"Ghana: Household disposable income to rise to $5,420 by 2026 \u2013 Fitch Solutions"

" \n Ghana: Household disposable income to rise to $5,420 by 2026 \u2013 Fitch Solutions \n \n\n \n Research agency, Fitch Solutions, is anticipating an increase in household disposable income over the next four years. \n \n\n \n According to the agency, it expects household disposable income to rise from the current figure of $4,488 in 2022 to $5,420 by 2026. \n \n\n \n Per its forecast, total household spending is expected to increase from GHS 329.7bn this year to GHS 617.5bn in 2026. \n \n\n \n \u201cWe hold a positive view for Ghanaian households over the medium-term (2022-2026), with disposable income per household rising from GHS34,200 (USD4,488) in 2022, to GHS48,400 (USD5,420) by 2026.\u00a0 \n \n\n \n \"We expect the growth in real disposable incomes to have positive effects on household spending over the medium term. In 2022, total household spending will total GHS329.7bn (USD55.8bn), and will grow by an annual average of 13.4% over the following five years, bringing total household spending to GHS617.5bn (USD69.2nm) by 2026. \n \n\n \n \"This bodes well for the sales of both domestic and international retailers operating in Ghana, particularly those who specialise in household essentials,\u201d stated Fitch Solutions in a recent article throwing light on Ghanaian household income. \n \n\n \n Fitch Solutions in the article, further stated that due to the current low levels of disposable income, essential spending by households remain the dominant category, asserting essential spending will be almost three times larger than non-essential spending by 2026. \n \n\n \n \"We forecast essential spending to be almost three times larger than non-essentials in 2022, totalling GHS248.4bn (USD42.0bn) and over the medium-term, we forecast essential spending to grow faster than non-essential spending. \n \n\n \n \"By 2026, essential spending will grow to GHS470.0bn (USD52.6bn) and will account for 76.1% of total spending. Within the essentials category, food and non-alcoholic drinks takes the highest proportion of total spending. \n \n\n \n \"Food and non-alcoholic drink spending will account for 43.0% of total spending in 2022, this means that food and non-alcoholic drinks spending will grow from GHS160.8 (USD21.1bn) in 2022 to GHS263.7bn (USD29.5bn) by 2026,\" it added. \n \n\n \n Read full details of the article:\u00a0 \n \n\n \n Ghanaian Dairy Spending Will Benefit From Growing Consumer Demand \n \n\n \n Key View : The Ghanaian dairy segment will see significant growth over the medium-term, aided by growing real disposable incomes and demand for dairy products. The dairy segment has benefitted from improving road infrastructure and refrigeration facilities and the increasing formalisation of the grocery shopping experience which has all contributed to lowering the time and costs of making dairy products more widely available to Ghanaian consumers. Within the dairy segment, yoghurt will be the outperformer, as Ghanaians demand for drinking yoghurts grow due to their affordability and convenience. \n \n\n \n Positive Medium-Term Outlook For Ghanaian Households \n \n\n \n We hold a positive view for Ghanaian households over the medium-term (2022-2026), with disposable income per household rising from GHS34,200 (USD4,488) in 2022, to GHS48,400 (USD5,420) by 2026. This equates to a 9.0% CAGR over the 2022-2026 period. However, we expect to see similar levels of inflation through the medium term. Ghana is highly exposed to commodities such oils and wheat, which have risen in price due to the Russia-Ukraine conflict. This is has resulted in rising consumer price inflation in recent months which is negatively impacting consumer purchasing power. Our Country Risk team forecasts Ghana\u2019s consumer price inflation to average 18.6% y-o-y over 2022 and this is higher than the 2021 average of 9.9% y-o-y. Looking ahead, we forecast Ghana\u2019s consumer price inflation to ease to 8.1% y-o-y over the 2023-2026 period. We expect the growth in real disposable incomes to have positive effects on household spending over the medium term. In 2022, total household spending will total GHS329.7bn (USD55.8bn), and will grow by an annual average of 13.4% over the following five years, bringing total household spending to GHS617.5bn (USD69.2nm) by 2026. This bodes well for the sales of both domestic and international retailers operating in Ghana, particularly those who specialise in household essentials. \n \n\n \n Disposable Income Growth Will Be Positive For Ghanaian Households \n \n\n \n Ghana - Disposable Income Per Household, GHS (2020-2026) \n \n\n \n \n \n\n \n e\/f = Fitch Solutions estimate\/forecast. Source: National statistics, Fitch Solutions \n \n\n \n A Growing Labour Force Will Support Consumption \n \n\n \n Ghana, like many other countries in the West Africa region, has a young population. In 2022, the median age in Ghana will be around 21.8yrs, with almost 47% of Ghana\u2019s population falling into the children and teenagers category. Ghana\u2019s population is forecasted to grow to 52.0mn people by 2050, increasing by almost 18mn people from their population in 2022 (of 32.4mn). Ghana\u2019s young adult (20-39 years old) and middle-aged population (40-64 years old), the working-age population, will grow from 16.2mn people in 2022, to 28.7mn people by 2026. We believe the growth in Ghanaians who can actively participate in the population will have positive effects on consumer spending segments. The positive growth in Ghana\u2019s economy will improve the wage and employment prospects on consumers in the country and this bodes well for consumer spending \n \n\n \n Ghana Will Have A Growing Labour Force \n \n\n \n Ghana - Population Dynamics (2022-2050) \n \n\n \n \n \n\n \n f = Fitch Solutions forecast. Source: National statistics, Fitch Solutions \n \n\n \n Essential Spending Commands Most Of Ghanaians Disposable Incomes \n \n\n \n Due to low levels of disposable incomes in Ghana, essential spending remains the dominant category. We forecast essential spending to be almost three times larger than non-essentials in 2022, totalling GHS248.4bn (USD42.0bn) and over the medium-term, we forecast essential spending to grow faster than non-essential spending. By 2026, essential spending will grow to GHS470.0bn (USD52.6bn) and will account for 76.1% of total spending. Within the essentials category, food and non-alcoholic drinks takes the highest proportion of total spending. Food and non-alcoholic drink spending will account for 43.0% of total spending in 2022, and we forecast this proportion to decrease slightly to 42.7% by 2026, however in nominal terms, spending will still be the largest segment. This means that food and non-alcoholic drinks spending will grow from GHS160.8 (USD21.1bn) in 2022 to GHS263.7bn (USD29.5bn) by 2026. \n \n\n \n Food And Non-Alcoholic Drinks Dominate Spending \n \n\n \n Ghana - Proportional Spending Breakdown, % of total spending (2022) \n \n\n \n \n \n\n \n f = Fitch Solutions forecast. Source: National statistics, Fitch Solutions \n \n\n \n Dairy Will Be The Outperforming Category \n \n\n \n We forecast a 13.2% five-year CAGR within the Ghanaian food spending category over the 2022 to 2026 period, with dairy spending forecasting to provide the highest growth. Diary spending will grow by an annual average of 20%, with bread rice and cereals being the second fastest growing category. While we note that dairy spending is growing from a low base, with dairy accounting for 3.7% of total food spending, the growth in spending is faster than categories such as fresh vegetables and oils and fats, both of which have a similar share in total food spending. Ghanaians spend predominantly on fish and fish products and bread, rice and cereals, which collectively account for around 70% of total food spending. While we do not see this trend changing over the medium-term, the acceleration in dairy spending highlights a trend of both westernisation and greater formalisation of the Ghanaian food sector. The Ghanaian food and drink segment of the economy has become far more formalised with many lower-middle income consumers in urban areas doing their grocery shopping at retail stores compared to markets. Better logistical capabilities, such as better roads making transporting goods easier, and better refrigeration capabilities makes Ghana far more of an attractive market for dairy companies to look into for expansion. \n \n\n \n Dairy Sales Will Outperform Over The Medium Term \n \n\n \n Ghana - Food Spending Breakdown, sales, GHSmn, % growth y-o-y (2020-2026) \n \n\n \n \n \n\n \n e\/f = Fitch Solutions estimate\/forecast. Source: National statistics, Fitch Solutions \n \n\n \n Yoghurt Demand Is Growing Exponentially \n \n\n \n Ghana has traditionally been unable to increase production of dairy related products due to low consumer demand, poor refrigeration and transportation service and difficulty in growing cattle production. In more recent years, demand for beef and dairy related products has grown significantly. In 2022, we forecast dairy spending to reach GHS176.1 (USD23.1) in per capita terms. This is a significant increase from GHS40.2 (USD22.0) in 2012. Furthermore, we project a five-year CAGR of 21.1% for total dairy spending, growing from GHS5.7bn (USD748.8mn) in 2022, to GHS12.3bn (USD1.4bn) by 2026. Within the dairy category, yoghurt stands out as the best performing category, with a five-year CAGR of 52.0%. We forecast yoghurt spending to increase from GHS678.1mn (USD89.0mn) in 2022, to GHS3.7bn (USD417.2mn) in 2026. The increased demand for yoghurt will largely be driven by a westernisation of Ghanaian consumption choices but also due to the greater accessibility and the fact that yoghurt is often seen as an affordable protein substitute. Drinkable yoghurts have also grown significantly in popularity amongst Ghanaian consumers and are often marketed as a high protein, low sugar, on the go drink. Companies such as FanMilk and VitaMilk have far deeper offerings in the drinkable yoghurt and ice-cream categories compared to traditional dairy products such as milk and butter. Emigoh Ghana , a large food and beverage company, has a subsidiary, Yomi Yoghurt, solely dedicated to the production of yoghurt products. We believe the Ghanaian dairy, and particularly yoghurt industry will continue to see continued expansion and greater demand by consumers. \n \n\n \n Ghana's Yoghurt Segment Will Grow Significantly \n \n\n \n Ghana - Yoghurt, sales, GHSmn (2020-2026) \n \n\n \n \n \n\n \n e\/f = Fitch Solutions estimate\/forecast. Source: National statistics, Fitch Solutions \n "

"Ghana: Household disposable income to rise to $5,420 by 2026 \u2013 Fitch Solutions"

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