Boosting consumer spending in Nigeria
Key questions this article answers:
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The recent reforms in Nigeria point to harder living situations for people, potentially increasing poverty and weakening consumer demand. What steps can create short to medium-term relief for consumers?
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How well can these reliefs boost consumer demand to support businesses?
President Tinubu plans to lift 100 million people out of poverty in the next eight years.
The plan, if successful, would benefit the economy as rising inflation is increasing poverty and dwindling consumer demand in Nigeria. Average inflation rose from 12% in 2018 to 17% in 2021, and household consumption expenditure declined to 62% in 2021 from 77% in 2018.
Today, headline inflation is at a 17-year high of 22.4% (May 2023) and will increase further due to the recent 3x increase in fuel price, a 24.8% increase in food prices, and a 12% rise in transportation costs in May 2023.
As a result, the World Bank believes that an additional 7.1 million Nigerians will slip into extreme poverty in 2023, pointing to a further decline in consumer demand, which is bad news for businesses. It also means that the small consumer market size in Nigeria will become even smaller, negatively impacting bottom-line numbers.
So, how can President Tinubu lift Nigerians out of poverty to support consumer demand, and how will this help businesses? These are the questions today’s article will answer.
First, let’s unpack the issues affecting consumer demand.
Inflation: the thief of value
When prices rise faster
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