KFC Index
The KFC Index
Overview
The KFC index was created by Sagaci Research (a Pan-African primary
For example, the average price of KFC's Original 12 pc. Bucket in United States in January 2016 was $20.50; in Namibia it was only $13.40 at market exchange rates. Therefore, the index suggests that the Namibian dollar was undervalued by 33% at that time.
Inspiration
The
Limitations
As in the case of the Big Mac Index, the KFC Index was not created to be a highly accurate and precise tool for measuring purchasing power parity and its limitations include factors such as inflation, dietary preferences, socio-economic classifications, levels of competition and local costs (e.g. advertising, production and taxes).
Currency volatility – due to the nature of developing economies (in this case all countries in Africa), there is more likely to be high volatility in currencies, therefore undertaking this analysis over a one to three month basis could produce large changes and different conclusions.
Black market – as there is a thriving market for US Dollars in some countries, it may produce conflicting results compared to the official exchange rate. Angola and Nigeria are examples of these types of markets. The report produced by Sagaci Research takes into account black market exchange rates.
Figures
The February 2016 publication states:
Most overvalued currencies
Angola 72%
Morocco 30%
Most undervalued currencies
South Africa -48%
Egypt -34%
Namibia -32%
The June 2016 publication[4] [5] states:
See also
References
- ^ "Angola's currency is the most overvalued in Africa, based on the "KFC Index"". Quartz. 4 March 2016.
- ^ "Fried Chicken Index Shows Angola Kwanza Most Overvalued Currency". Bloomberg. 1 March 2016.
- ^ "The KFC Index". The Atlas. 1 March 2016.
- ^ "KFC Index shows Angolan and Moroccan currencies overvalued". How We Made It In Africa. 2 August 2016.
- ^ "Sagaci Research updates Chicken Bucket Index; purchasing power parity across Africa revealed". African Business Review. 28 July 2016.