Windhoek-A new research report has been produced to provide accurate figures and data for people wishing to invest in Africa. The report, produced by a consumer research company called Kasi Insight, aims at providing data on African consumers, figures which the firm say are either lacking and when found are misleading.
“Most investors will say there is still a lack of data on Africa that is accurate, reliable, independent and current. The African consumer, who is the main driver of future growth in Africa, is not very well understood,” said the statement issued by Kasi Insight, an award-winning consumer research, data analytics and advisory firm focusing on Africa.
The firm says even though macro data provides insights into the economic health of frontier markets, it does not do a good job at capturing idiosyncratic risks and opportunities that are intra- country or industry specific. Consumer spending makes up roughly two thirds of GDP in Africa but there is a lack of good data that allows investors to gauge consumer confidence and spending attitudes when it comes to the regional and metro level in frontier markets in Africa.
“There has been a lot of hype about Africa’s economic ascendance over the past 10 years as GDP estimates were far exceeding developed markets growth estimates. Unfortunately, these rosy numbers were mostly driven by external factors such as high commodity prices and foreign direct investments. The fact that some economies were not well-diversified meant that when commodity prices dropped, economies took a turn for the worse,” said the statement.
“Given the relatively low growth rates in the developed markets of Europe and the US, the argument for investing in less mature economies is strong,” the company said. The paper is titled ‘Improve Investment Decision in Africa using Consumer Confidence Data.’
Kasi Insight prides itself in being the firm that solves problems that present challenges for most firms doing business in Africa – lack of fresh local market data, slow project turnarounds, and a need for contextual insight and innovative research methods.
“For those willing to be patient and willing to take the road less travelled, the African markets offer investment opportunities with higher growth rates and often attractive valuations,” said the statement.
Given that capital markets are still in their infancy in Africa, it is not easy to make investment decisions and take positions in these markets. The investment process can be lengthy and difficult due to the lack of reliable and actionable data.
The report notes that in many parts of the world, public and private surveys track consumer confidence and sentiment to guide business decisions for consumer-focused companies and also to convey a sense of the economic climate.
“Whether consumer confidence is a robust lagging indicator of economic activity in African markets and how long the lag is, as well as the accuracy of the signal, will require academic research that goes way beyond the scope of the paper,” says the statement.
But the beauty of data as a service, is that the consumer of data can use it as they see fit and decide for themselves what is signal and what is noise. What is important to the consumer of data is that the data is accurate and the process by which it is gathered is consistent across geography and time.
The few global research companies also produce consumer confidence measures for a few key African economies. However, these tend to come out with a quarterly lag and the published metrics cover wide – usually national – populations. However, consumer behaviour differs within countries. Furthermore, economic conditions also vary widely within countries, with the average income in cities much higher than in rural areas, for example.
“We examine whether the confidence score accurately signals a decline or increase in the level of economic growth and can thus be used as a lagging indicator. We test the consensus forecast of economic growth for specific countries,” said Kasi Insight in the statement.
“We are thrilled to be working with frontier investors and managers like Africa Capital Group to support their investment decision process in Africa by providing much-needed bottom-up data,” says Yannick Lefang, founder and CEO of Kasi Insight.