The Institute of Chartered Economists Ghana (ICEG) believes consumer confidence is one of the proxies (a social research tool) crucial in implementation of businesses and public policies, as well as predicting or projecting economic performance.
However, apart from the Bank of Ghana (BoG) that regularly embarks on consumer and business surveys, private and independent measuring of consumer confidence in Ghana is to a large extent non-existent. ICEG is of the opinion that as the BoG is part of the executive branch of government, it would be appropriate to get similar surveys from civil society’s viewpoint to, at least, ascertain the veracity of such findings.
It is against this backdrop that the ICEG has taken upon itself the duty of measuring consumer confidence semi-annually to help both the private and public sectors in policymaking and implementation, as well as provide an independent measure of consumer confidence as against the BoG’s.
ICEG indicated in its biennial consumer confidence indicator that consumer confidence has declined in the first half of 2018, compared to the second half of 2017.
The consumer confidence indicator is designed to measure consumer confidence, which is the degree of optimism in the state of the economy that consumers are expressing through activities of savings and spending.
Increase in consumer confidence indicates economic growth in which consumers are spending money, indicating higher consumption. Decreasing consumer confidence on the other hand implies slowing economic growth, hence consumers are likely to decrease their spending.
A biennial decreasing trend suggests consumers have a negative outlook on their ability to secure and retain good jobs. When faced with a down-trending indicator, government has a variety of options such as issuing tax rebates or taking other fiscal or monetary actions to stimulate the economy.
Speaking to the B&FT, CEO of the ICEG Mr. Gideon Amissah indicated that the survey was done based on 4,000 households in the 10 regions of Ghana.
According to Mr. Amissah, consumption forms a greater part of our GDP and therefore consumer confidence should not be neglected when formulating policies as was done in the past.
As indicated in the findings of ICEG, the period between January 2018 and June 2018 reveals a consumer confidence indicator of 45.07% compared with a December 2017 CCI of 49.81%. This indicates a drop in consumer confidence of about 4.74%.
The survey consists of five questions which ask for the respondents’ opinions about the current business conditions, business conditions for the next six months, current employment conditions, employment conditions for the next six months, and total family income for the next six months.
The highest indicator in the survey was ‘expectation’, with Employment condition in the next six months recording 49.49%. The lowest recorded indicator was the ‘current employment condition’ which recorded 37.90%’.
Only the Upper East recorded an increase in confidence level – of about 6%, while the Central Region recorded the highest decrease in confidence of about 14% and the Eastern Region recorded no change in confidence level.
The ICEG CEO noted that such surveys are not done for political gain, and that the current government can take advantage of this in terms of drafting political strategies to address the problem of consumers losing confidence. He further noted that the opposition can also use this to strategise in terms of winning back the people’s confidence.
The survey highlighted the possible contributory socio-economic factors which could have influenced the loss in consumer confidence, and these include the GITMO 2 saga; the corruption perception index (BOST, GEPA, Kelni GVG, and Numb 12); the US military base in Ghana; EC Removal; Depreciation of the cedi; and the US$2.2billion bond.
The institute made some recommendations which government should critically look at to help improve consumer confidence, and these include that government should not only pursue accelerated growth but also inclusive growth and sustainable development of the economy.
Government must maintain policy consistency and coordination between the monetary and fiscal regimes so as to reap the benefits of economic growth; and it should intensify policies on human development in Ghana – in terms of poverty, education, health and decent job policies.
Policy reforms and digital innovations are required for the effective use of public resources in achieving results in public service delivery; security issues and corruption perception must be resolved swiftly to maintain the populace’s confidence in the current governance system.