CEM REPORT, FINANCE | Though there is a significant rise in cost of living due to high inflation in the country, a study has revealed that 50 per cent of Nigerians had an increased income in 2023.
The study by SBM Intelligence revealed that 18.6 per cent of Nigerians recorded an income decline in the period under review.
The report, titled ‘Living Dangerously on Credit’, said that the Northcentral region recorded a 28 per cent increase in income while the Southwest region followed, with 24 per cent. The report noted that other parts of Nigeria recorded a decline or stagnant income between 2019 and 2023.
“More than a quarter (27.4 percent) of the respondents said their income has remained unchanged since 2019.
“The data contained in this report is only up-to-date as of September 15, 2023. Some of it is subject to change during the natural course of events.”
The SBM report which surveyed 1,745 respondents living in Lagos, Kano, Abuja, Port Harcourt, Awka, Ibadan, Onitsha, Enugu, Bauchi, Nnewi and Calabar, a representation of Nigeria’s six geopolitical zones, attributed increased income to promotions, jobs change and increased demand for goods.
“In contrast, job losses, salary cuts and reduced sales were cited as reasons for experiencing a reduced income.”
Additionally, SBM in the report stated that “the Nigerian consumer is currently facing significant challenges because of a combination of high inflation, sluggish economic growth and high unemployment rates.
“This situation has resulted in wage increases that are not keeping pace with rising inflation. This has left Nigerians with little choice but to gorge on credit facilities.”
A breakdown of the data reveals that the Northcentral region representing 28 per cent reported an increase in income compared to those based in other parts of the country.
“The Southwest followed, with 24 percent of respondents reporting an income increase.
“Income remained stagnant in Southwest, accounting for 30 per cent of the respondents who said their income did not change in the four years between 2019 and 2023.”
The report added that respondents from the Southeast reported the biggest decline in income, accounting for 28 percent of all those who said their income had decreased.
“This was followed closely by the South-South region, where 23.6 percent of the respondents reported decreased income.”
Moreso, the report details that 97 per cent of Nigerians spend their monthly income on food. The report puts average spending on food at ₦105,318 compared to the monthly average income of ₦108,097.
“Respondents from the Northeast, South-South and Northwest reported spending above 100 per cent of their income on food. Those in the Southeast got a little respite, spending 80 per cent of their income on food.
“Those in the Southwest and Northcentral reported spending 97 per cent and 89 per cent of their income on food, respectively,” it added.
Analysts at SBM opined that the removal of the fuel subsidy tripled the petrol price which invariably shot up transportation fares and affected private sector workers who rely on public transportation.
“With higher transportation fares, many employees are forced to allocate a substantial portion of their salaries to cover commuting expenses, leaving little for other essential needs like food and rent.
“Removing subsidies has led to an increase in the prices of goods and services such as fuel and food. This has made it difficult for people to afford necessities such as food and transportation,” analysts at SBM said.
They added that the economic change has also affected people’s ability to earn a living wage. “Many people have lost their jobs or experienced decreased income due to the economic downturn.”
The report also highlighted that the main reason why most respondents (47.8 per cent) were unable to afford some items between 2019 and 2023 was the increase in the prices of goods.
“This can be attributed to the high level of inflation in the economy, which eroded the purchasing power of consumers. Various factors, such as supply shocks, demand shocks, currency depreciation, or expansionary monetary or fiscal policies, can cause inflation.”