Implications of Nigeria’s Consumption Expenditure Pattern

Implications of Nigeria’s Consumption Expenditure Pattern

The latest consumption expenditure data from the NBS shows that Nigerians spent N40.21 trillion on food and non-food items in 2019, of which expenditure on food consumption outside of home was highest (11.43% of total consumption expenditure) followed by expenses on transport (6.44% of total consumption expenditure) and consumption of starchy roots, tubers and plantain (6.28% of total consumption expenditure). The urban areas recorded N19.11 trillion in total expenditure of which 51.52% was spent on food items. In the rural areas, N21.09 trillion was recorded as total expenditure of which 61.29% was spent on food items while the remaining 38.71% was spent on non-food items.

With a real GDP of N71.34 trillion in full year 2019, and total consumption expenditure of N40.21 trillion, it indicates that consumption expenditure contributed 56.36% to the real GDP of the country in 2019. For previous years, the consumption as a percentage of GDP has always been roughly 60%. The implication of this is that any factor that leads to shrinking of the disposable income of the citizens (which affects expenditure), will have more impact on influencing the GDP of the country than investment and government expenditure. It is also why downturn trends in the country are usually associated with distortion in aggregate demand more than distortion in government exenditure and private investment. In regional terms, total consumption expenditure in the North was N14.96 trillion compared to N25.24 trillion in the South. The higher consumption expenditure in the South than the North reflects geographical inequality of income distribution.