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ICEA LION Asset Management, East Africa’s leading investment management firm, presented its Second Quarter 2024 ILAM Consumer Spending Index. The report, themed “Individual spending trends rise again while retail business sales trends flatline,” highlighted significant shifts in consumer behavior and economic trends.
Income Trends
The report revealed mixed income trends among Kenyan consumers. Half of the respondents reported no change in their income levels over the past year, while 30% experienced a decrease. Less than 20% saw their incomes rise in the second quarter of 2024 compared to the same period in 2023. This represents a decline from the first quarter of 2024, where 25% of respondents reported both increases and decreases in their income.
“The manufacturing and education sectors saw the highest proportion of improved incomes, whereas the trade, transport, and logistics sectors had the largest proportion of reduced incomes,” noted Richard Muriithi, Senior Portfolio Manager at ICEA LION Asset Management.
ILAM Consumer Spending Index
Despite the static income trends, the ILAM Consumer Spending Index rose by 5.5% in the second quarter of 2024. This increase was driven primarily by a rise in individual spending, which offset the stagnant retail business sales trends.
Individual Spending Trends
Individual spending trends improved by 11% in the second quarter of 2024 compared to the first quarter. The increase in spending was largely attributed to higher costs of items purchased and was driven mainly by women and consumers aged between 26 and 35.
“In terms of socio-economic categories, the lower middle-income segment recorded the strongest improvement in spending trends, while the lower-income segment saw the biggest decline,” Muriithi explained. The report also noted that 87% of respondents made purchases using their own income, while 13% relied on credit.
Retail Business Sales Trends
Contrary to the rising individual spending trends, retail business sales remained flat between the second quarter of 2024 and the first quarter. Improvement in sales trends in large and medium-sized businesses was offset by a decline in small and micro-business sales.
“The clothing, retail shopping, and food & beverage sectors saw an improvement in sales trends. However, this was counterbalanced by a significant decline in sales trends in the house fittings and accessories sectors,” Muriithi added.
CEO’s Perspective
Einstein Kihanda, CEO of ICEA LION Asset Management and the immediate former Chairman of the Institute of Certified Investment and Financial Analysts (ICIFA), summarized the findings: “Individual spending trends continued to remain resilient in a challenging economic environment while retail business sales trends remained relatively muted.”
The report underscores the complex economic landscape in Kenya, where individual spending is rising despite flatlining retail sales, suggesting a need for strategic adjustments in both consumer and business sectors to navigate these challenging times effectively.
