Paul Arithi 
Award Winning Fund Manager ICEA LION Asset Management launches the ILAM Consumer Spending
Index (ICSI) “Consumer spending relatively resilient between July and September 2023”
East Africa’s pioneering Investment Management Firm ICEA LION Asset Management launched the ILAM Consumer Spending Index, with the theme ‘Consumer spending relatively resilient the third quarter of 2023!’
Speaking at the event, Judd Murigi, Head of Research at ICEA LION Asset Management highlighted the following key trends:
• Introducing the ILAM Consumer Spending Index
The index is aimed at tracking consumer spending as a gauge of how the real economy is trending. It is based on interviews of 500 consumers and 100 retail businesses in the greater Nairobi area.
• ILAM Consumer Spending Index declines by 1.5% in the third quarter of 2023
The individual spending sub-index fell by 3% between July and September 2023 while the retail business sales sub-index remained broadly flat in the same period, resulting in a decline of 1.5% in the overall consumer spending index (which is weighted 50% by changes in individual spending and 50% by changes in retail business sales).
• Relative resilience
This was a relatively resilient level of consumer spend in the 3rd quarter considering the perception that disposable incomes had reduced. However, we note that many consumers attributed the additional spending to an increase in the cost of items purchased rather than higher income per se. At the same time we also note that the spending came in spite of continued slowed private sector credit.
Semi and unskilled manual workers reduce spending the most While all categories (executive, skilled and unskilled workers) had reduced spending levels in the third quarter of 2023,the lower income consumer segment had the largest proportion (9%) experiencing reduced personal consumption expenditure in that period
• Income levels fairly stable overall
37% of individuals indicated that their income did not change between 2022 and 2023, while 38% experienced a decline in income and 24% saw their income rise between 2022 and 2023.
• Large and micro businesses experience increase in sales
The large business segment had the largest improvement (25%) in sales trends in the third quarter, followed by the micro businesses segment at 7% better sales trends.The medium sized businesses segment recorded a fall of 18% in sales trends in the same period,while the small business segment had similar level of sales trends in the third quarter.
• Similar sales trends noted in different sectors
Various business sectors including retail stores, clothing & apparel, food and drink outlets, as well as house fittings & accessories recorded broadly similar trends in sales between July and September 2023, with no major divergence noted.
• Balanced sentiment on spending trends
Our sentiment analysis on individual spending trends indicated that 44% of consumers had a positive mindset regarding their spending while 56% had a negative mindset regarding with their spending trends.
On the business side, that 48% of businesses appeared to hold positive sentiments regarding sales trends while 45% had negative sentiments regarding sales
In closing, ICEA LION Asset Management CEO – Einstein Kihanda, who is also the immediate former Chairman of the Institute of Certified Investment and Financial Analysts (ICIFA) summarized thus: “Consumer spending levels remained relatively resilient between the second and third quarter of 2023”
