Kenya is among countries in Sub-Saharan African whose consumer spending is looking positive after a rough 2023 characterized by high cost of living.
- In assessment of consumer market potential in sub-Saharan Africa, Stears Consumer Intelligence Report 2024 puts Kenya alongside South Africa, Botswana, Cabo Verde, Eswatini and Namibia as an advanced consumer market.
- The classification means that Kenya and the four other countries in the category have large and diverse consumer class, with significant purchasing power and consumption patterns similar to developed nations.
- The countries have advanced financial inclusion, a predominantly formal workforce, high income and extensive electricity access.
“With an average GDP growth rate of 5.6 per cent in 2023 and an appreciating currency, Kenya has made significant strides in its economic fundamentals. These improvements and strategic investments in infrastructure and credit expansion have positioned Kenya as East Africa’s leading advanced market,” notes the report.
The report notes that Kenya, after facing economic challenges in 2023, is on a path to recovery, as evidenced by its successful Eurobond issuance and the resultant boost in external financing. Through the support of international lenders and a proactive monetary policy, the Kenyan shilling appreciated by about 16 per cent in 2024, marking a significant recovery from the previous year’s decline.
Kenya’s inflation has also been decreasing to 6.3 per cent in 2024 from 9.1 per cent in 2022, aided by favourable agricultural outputs and a stabilising currency. The positive macroeconomic trend, reflected in the rising Purchasing Managers Index, signals growth across key sectors like tourism, manufacturing, and IT.
“Kenya’s consumer market is positioned for growth amid a complex and evolving economic backdrop. Businesses can find opportunities by aligning with changing consumer behaviors and leveraging digital innovations to meet the needs of Kenya’s diverse consumer segments,” the report says.
The report reveals that 59 per cent of Sub-Saharan Africa’s consumer potential is distributed across 27 countries. This includes major economies like South Africa, which is expected to hit a nominal GDP of $401 billion in 2024, surpassing Nigeria as the largest SSA economy. Countries such as Cape Verde, Senegal, Ethiopia, and Tanzania also display promising consumer market growth.
A significant portion of SSA’s markets, approximately 44 per cent, are categorised as either ‘Maturing’ or ‘Developing’, representing a combined population of 579 million. These markets, like Nigeria and Ghana, are often characterised by their young demographics, reliance on commodities, and uneven consumer class structures.
Emerging markets constitute a notable 33 per cent of SSA’s consumer potential, with over half of the world’s low-middle-income countries located in the region. Most of these Emerging markets are in East Africa, accounting for 56 per cent, while the remaining 44 per cent are distributed across Southern and Western Africa.
“The varied stages of market development across Sub-Saharan Africa (SSA), from Advanced to Emerging, imply that companies must adopt tailored strategies to tap into these differing consumer segments.”
