Ninety-three percent of Nigerians still save a portion of their income despite rising inflationary pressures which has squeezed incomes, a new survey has shown.
The survey report titled ‘In Pursuit of Value’ by KPMG Nigeria and Ghana highlighted diverse value-seeking behaviours across customer segments.
“In Nigeria, 93 percent of respondents actively save a portion of their income each month, underscoring a resilient culture of saving despite the challenging economic conditions,” the report said.
It said while the percentage of individuals saving over 20 percent of their income has declined by seven percentage points to about 20 percent compared to 2022, there has been a noteworthy 6-percentage point increase in those saving between five to 20 percent of their income.
“This indicates that, despite the decreasing purchasing power of customers, the dedication to preserving and growing their financial resources through saving is enduring.”
The report revealed that in Ghana, 92 percent of respondents affirmed their commitment to saving but only one in five is able to set aside more than twenty percent of their income, signalling that rising costs have eroded disposable incomes.
“In response to this challenge, some Ghanaians have turned to saving in foreign currencies to safeguard the value of their money.”
Nigeria’s inflation rate, which has been in double digits since 2016, increased significantly this year due to the removal of petrol subsidy and the naira devaluation.
This has weakened the purchasing power of cash-strapped Nigerians, put a strain on disposable incomes among households and impacted the operations of many businesses.
Higher petrol prices and foreign exchange costs have continued to cause a spike in the country’s inflation rate.
According to the National Bureau of Statistics, headline inflation rose to 28.2 percent in November, hitting a new 18-year high, from 27.33 percent in October.
As inflation diminishes the purchasing power of the population, we are witnessing a race to preserve the value of investments with individuals actively seeking ways to mitigate risks, according to authors of the KPMG report.
“People are comparing rates across different providers, seeking higher returns, and even changing the format in which they save. In June 2023, the total balance in domiciliary accounts in Nigeria’s commercial and merchant banks increased by more than a fifth,” they said.
They noted a growing trend of investing in alternative assets as 23 percent of Gen Z customers hold digital currency principally for investment and savings.
“With a decline in purchasing power comes an increased need for credit facilities to meet basic needs. We have observed a steady increase in the number of respondents who consider accessing loans extremely important.”
BusinessDay reported on Thursday that the demand for bank loans by consumers in Nigeria has risen to the highest in nearly four years.
Consumer credit rose by 16.9 percent to N2.99 trillion in August from N2.56 trillion in the previous month, according to the latest data from the Central Bank of Nigeria (CBN). It also rose year-on-year by 23.1 percent from N2.43 trillion in August last year.
“The rise in consumer credit could be attributed to increased demand for credit facilities by economic agents,” the CBN said in the report.