Food Accounts for 66.3% of Consumption Basket as Nigerians Change Consumer Habits

The average Nigerian will rather buy food, beverages and tobacco than venture into leisure eating and other pleasures as a result of the low level of disposable income available.
The 50 percent hike in fuel price in 2012 is said to be a contributing factor.
“The consumption basket is divided into 9 major categories with food, beverages and tobacco (FB&T) constituting the majority with 66.3 percent, followed by housing & household fuels at 18.2 percent and transport and communication at 4.7 percent”, said Bismarck Rewane, Chief Executive Officer of Financial Derivatives Company (FDC) Limited.
Investigations reveal that, given the low level of disposable income available, consumption is dominated by the purchase of food items, with little left for other consumer goods such as leisure eating.
It is however believed that consumer income is projected to increase in the next few years as productivity and efficiency improves.
Consumption patterns are likely to reflect increased expenditure on leisure items, while essentials decrease slightly. This will also be driven by the burgeoning middle class rather than the nation’s poor, who will remain in the vast majority.
Nigeria’s consumption pattern is also defined by the demographic structure. The country has a young and growing population estimated at 170 million, with approximately 60 percent living in absolute poverty. The median age in Nigeria is 18years compared to the global median age of 29 years. The top and bottom of the demographic pyramid (14 years and be-low, 65 years and above) constitute 42 percent of the populace, supported by the working class who constitute 58 percent.
There has been much ado about the growing middle class in Nigeria. As true as this fact is, the income inequality continues to widen still as the rich get richer and the poor get wealthier at a slower pace. The Economist Intelligence Unit (EIU) projects an income per capita of $1,698 for Nigeria in 2014, relative to other SSA peers such as South Africa ($6000), Ghana ($724), Senegal ($799) and Ivory Coast ($548). Within Nigeria, the income disparity is worse; states such as Abuja, Kano and Lagos have the highest per capita income compared to other states especially in the North such as Jigawa.
Having set the demographic framework, what then drives the consumption pattern of the average Nigerian?
Consumer Behavioral Shifts
Nigeria is an economy driven by a strong sense of cultural values that continue to drive consumption patterns. Nonetheless, the penetration of westernization and increasing awareness of information technology is beginning to turn the tables over. This is becoming more visible in the growing middle class, characterized by their desire to live in an aspirational society and thus displaying increased sophistication in their shopping habits, dietary shifts, growing urbanization and increasing e-commerce adoption, to name a few.

Dietary Shifts
An increasing number of Nigerians in the middle and high-income class are becoming more health conscious. Consumers, due to health reasons, have become heavier eaters of fruits and vegetables, which are sold fresh in grocery stores and at roadsides. The soft drinks market is one segment of the FB&T industry that has been impacted by the growing awareness in health and wellness. Manufacturers of major soft drinks have resorted to producing low calorie products.

Increasing e-commerce
Practically almost anything and everything can now be purchased online, from groceries to white products. Internet penetration is expanding rapidly with the increasing use of smart phones and tablets. Active internet subscription for GSM grew by 119.67% to 57.84m in October 2013, relative to the corresponding period in 2012.
The most frequently visited websites according to Jana Research Consulting (a Canada-based clinical research company) are Google, Jumia, ebay, Konga and Amazon.
In addition, there has been an increased awareness of the use of debit cards as a means of payment both within Nigeria and for oversea travels- paying for a purchase is now just a swipe away.

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