

20

30

40

50

60

70

80

90

100

Tot l

Di r t '09 Di r r '10 Di r '10 Di r t '10

Oct 09 Mar10 Jun10 Aug10

Nochange innegative perception inceMarch 2010

Anaverageof70% feel income i not keepingup with inflation


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% agree that you expect inflation to increase over next 6months42% still expect inflation to increase, no change

4946

42 42

0

10

20

30

40

50

60

70

80

90

100

otal

Agree ct '09 Agree Mar'10 Agree June'10 Agree august

No change in % of those who expect inflation to increase.But Less than

half still expect inflation to worsen.

27 Oct 09 Mar10 Jun 10 Aug 10


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Crime and Corruption


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% say they have been a victim of crime in past 6 months

811

810

0

10

20

30

40

50

60

70

80

90

100

a

ee c 09 ee Ma 10

ee J e 10 ee a s 10

he p p i f pe p e wh have

bee vic ims fc ime i pas 6 m hsis a 10%

29 c 09 Ma 10 J 10 10


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% say they have been asked for a bribe in the past 6monthsClaimed corruption levels drop.

3436 37

27

0

10

20

30

40

50

60

70

80

90

100

Total

Agree Oct '09 Agree Mar'10 Agree June'10 Agree august '10

significant change(10%DROP) since June 2010 on those who had

been asked fora bribe in the past 6 months.

30 Oct 09 Mar10 Jun 10 Aug10


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Future of Kenya


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% agree that you feel positive about Kenya and its futureBig increase in positive feeling about the future

4946

50

59

52

60

51

44

53

70

75

69

0

10

20

30

40

50

60

70

80

90

100

ota U an Rur a

Agree ct '09 Agree ar'10 Agree June'10 Agreeaugust 10

Kenyansaremore optimistica out Kenyasfuture now.Notea19%

increasefrom thepreviouswave.


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Summary

Jobs hard to find at the moment big majority, no change

Future jobs, gone up to one-third

Business conditions poor big majority, no change

Business conditions will go up half, big increase

Economic circumstances good low, no change

Future economic circumstances up 58%, big increase

Future economic circumstances to worsen 23%, big decrease

Income to go up 60 %, big decrease

Most feel income not matching inflation, no change

42% still expect inflation to increase, no change


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Overall confidence index improved since October 2009despite a dip at 3rd wave

100

120

115

136

50

60

70

80

90

100

110

120

130

140

150

Wave1average Wave2average Wave3average wave4averageOct 09 Mar10 Jun 10 Aug10


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Key points

Overall Kenyan Confidence increased between June and August 2010

from 115 to 136. This represents an overall upward trend since October

2009

The slight decrease in June 2010 may be due to pre-Constitution poll

concerns. The situation is better now that the country is stable again.

This increase is mainly caused by optimistic perception about future

economic circumstances and future business conditions.

The future of Kenya looks bright for many as is the perception from the

increased index.

No big change in crime but for corruption there is a decrease in the bribery

rate.

consumer confidence august 2010 10.9.10

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