Market News

By Joseph Chibueze, Abuja

Recent data mined from Nigeria’s gross domestic product (GDP) reports of 2023 up to the second quarter of 2024 shows that household consumption has consistently dwindled over the period.

According to the report, in the first quarter of 2023, household consumption was down by 23.57 per cent, it increased by 7.08 per cent in the second quarter, fell by 0.12 per cent in the third quarter and even further down by -13.68 per cent in the fourth quarter. The report shows that the annual growth in 2023 was -10.89 per cent.

The situation became, even more, scary in 2024 as the first quarter report shows household consumption fell by -42.28 per cent and slumped by -61.18 per cent in the second quarter.

In the first quarter of 2024, disposable income rose to 12.91 per cent and further up to 17.44 per cent in the second quarter. A fall in household consumption means that people are spending less money on goods and services, indicating a decrease in overall consumer spending within an economy, which can be a sign of a potential economic slowdown as it directly impacts aggregate business activities.

In a normal situation, the rise in disposable income ordinarily drives up household consumption, but that has not been the case with Nigeria as inflation which has ravaged the country has drained people of their purchasing power.

The President of the Manufacturers Association of Nigeria (MAN), Francis Meshioye, recently raised the alarm that inventories in the manufacturing sector rose to N1.4 trillion in the second half of 2024 from N1.24 trillion in the first half of 2024, a consequence of consumers’ inability to buy goods produced due to high costs.

Many businesses have either scaled down their operations or shut down completely, while others have relocated to other countries. A recent report by Mustard Insights, a Nigerian data company, revealed that 43.7 per cent of business owners in Nigeria reduced their workforce in 2024, indicating widespread struggle and potential closures across various sectors.

Experts believe that when households are consuming less, it often reflects a reduced standard of living, as citizens may be cutting back on essential goods and services, which can lead to increased hardship, especially for lower-income families. They say the quality of life may deteriorate as access to necessities becomes limited.

“This goes to show how unhealthy many Nigerians have become at this moment. If household consumption has fallen this huge, it means many people are not even eating balanced diets anymore. Talk more about supplements, talk more about medications,” they said.

Early this year, a report by PiggyVest, an online savings platform showed that 83 per cent of Nigerian households are prioritising food over education, healthcare as well as savings and investments.

The report said this was so because the funds available to families could hardly provide them with a quality meal. Last year, the Central Bank of Nigeria (CBN), released a report that households are spending 55 per cent of their income on food.

CBN in the report titled, Household Expectation Survey, published on its website, said many Nigerians intend to cut down on items that are not essential and plan to spend 54.9 per cent of their income on food items, 35.4 per cent on education, and 12.2 per cent on medical expenses.

The CBN report also showed that Nigerians do not intend to spend on investments such as acquiring landed properties or other forms of investments. They equally do not plan on saving their incomes.

The removal of fuel subsidies by the present administration to shore up government revenue exposed the people to a cost-of-living crisis as a result of heightened inflation that made cash in their hands worthless.

Governor of Bauchi State, Senator Bala Mohammed, last year at the launch of the Nigeria Development Update (NDU) by the World Bank, said it is true the states were getting more money, but the money can barely meet their budgets because prices have gone up.

People can hardly afford one square meal a day as food prices keep rising, exacerbating the hunger crisis in the country.

A report by Cadre Harmonisé supported by the Federal Government and the United Nations World Food Programme, warned of deteriorating food security in Nigeria, with 33.1 million people projected to face a high level of food insecurity in the next lean season (June-August 2025) owing to the inability of many families to afford staple foods.