Nigerians plan borrowing, savings dip for next three months as economy worsens – CBN survey 

Nigerians are bracing for tough months ahead, with many planning to rely on borrowing and depleting their savings to manage their financial obligations amid a challenging economic landscape.

This is according to the Central Bank of Nigeria’s (CBN) July 2024 Household Expectations Survey, which highlights growing consumer pessimism about the nation’s economic trajectory.

The survey, which involved 1,665 households from across Nigeria, reveals a stark decline in consumer confidence, with the overall confidence index for the next three months standing at a negative 9.1 points.

This figure reflects a significant level of anxiety among consumers who anticipate a continued decline in economic conditions and family financial situations.

As a result, many Nigerians expect to either draw down on their savings or incur debt to meet their needs during this period.

The CBN report read: “At -9.1 points, consumers overall confidence was pessimistic for the next three months. The pessimistic outlook is attributed to declining economic conditions and declining family financial situation as consumers opined that they will be drawing down on savings or getting into debt. They, however, anticipate improvement in the total family income as the index stood at 1.6 points.” 

Outlook for July and August 

In July 2024, the CBN’s survey revealed a deeply pessimistic outlook among Nigerian consumers, as reflected in the Consumer Confidence Index.

The index for the month stood at -41.7 points, highlighting significant concern over the state of the economy. The negative sentiment captured by this index suggests that a majority of households are facing considerable financial pressures, with many anticipating the need to draw down on their savings or incur debt to manage their living expenses.

Looking ahead to August 2024, the outlook remains bleak, although there is a slight improvement in consumer sentiment.

The confidence index for the next month is projected at -21.8 points, indicating that while consumers are still pessimistic about the future, their outlook is marginally less negative compared to July.

This slight uptick suggests that some consumers may be holding out hope for a modest stabilization or improvement in their financial situations.

Despite the overall pessimism, there is a glimmer of hope as consumers express a slightly optimistic outlook for the next six months, with an index of 2.7 points.

This cautious optimism is driven by expectations of an improvement in both the economy and family incomes by early 2025.

The document reports: “Consumers were optimistic in their outlook for January 2025 as the index stood at 2.7 points. This positive outlook was attributed to anticipated improvement in the economy and expectations of improvement in family income in the next six months.”

Major concerns 

• Key findings from the survey show that consumers are particularly concerned about the rising costs of basic commodities and services, with many expecting these expenses to increase further in the coming months.
• Also, the majority of respondents believe that now is not the right time to make significant purchases, such as consumer durables, motor vehicles, or real estate.
• In terms of inflation expectations, the survey indicates that Nigerians foresee a continued rise in the cost of living, particularly in essential areas such as transportation, medical expenses, and housing.
• The CBN survey also sheds light on consumer attitudes towards interest rates, with a significant portion of respondents expecting borrowing rates to rise in the near future.

What you should know 

Nairametrics earlier reported that the rising cost of living pushed Nigerians to borrow about N4.82 trillion from banks between January and March this year.

• Consumer credit outstanding in Nigeria surged by 268.9% to N8.24 trillion by the end of March 2024, from N3.42 trillion in December 2023, reflecting the severe financial strain on Nigerians due to escalating inflation.
• The surge in consumer credit was primarily driven by a significant rise in both personal and retail loans.
• However, personal loans constitute the largest portion of consumer credit, rising by 270.4% to N7.52 trillion by the end of March 2024.
• Similarly, retail loans saw a significant increase of 253.4%, reaching N721.13 billion.
• This growth indicates a heightened reliance on credit to manage personal finances, with personal loans accounting for a dominant 91.2% share of total consumer credit.