Persistent slowdown in growth occasioned by continuous drop in price of crude oil and the associated weak confidence in the performance of the domestic economy seems to dampen the level of aggregate spending this festive season, BusinessDay investigation reveals.
Worse still is the fact that prices of consumer goods in various markets across the country have increased, limiting spending spree by Nigerians at Christmas.
For instance, a basket of tomatoes that sold for between N2,000 and N3,000 last year, currently sells for between N11,000 and N14,000 in Lagos markets.
“There will always be Christmas and new year celebrations but this year, the tempo is bound to be low because the economy is at its lowest ebb in decades just as crude oil price,” Agbola Bolade, executive director, Cash Craft Asset Management, said in an emailed response.
Olutola Oni, analyst at WSTC Financial Services Limited, told BusinessDay in an emailed response that in order to improve consumer spending, the government was expected to create liquidity in the FX market and also aggressively push reforms that would promote private sector participation.
We believe the timing and pace of these reforms will go a long way in boosting the impact of the proposed social welfare package of the government in 2016, Oni said.
“On a Year-on-Year basis, we anticipate a decline in consumer spending in the yuletide period. This is on the back of a battered naira vs. the greenback, which has impacted on the prices of goods and services, hence squeezing the purchasing power of the consumers,” Ayodeji Ebo, head, investment research, Afrinvest Securities Limited, said in an emailed response.
According to him, industries are unable to get sufficient foreign exchange to restock, leading to a hike in prices and rationing of available products. This invariably has led to the significant job cut among these industries.
“Despite the drop in global oil prices, we are optimistic that the 2016 budget assumptions are conservative save for the exchange rate assumption. The swift review and approval of the 2016 budget should ameliorate the dwindling consumer spending in the first quarter of 2016. Upon approval of the 2016 budget, the speedy implementation of spending on capital expenditure as well as the social welfare packages should cumulatively improve consumer spending,” he said.
