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New ‘KFC Index’ provides insight into African currency valuations

The KFC Index, against USD, February 2016. The index shows overvaluation of the Angolan kwanza and Nigerian naira, while the South African rand is the most undervalued.

Sagaci Research, a pan-African market research and intelligence firm, has published 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, the index provides insight into African currency valuations 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.

The highest prices in comparison to US prices are found in Angola and Nigeria, whose currencies are estimated to be overvalued by +72% and +47% respectively. On the other hand, the lowest prices are found in Egypt and South Africa, whose currencies are undervalued by -34% and -48% respectively.

  • React

    This research is so poorly done; it implies that cost of production and doing business is uniform across all markets. Demand for Chicken is highest in Nigeria because of low agriculture produce in relation to population which in turn will drive cost up. In Nigeria, owing to epileptic power supply processing Chicken would be expensive cos you have to power your shop “Manually” which makes preservation extremely expensive. In addition to all these, KFC is the most expensive Fast Food outlet in the Nigerian market and to preserve the perception of Premium they add to the bill. Finally a 12pc Bucket goes for 22 dollars not $30.

    • Belvas Otieno

      Hahaha, React, ur being too harsh on them…it’s just a simple analysis to give an indication whether a currency is under or overvalued and yes, the concerns you raise are valid.

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