Nigerian households spend more on recharge cards than on food -report

The average Nigerian household spent more on recharge cards than they did on petrol, soap, washing powder and personal food care, a survey report for 2012/2013 carried out by the National Bureau of Statistics (NBS) in collaboration with the World Bank, has shown.

The survey showed that recharge card spending by Nigerians moved to essentials from discretionary spending as 72.3 percent of the sampled households, reported making expenditure to recharge their phones, higher than personal care foods (52.2 percent), and petrol (30.9 percent).

An interesting interplay for investors in the telecommunication sector reveal that the four telecoms firms (MTN, Glo, Airtel, and Etisalat), are major beneficiaries, as Nigerians collectively spent about N449.7bn a month on recharge cards.An average Nigerian household spent about N33,373 a month on house rent, with payment for house rent being a major spender for Lagos residents. With the prospect of increasing household formation as the Nigerian population grows to 400 million by 2050, this offers an opportunity for firms in the building material space to continue growing revenues, as developers race to meet the estimated 17 million housing deficit. Soap and washing powder is the typical essential commodity as 90.9 percent of Nigerian households reported making a purchase of these items in the past month. Total monthly national household expenditure on soap and washing powder came to N149.2 billion.

Unilever, Procter &Gamble and PZ are some listed names set to benefit from the growth of this sector.The average household spent N13,860 a month on petrol reflecting the growing middle class, as more Nigerians buy cars, as well as the crushing energy deficit, as most expenditure on petrol is invariably used to power generators for homes or businesses.

The NBS/World Bank report coincides with a study by ‘Nielsen Emerging Market Insights,’ which revealed that food, personal care, and household products account for 37 percent of total monthly household spend. While eight out of 10 consumers shop at traditional places such as neighbourhood shops and open markets, shopping at malls is increasingly becoming the norm for the emerging middle and elite class, as well as trendy buyers who shop for discretionary products like households and decorations.

Research also shows that traditions, family and maintaining high standards for oneself are key attitudes that influence the purchasing habit of the Nigerian consumer. The Nielsen Emerging Market Insights reveal that “eight of ten respondents stress the importance of planning for the future, which results in price sensitivity and prioritisation in consumption.

”Interestingly, consumers prefer tried and tested route in terms of products. In addition, products that are affordable and easily available are most likely to succeed in the Nigerian market. Analysts believe that the establishment and growth of organised retail has continued to affect the way many Nigerian consumers approach the purchase of consumer goods and services.Not only do consumers have a wider selection from which to choose from, they often tend to see, sample and buy many of the products and brands Western shoppers now take for granted.

Sectors which have witnessed change from the formal retail in the country include food and drink, clothing and footwear, personal care products and house wares. While strong formal retail sector is expected to have positive impact on the growth of other consumer sectors, an emerging trend is that with their increasing levels of disposable income, some Nigerians could afford to become brand-conscious, driving demand for designer fashions. Interestingly, Nigerian consumers tend to remain loyal to brands,but this is being sharply tested by the increasing presence of cheaper quality alternatives.

The survey which identified seven consumer segments based on a face–to–face survey of 5,000 respondents across Nigeria, Ethiopia, Uganda, Kenya, Tanzania, Zambia and DRC revealed that Nigerian consumers preferred the ‘tried’ and ‘tested’ route in terms of products. Also in Nigeria, the middle and high income consumer segments comprising of trendy aspirants, balanced seniors and progressive Affluent, which constitutes 54percent of total survey respondents, which is significantly higher than the Africa average of 45 percent.

While growth in the country has been possible because of steps taken by the government to end armed conflicts and create a better business climate, due to these positive changes, Nigerians earn more and spend more on CPG products than the African average.

According to experts, while there is potential for value-added products amonghigh Consumer Packaged Goods (CPG) spend segments, launching a new product in this country of diverse groups requires a strategy that accounts for the culture and needs of people across all consumer segments.

Source:Business Day

Posted From iProdigy Group Nigeria(Dabibi Ori-ibim’s Blog).

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