Amid rising unemployment, a new report by British firm Utility Bidder has revealed that Nigerians are spending a large chunk of their monthly income on major utilities. According to the report, Nigerian households spend more than two thirds or 67.7% of their monthly income on utilities. Items affected include water and gas, broadband data and internet, electricity tariffs, transmission tariffs and others. When other basics like food and rent are added, there is little or nothing left in savings for an average household in the country.
Data from the National Bureau of Statistics (NBS) corroborated the UK-based business survey, renowned for offering well-researched advice on utility prices for consumers. Around 51 countries were covered in the survey, in which Nigeria ranked second, followed by Pakistan and the Philippines in first and third positions with 62.9% and 61.5% of monthly utility expenditure respectively.
The survey also showed that Nigerians pay one of the highest prices for internet access. This is also true, as mobile internet service providers often raise data charges, especially in reaction to the government’s recent increase in value added tax. Overall, the report can hardly be faulted, it represents an almost accurate account of the harrowing experiences that many Nigerians are currently going through. With a national minimum wage of N30,000 per month, yet to be implemented by many state governments, the difficult economic situation has taken its toll on many Nigerians.
Rather than criticizing the report as some government officials would tend to do, the report should serve as timely advice to the government to initiate policies that will improve the disposable income of Nigerians and reduce the cost of key public services.
the The National Bureau of Statistics (NBS) had in its Gross Domestic Product (GDP) expenditure and income report last year revealed that Nigerians spent N54.84 trillion on household consumption in nominal terms in the first half (H1) of 2021. The figure was above 48.22 trillion naira recorded in the first half of 2020. It stood at 49 trillion naira and 44 trillion naira in the first half of 2019 and 2018, respectively.
Household expenditure is the amount of final consumption expenditure made by households to meet their daily needs, such as food, clothing, rent, energy, transport costs, durable goods (including cars), health costs, recreation and miscellaneous services. Household consumption expenditure increased by 8.90% in the first quarter (Q1) and by 19.08% in Q2 2021.
This shows that Nigerians are spending more on public services and that development has reduced the income available for savings and investments needed for economic growth. The increase in household spending is also a clear signal that Nigerians are spending more due to an increase in the prices of goods and services. There are a few key takeaways from the report that government policymakers should work with. Although inflation has declined in recent months, it remains well below the CBN’s inflation target of 9%. For example, the cost of 12.5 kg of cooking gas which sold for N3,800 in October 2020, now sells for between N7,500 and N8,000 in many states. In addition, prices of major food items such as rice, beans, eggs and bread are on the rise.
Over the past month, prices of essential foodstuffs have increased by 30-50%. For example, a sachet water bag has been changed from N200 to N150. The electricity tariff has been increased by more than 50% per kilowatt. Across the states, the Consumer Price Index (CPI), which measures inflation, shows that food inflation has risen beyond the reach of many Nigerians.
A recent NBS report showed that most Nigerians are groaning under the pressure of high food costs. There is an urgent need for policy measures that will reduce food inflation and make food available and affordable. General insecurity across the country has worsened household consumption expenditure. Farmers must have adequate security.
According to the Misery Index, which helps determine the economic well-being of an average citizen, Nigeria may be the largest economy in Africa, but an average Nigerian is more miserable than his peers in other African countries. Nigeria’s poverty index is 50.6% higher than that of nine other African economies. South Africa recorded 35.7%, Angola 32.7%; Ghana, 14.8% and Kenya, 13%. With rising unemployment and high inflation, many Nigerians are not doing well despite our seemingly positive GDP outlook.
According to the International Monetary Fund (IMF), Nigeria has one of the lowest savings rates in the world. In 2019, the gross savings rate in Nigeria was 13.9%. This is well below China at 45%, and well below South Africa (15.8%), Tanzania (24.8%) and Togo (21.2%). Higher savings will stimulate investment, productivity and economic growth. Let the government come up with workable plans to encourage savings, private investment and other things that will increase our GDP.