December 23, 2020
December 21, 2020 / 10.00 AM --
In November, Nigeria’s Consumer Confidence Index (CCI) saw a 5-point decline. This was led by both a drop in the index of consumer expectations as well as sentiment surrounding current conditions which fell 6 and 5 points respectively.
The index of current conditions saw a 5-point drop, taking the index value from -30 to -35. The index reading has remained in the negatives ever since it first dropped upon the first COVID-19 case being announced. Ever since then, social unrest, political concerns, worries surrounding the pandemic, and the recently announced recession has kept the value in the negatives. The drop in the month of November was led by a fall in optimism about making large expenditures as well as regarding job prospects. Both sub-indexes saw a 4-point drop in their value. Job prospects fell further from the -71 recorded in October to -75 which is the lowest index value recorded this year and only 3 points away from the all-time low recorded in May 2017. This goes to show that unemployment in Nigeria is the grimmest it has been.
It is not a surprise that consumers aren’t entirely optimistic about making large expenditures on discretionary goods this November. With inflation rising once again for the 15thconsecutive month to 14.9%, disposable income is being utilized to cover basic needs. Core consumer prices including agricultural produce rose 0.71% in November according to the National Bureau of Statistics. According to the Kasi COVID-19 Pulse tracker, not only are Nigerians concerned about contracting the virus or a family member being ill, but they are also worried about struggling financially and being able to put food on the table.
As the health crisis continues to take lives and livelihoods, concerns about the pandemic continue to control sentiment as well. The majority of Nigerians have rated their concerns over the virus at a 5 or 4 (34% for the former and 38% for the latter). Respondents are also split between two conflicting sentiments where the majority, at 45%, think that the worst of the crisis is happening right now and the second-highest group, at 34%, think that the worst of the crisis is over now. Right now, Nigeria’s total case count stands at 67 557 confirmed cases and 1173 deaths according to Africa News.
Future expectations also took a dip bringing the index value to 37 from the 43 points recorded in October. This was primarily led by the drastic 17-points drop in the sub-index measuring the ability to meet regular expenditure. With inflation rising month over month and the current recessionary period, it is expected that inflation is only going to go up. As core prices continue to rise, COVID-19 cases rising, and oil prices not expected to pick up in the last quarter of 2020, Nigerians worry what that would mean for future income.
Additionally, negativity surrounds the expected situation of the country, household income, and expenditure on discretionary goods in the next 6 months. The sub-indexes fell 4, 3, and 8 points respectively. Uncertainty continues to surround the Nigerian economy as a result of continuous periods of economic downturn as tanked oil prices during the pandemic put the oil sector under stress. Consecutive periods of economic decline put Nigeria in a recession in the 3rdquarter this year and while the expectation is for the country to grow in 2021, the current outlook is still very fragile. Moreover, with social tensions and issues surrounding security, the sentiment is down overall in the country.
Nigeria’s most heavily hit industry is definitely the oil sector but at the same time, so was the retail industry. Many products faced negative momentum as luxury products weren’t demanded during the peak months of the pandemic. Such products included electronics, alcoholic beverages, beauty products, clothing, entertainment, etc. that became redundant expenditures people couldn’t afford. However, in recent months, there has been a shift to positive momentum for some products as health concerns began to fall. Once again though, as Nigeria entered a recession, while momentum remains positive, demand for luxury and discretionary products have definitely fallen once again. This includes cleaning products as well as personal hygiene products for which demand was expected to remain high.
Shopping and lifestyle trends remain the same as they were in the last 8 months. Nigerians continue to avoid going to the grocery stores too often and prefer to purchase in bulk and thus, seek out places that provide products in bulk. The public also continues to avoid using public transport and going to public places including restaurants. Hence, business in the entertainment and retail industries haven’t recovered to pre-pandemic levels and remain quite low.
By Tanya Gandhi, Economic Intelligence Group at Kasi
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