COVID-19 Impact on Consumers: Will Africa remain one of the world's fastest-growing consumer markets?
Prior to the pandemic, Africa was identified as one of the fastest-growing consumer markets in
the world[1],
with household consumption growing even faster than gross domestic
product (GDP) in recent years and annual GDP growth consistently
overtaking the global average[2].
It was predicted that, by 2030, the largest consumer markets would include Nigeria and South Africa[3],
with Kenya and Ghana set to lead as the fastest-growing consumer markets on the continent by 2024[4].
But how has COVID-19 affected consumers in these countries and what will this mean for these predictions?
Survey54 - an automated mobile-led data collection platform – has recently published a
report based on the findings of
surveys conducted in South Africa, Nigeria, Ghana and Kenya to
ascertain the impact of the pandemic on consumers. Using mobile-enabled
AI technology and experience in accessing audiences in
emerging and frontier markets, Survey 54 explored a range of topics,
including how COVID-19 has affected the livelihoods of the general
public across specific African countries; changes in consumption
patterns and behaviour; financial concerns and stability;
and perception of government support. To ensure diversity of
perspective, surveys were deployed via the Survey 54 app for those with
access to the internet and USSD which allows users without smartphones
or internet to communicate via text, enabling audiences
who tend to fall within the lower income threshold to participate.
Among
the interesting insights that emerged was the decrease in spend on
groceries versus the increase in spend on data which was noted across
the countries surveyed. In Kenya,
for example, 48% of respondents reduced their grocery spend, but 70%
spent more on data. Consumers’ financial concerns have also intensified
among 94% of Nigerians, 91% of Kenyans, 78% of South Africans and 55% of
Ghanaians. “It’s clear that consumption patterns
have shifted radically, with everyday consumers having to take a
handful of factors into consideration before making purchase decisions
including income reduction or complete loss of income, legislative
mandates and health fears,” says Survey54 CEO and Co-Founder,
Stephan Eyeson.
Each country also produced unique results.
Ghana, for instance, indicated a
higher level of consumer confidence than the other countries reviewed,
with a lower decline in spending on takeout. In contrast to South
Africa, Nigeria and Kenya, where over 70% of respondents
stated that they would spend less on takeout, only 56% of Ghanaians
said they would. Additionally, Ghanaians appear to be more optimistic
about their finances than their compatriots in other countries which
could be attributed to the early lifting of the lockdown
which saw several businesses reopen, coupled with the feeling of
emotional support (40%) from their churches and local community which
has helped ease the burden. While the latest forecasts do not predict
contraction for Ghana this year, the country's anticipated
real GDP growth in 2020 was revised down substantially from a
projection of 5.8% to just 1.5% in the International Monetary Fund’s
latest World Economic Outlook.
In
Kenya, consumers’ leisure spending
was higher than in the other countries with 73% of respondents saying
that they would increase spend on online classes. Additionally, 51% said
that they would be looking to spend more on
online wellness and fitness. This suggests that people are changing not
only their spending habits but how they spend their time. Despite this,
80% of survey participants reported that they had seen a drop in income
since the lockdown started, with the remaining
20% not being affected. Worryingly, 53% said that they now had no
income, 24% said they had seen cuts to income by roughly a third; 15% of
respondents shared that they had their income cut by a fifth; and 8%
saw their income decrease by a tenth.
South Africa,
which according to the Coronavirus
Government Response Tracker had one of the strictest government
responses on the continent, saw 45% of consumers spending less on their
groceries and buying what they could afford or what they needed within
the current climate. This is understandable, given
that 78% of respondents said that they have suffered financially during
the pandemic, with 56% indicating that this has been due to a total
loss of income. For those fortunate enough to still be employed and able
to work from home, a major concern was that
of access to data and the internet, so much so that over 60% of
respondents flagged having access to cheaper data plans would make this
period easier for them.
In
Nigeria there is a downward shift
in consumer spending as evidenced not only by the decline in spend on
groceries (55%), takeaway and delivery meals (75%), but also 86% of
respondents planning to spend “much less” than they
previously did on alcohol, with only 4% expecting to spend “much more”.
This is in stark contrast to countries in Europe where alcohol
consumption has rocketed. It is unsurprising that Nigerians are more
frugal with 25% of survey participants being without
a job but looking. This unemployment rate is higher than that reported
by the World Bank which stated that in 2019 the unemployment rate was at
around 8%.
“As
the world begins to come out of lockdowns it has become apparent that
most people have started adjusting to the ‘new normal.’ However, the
long-term impact of COVID-19 on
work, the economy, social interactions and schooling are yet to be
seen, with many suggesting the full extent won’t be known until 2021.
Our study confirms that, over the last few months, the crisis has
fundamentally changed how and what consumers across Africa
buy. With uncertainty surrounding the next phase, organisations must
look to develop new products and systems for life post-pandemic - it
will be a delicate balancing act between stabilising revenues and
putting the wellbeing of customers first. This in itself
presents an opportunity for innovation. One thing for certain is that
people will adapt and in this current climate institutions must follow
suit by adapting to new and uncertain market conditions,” concludes
Eyeson.
To access the reports on each country, or for more information, go to
https://survey54.com/
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