August Findings "Post-Referendum": Kenya Consumer Confidence

August
findings
“Post-
Referendum”
Kenya 14th
Consumer September
Confidence 2010
Melissa
Baker
CEO
1
Introduction
2
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 spending but 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.
3
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 Michigan’s 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
4
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
5
Sample
 The survey was representative of Kenya adults.
 The sample is a national representation of adult Kenyans aged 18 and above and is drawn in
proportion to the population size per province (Census 1999)
 Data weighted to reflect the population distribution of Kenya
6
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
7
Consumer confidence index scores
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
8 Constant to add 41.1
Consumer Confidence Index
13
Overall confidence index improved since October 2009 despite a
dip at 3rd wave
150
140
136
130
120 120
115
110
100 100
90
80
70
60
50
Oct1 09
Wave average Mar
Wave 10
2 average Jun
Wave 10
3 average Aug
wave 10
4 average
14
Average score on statements over time and August index Biggest
improvements in Nairobi and Coast
180 Wave 1 average Wave 2 average Wave 3 average
Wave 4 average wave 4 index 165

160
152
144
140
132
126 128
120
109
100
80
60 56 54 56
50 52 49 50 50
46 44 45 46 46 46
43 43
39 38 41 39 36 38 36
40
40 31 33 34
28
20
0
Nairobi Central Coast Eastern Nyanza R/valley Western
15
Jobs
16
% that disagree that “jobs are easy to find at the moment”
Most feel jobs are hard to find currently – no change
Disgree Oct '09 Disgree Mar '10

Disagree June '10 Disagree August '10
100 96
93 92
91
90
80
70
92% feel that jobs are NOT easy to find at
60 the moment
50 The changes are marginal and there does

seem to be a strong negative feeling
40
towards current job availability.
30
20
10
0
17 Oct 09 Mar 10 Total Jun 10 Aug 10
% that agree that “jobs will be easier to find in next 6 months”
More than one third of Kenyans have positive future outlook on
jobs, with this % growing
Agree Oct '09 Agree Mar '10 Agree June '10 Agree August '10
100
37% feel that jobs will be easier to find in the next 6
90 months. The levels have gone up by 10% from the
last wave.
80
70
Kenyans have started to feel optimistic about the
future of the job market
60
50
40 37
30 27
22
20 15
10
0
Business conditions and
economic circumstances
19
% agree that “business conditions are generally poor at the
moment”
Majority feel business conditions poor. No change since last
wave
Agree Oct '09 Agree Mar '10 Agree June'10 Agree August '10
100
90
81
80 76 75
74
70
60
50
40
30
75% believe that business conditions are generally poor at the moment
20
No significant change has been noticed.
10
0
Oct 09 Mar 10 Total Jun 10 Aug 10
20
% agree that “business conditions will improve in the next 6 months”
More than half believe that conditions will improve, up
100
Agree Oct '09 Agree Mar '10
Agree June'10 Agree August 10
90
80
52% feel that business conditions will improve in the next
70 6 months. More people feel optimistic(13%increase)
60
52
50 48
39
40 36
30
20
10
0
% who agree that “Your economic circumstance is good at the
moment”
Kenyans negative about economic circumstances
Current economic circumstances still look bad
Oct 09 Mar 10 Jun 10 Aug 10

22
% agree that “your economic circumstances are to improve in the next
6 months”
Optimism about future economic circumstances up
100
Agree Oct '09 Agree Mar '10 Agree June'10 Agree august '10
90
There is an increase of 16% In optimism levels about future economic
80
circumstances
70
60 58
50 46
42
40
33
30
20
10
0
Total
Oct 09 Mar 10 Jun 10 Aug 10
23
% agree “you expect your household income to increase in next 6
months”
big change in those expecting income to increase over time
Agree Oct '09 Agree Mar '10 Agree June'10 Agree august 10
100
90
80 A continuous pick up of optimism levels about house hold income

improving (14%increase).
70
62
60
47 48
50
40
33
30
20
10
0
Total Jun 10 Aug 10
25 Oct 09 Mar 10
Inflation
26
% disagree that “your income is keeping up with inflation at the
moment”
Most feel income not matching inflation, no change
Disagree Oct '09 Disagree Mar '10 Disagree June'10 Disagree august '10
100
No change in negative perception since March 2010
An average of 70% feel income is not keeping up with inflation
90
81
80
71 70
69
70
60
50
40
30
20
10
0
Total Jun 10 Aug 10
27 Oct 09 Mar 10
% agree that “you expect inflation to increase over next 6
months”
42% still expect inflation to increase, no change
100
Agree Oct '09 Agree Mar '10 Agree June'10 Agree august
90
80
70
60
49
50 46
42 42
40
30
20 No change in % of those who expect inflation to increase. But Less than

half still expect inflation to worsen.
10
0
Total
28 Oct 09 Mar 10 Jun 10 Aug 10
28
Crime and Corruption
29
% say they have been a victim of crime in past 6 months
100 Agree Oct '09 Agree Mar '10

Agree June'10 Agree august '10
90
80
70
The proportion of people who have
been victims of crime in past 6 months
60 is at 10%
50
40
30
20
11 10
8 8
10
0
Total
30
% say they have been asked for a bribe in the past 6 months
Claimed corruption levels drop.
100 Agree Oct '09 Agree Mar '10 Agree June'10 Agree august '10
90
significant change(10% DROP) since June 2010 on those who had
80
been asked for a bribe in the past 6 months.
70
60
50
40 36 37
34
30 27
20
10
0
Total
31
Future of Kenya
32
% agree that “you feel positive about Kenya and its future”
Big increase in positive feeling about the future
Agree Oct '09 Agree Mar '10 Agree June'10 Agree august 10
100
90
80 75
70 69
70
59 60
60
52 53
51 50
49
50 46
44
40
30
20 Kenyans are more optimistic about Kenya’s future now. Note a 19%
increase from the previous wave.
10
0
Total Urban Rural
33
Overall confidence index improved since October 2009 despite a
dip at 3rd wave
150
140
136
130
120 120
115
110
100 100
90
80
70
60
50
Oct1 09
Wave average Mar
Wave 10
2 average Jun
Wave 10
3 average Aug
wave 10
4 average
35
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.
36

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August

 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.

 Many media commentators regard this as “economically crucial”,

 We have also added questions about personal economic circumstances rather

 The survey was representative of Kenya adults.

 Data weighted to reflect the population distribution of Kenya

180 Wave 1 average Wave 2 average Wave 3 average

Wave 4 average wave 4 index 165

Disgree Oct '09 Disgree Mar '10

50 The changes are marginal and there does

Current economic circumstances still look bad

Oct 09 Mar 10 Jun 10 Aug 10

80 A continuous pick up of optimism levels about house hold income

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

100 Agree Oct '09 Agree Mar '10

• Overall Kenyan Confidence increased between June and August 2010

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