HomeInsightsSectorsConsumer Goods / FMCGNew purchasing power parity study across African countries provides a fact-based understanding of currencies issues on the continent

New purchasing power parity study across African countries provides a fact-based understanding of currencies issues on the continent

  • 25/02/2016
  • Posted by: Julien Garcier
  • Categories: Consumer Goods / FMCG, Sagaci Insights
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February 24th, 2016. Sagaci Research, the leading independent pan-African market research and market intelligence firm, has published today a new comparative study of Purchasing-Power-Parity (PPP) among African countries, named “The KFC Index”. Inspired by the world renowned Big Mac Index, Sagaci Research has leveraged the presence of KFC™ in 18 African nations to develop the KFC Index of African currencies valuation.

By analysing the prices of the Original Chicken Bucket from KFC™ and covering countries in the North, East, West and South of Africa, Sagaci Research has effectively become the only company providing insight on African currency valuation and consumer purchasing ability relative to the US, and selected European countries. The KFC Index is also a strong fact-based indicator of the financial turmoil affecting African countries, whether driven by rapidly decreasing global oil prices or other factors.
As per the report, average costs of the same product vary widely from country to country, indicating a disparity in real vs. implied currency exchange rates. The highest prices in comparison to US based prices are found in Angola and Morocco, whose currencies are estimated to be overvalued by +72% and +30% respectively. On the other hand, the lowest prices are found in Egypt and South Africa, whose currencies are undervalued by -34% and -48% respectively.
Sondos Faramawy, Research Director at Sagaci Research has stated that “the KFC Index is the first of its kind to illustrate the cost of purchasing final products by consumers in Africa, home to a rapidly growing middle class. It enables companies and individuals to draw comparisons between African countries, as well as other developed markets such as the US and Europe, and hence assist them in calibrating pricing strategies during their entry into the African market.”
The report will be published semi-annually to track the changes in consumer prices and currency exchange rates, and hereby shedding light on economic performance, inflation and monetary policies.
Report and index data can be found on the Sagaci Research website: www.sagaciresearch.com