Nigerians spent a sum of N108.47 trillion on household consumption in 2021, representing an 11% increase compared to N97.72 trillion incurred in the previous year, and a slight increase above the N108.1 trillion spent in 2019.
This is according to the recently released Nigerian Gross Domestic Product Report (Expenditure and Income Approach), released by the National Bureau of Statistics (NBS).
In contrast to the nation’s nominal GDP for the review year, household consumption accounted for 62.5% of the country’s annual GDP. Similarly, consumption expenditure for non-profit organizations serving households increased by 11.4% to N964.9 billion compared to N865.8 billion recorded in 2020.
It is worth noting that the significant increase recorded in household expenditure can be attributed to a favourable base period, which was marred by the COVID-19 pandemic, causing the Nigerian economy to fall into a recession, printing an annualised contraction of 1.92% in 2020.
Highlights
- Household Consumption Expenditure, in Q3 and Q4 2021 grew by 19.36% and 7.30% respectively in real terms, year-on-year.
- The annual growth rate in real household consumption expenditure stood at 25.65% compared to 1.69% decline recorded in 2020.
- Government Consumption Expenditure recorded growth rates of -39.51% and -16.76% in Q3 and Q4 2021 respectively, year on year, while annual growth rate stood at -34.03% in 2021 compared to 61.58% in 2020.
- Net exports grew in real terms in Q3 and Q4 2021 by -38.27% and 1.35% respectively. On an annual basis, net exports grew by -55.77% in 2021 compared to -13.17% recorded in 2020.
The observed trend in 2020 indicates that real household consumption expenditure declined in Q1 and Q2 accounting for negative growth rates informed by the COVID-19 pandemic. However, positive growth rates were recorded in the second half of 2020 as well as the four quarters of 2021. On a quarter-on-quarter basis, real household consumption expenditure grew by 13.77% in Q3, and 10.45% in Q4 2021.
Meanwhile, in nominal terms, household final consumption expenditure grew by 10.92% in Q3, and 6.12% in Q4 2021, The annual growth rate of 11.00% was recorded in 2021. This growth rate was 20.59% points higher than the figure recorded in the previous year which stood at -9.59%.
On a quarter-on-quarter basis, growth was recorded at 17.53% in Q3, and 5.29% in Q4 2021, compared to the preceding year’s of 22.58%, and 10.05% in the corresponding quarters. Household consumption accounted for 70.85% of real GDP at market prices in Q3 2021, and 71.35% in Q4 2021.
Upshot
- Household consumption expenditure rose significantly in 2021 in comparison to the previous year, considering the effect of the lockdown measures on the earning and spending power of Nigerians during the covid-19 pandemic.
- The uncertainty surrounding the outcome of the spread discouraged spending on the part of the people. However, when the spread subsided and economic activities fully revamped, Nigerians returned back to their spending ways, hence the uptick.
- It is worth noting that the decline in government expenditure in 2021 is basically due to a huge surge in its spending in the previous year, which was aimed at spurring growth and maintaining some level of normalcy in the economy during the pandemic.
- Recall that government spending skyrocketed by 65.5% in 2020 from N8.12 trillion recorded in 2019 to N13.43 trillion in nominal terms before reversing backwards to N9 trillion in the review year.