Consumption Patterns Face Threat as Nigerians Battle Inflation, Unemployment

With Nigerians still battling high unemployment rate, poverty and quick inflation, a Nigerian Banker and Coach at Akinjnr Leadership Academy, Mr. Akin Oluwadare has expressed concern that Nigerian consumers may experience an unstable consumption pattern in 2022.

Speaking to THISDAY on the consumer outlook for the new year, Oluwadare, who argued that consumer spending may nosedive again, urged governments at various levels to quickly arrest the imbalance in the wealth distribution by coming out with economic and financial structural reforms that would yield significant results.

According to him, “The unemployment and inflation trends have been going on for a few years now and it’s getting worse with each passing day. The Nigerian labour market is characterised by high rate of unemployment, low wages and poor working conditions, which also brought about other problems such as increase in crime rate, reduction in investment and retardation of economic development. Perhaps the ultimate is lower standard of living brought about by poor income levels, high poverty rates and inequality gaps and rising prices. If adequate measures are not put in place to proffer solutions to these problems, I fear Nigerian consumers may experience unstable consumption patterns this year.”

Speaking further, the Banker pointed out that the effect of the COVID-19 and lockdown is yet to subside, arguing that consumers increased their purchases of durable goods during the COVID-19 pandemic.

“As admitted by many experts, the pandemic may have lifted the demand for durable goods directly, by shifting consumer preferences away from services toward a variety of durable goods. It may also have stimulated spending on durable goods indirectly, by prompting a strong fiscal policy response that raised disposable income. With other factors threatening consumers, most people may go after cheap commodities this year for survival rather than considering other factors,” Oluwadare stated.

Another Economic analyst, Oluwatoyin Ogunjuyigbe in a piece titled, “Consumer trends to look out for in 2022,” also predicted that the need for cheaper alternatives will threaten brand loyalty in 2022.

He argued that consumer spending in Nigeria has been on a downward trend since 2015 as a result of several factors, including inflation and reduced income.

He said, “It also signals a decline in consumer interest — Nigerians are reducing the amount of money they spend in Nigeria. According to a report by the World Bank, 50 per cent of Nigerian youths want to emigrate permanently. The report also states that Nigerians were the largest group of migrants from Sub-Saharan Africa that entered Europe in 2016 and 2017 — the same period consumer

spending was declining. In 2020, the pandemic restricted travelling. As a result, business was slow for airlines and travel agencies. But with travel restrictions lifted, the market is open for brands that innovate ways to make travelling easier.”

Ogunjuyigbe also observed that demand for multipurpose products may increase in 2022 because of inflation.

“The Fast Moving Consumer Goods (FMCG) sector is known for quick adaptation to consumer behaviour. In Africa, these companies have to keep adjusting their products that suit countries with a shrinking middle class. Sales of products in small sachets have increased in high-inflation countries such as Nigeria. But consumers are looking for more short-term ways to cope with the loss of purchasing power.

“The growth of the liquid soap market in Nigeria proves that consumers now want products with multiple functions. Hypo grew its market share by marketing its bleach, an already cheaper alternative, as a toilet cleaner. Volatile exchange rates and inflation are fuels for this preference. In 2020, Nigeria recorded one of the highest inflation rates in the world. This year, brands that innovate products to serve multiple needs will have a market edge. Telecom brands are adopting this by providing financial services to their customers,”he added.