ICEA LION Asset Management Consumer Spending Index

East Africa’s pioneering investment management firm, ICEA LION Asset Management has released the Third Quarter 2024 ILAM Consumer Spending Index, with the theme ‘Recovery in retail business sales trends offsets a drop in individual spending.’

The index is aimed at tracking consumer spending as a gauge of the trends in the real economy. It is based on interviews of approximately 1,200 consumers and 200 retail businesses in major urban centres across the country.

Speaking at the event, Judd Murigi, Head of Research at ICEA LION Asset Management, highlighted the following key trends:

• Income trends peak

Half of respondents indicated static income levels over the last year, while 30% reported lower income and less than 20% saw their incomes rise in the second quarter of 2024 compared to the same period in 2023. This represented the best income trends this year so far.

Respondents working in the manufacturing and trade sectors had the highest proportions of improved incomes, while those employed in wholesale and retail had the largest proportion of reduced incomes. This represented the second successive quarter when manufacturing sector workers have led in increased incomes.

• ILAM Consumer Spending Index rises by 30% in 3Q24

The ILAM Consumer Spending Index rose by 30% in the second quarter of 2024, driven by a turnaround in retail business sales which offset declines in individual spending.

• Retail business sales experience a turnaround

Compared to the second quarter when most retail businesses recorded lower sales, the third quarter of 2024 saw 60% of retailers surveyed report an increase in sales compared to the same quarter in 2023. Approximately 40% of retail businesses had lower sales in the quarter.

Most of the retail businesses recording higher sales were in Nairobi and Mombasa, while most of those with lower sales were located in Kisumu and Nakuru.

In terms of business sectors, the retail shopping and food & beverage sectors saw the biggest recovery in sales trends in the third quarter.

• Women drag down individual spending

Individual spending trends fell by 3% in the third quarter of 2024 compared to the second quarter.

For the first time this year, we saw lower spending by women during the third quarter.

The 36 – 45 age group had the highest proportion of individuals spending more, but this was offset by a large proportion of those aged 18 – 35 spending less

Almost 90% of respondents made purchases using their own income, with the remainder using credit to spend.

In closing, ICEA LION Asset Management Chief Executive Officer Einstein Kihanda, who is also the immediate former Chairman of the Institute of Certified Investment and Financial Analysts (ICIFA), summarised thus: “Retail businesses surprisingly reported improved sales trends despite the prevailing operating environments.”