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In determining living standards, income and consumption are the most popular approaches. Income refers to earnings from productive activities and current transfers. Measuring consumption over a week or month provides an indication of a household's consumption habits over a year because it has a smooth flow to it in order words it is steady. Income however, tends to vary widely from week to week or month to month. Consumption data is much easier to collect than income data, particularly in agricultural communities or with self-employed persons. Consumption is therefore a better indicator of living standards.
The consumption pattern of a country depicts the aggregate demand of goods and services in the country, and in most cases it constitutes about 60 percent of the total GDP of the country. Consumption pattern also depicts the level of welfare and poverty that a nation is experiencing. This report is based on the Nigeria Living Standard Survey (NLSS) 2018/2019.
The purpose of this report is to portray household consumption expenditure types by food and non-food items at the national, zonal level, and state level, and also the urban/rural split.
The amount of money spent on consumables will be used in the computation of final household expenditure which is a component of our gross domestic product (GDP) compilation. The computation of GDP through the expenditure approach will not be complete without the household consumption/expenditure input. It is worth noting that, when a country is experiencing a downturn trend, it implies that the aggregate demand (consumption) is very low, poverty incidence is on the increase, unemployment rate rises, investments fall drastically and prices of goods and services will most likely rise too.
On the other hand, when the aggregate demand (consumption) is high, firms will invest and be ready to employ idle resources, prices will fall (due to an increase in the supply of goods and services) and other economies of scale will be accrued to the nation as a result of the large size of its aggregate demand.
Consumption Patterns in Nigeria
The consumption pattern of a household is the combination of qualities, quantities, acts and tendencies characterizing a community or a human group's use of resources for survival, comfort and enjoyment. Of course the type of food and non-food items consumed, vary from region to region. Consumption patterns normally contribute greatly to the social and economic policy of the country. For a developing country like Nigeria, the consumption pattern is skewed towards food i.e. food is higher than the non-food items. In most developed countries, it is the opposite, where the consumption pattern is skewed towards non-food items. The more developed a society becomes, the less it spends on food and the more it spends on non-food items. Lagos is a clear indication of a state with an emerging economy. Lagos state's expenditure on non-food items was more than its expenditure on food.
This report will avail researchers and policy makers the opportunity to test whether the consumption patterns of a state or zone, correlates with food items using valid statistical theory. Specifically, this report will open further examination of consumption /expenditure patterns within the country as it portrays the level of welfare (poverty).
Consumption patterns differ from one zone to another. Zonal variation exists at a close examination of a representative state within one zone when compared with another state within another zone. These zonal variations can be statistically explained as the states within each zone having similarities in consumption patterns. There are however variations where some states do not follow the same pattern and that is not unusual.
At the national level the total household expenditure on food and non-food for 2019 was N40,207,388,459,367 (N21,620,601,543,613.90 in 2009/10). Of this total, 56.65% (60.2% in 2009/10) of total household expenditure in 2019 was spent on food with the balance of about 43.35% (39.8 % in 2009/10) spent on non- food items. Food consumed outside the home, followed by transportation costs and starchy roots, tubers and plantains were responsible for the largest proportion of household expenditure representing a combined 24.16 percent of total household expenditure in 2019.
Further analysis of food expenditure by households in 2019 reveals that various foods consumed outside the home, starchy roots, tubers and plantains, rice, vegetables, fish and sea food, grains and flours in that order were the top food items households spent on in 2019 accounting for a combined 59.19% of food expenditure and 33.53% of total household expenditure on food and 24.8% of total household expenditure. Household expenditure on non-food items on the other hand were directed as aforementioned mostly at transport, health, education and services (which includes information technology and communication equipment as well as things like insurance, financial services and so on), rent and fuel and light, accounting for a combined 79.40% of non-food expenditure.
Table 2 Household Expenditure by Type of Commodity: National 2019
Urban/Rural split is based on the official classification adopted by the National Population Commission which determines which location is termed urban and rural.
Total household expenditure in urban areas in 2019 stood at N19,113,569,558,086 (N8,412,656,254,286 in 2009/10), relative to N21,093,818,901,281 (N9,364,312,669,993 in 2009/10) in the rural areas.
Against this backdrop total expenditure on food in urban areas stood at N9,847,690,798,340 in 2019 (N3,654,003,234,722 in 2009/2010), while in rural areas it was N12,929,558,844,031 (N9,364,312,669,993). Both areas spent mostly on food outside the home, Starchy foods, tubers, and plantains, and rice representing about 37.96% for rural and about 42.59% for urban areas of total expenditure on food. In the non-food section, education, transport, services and rent represented the highest expenditure for urban households while expenditure on health, transport, education and services dominated non-food household expenditure in 2019.
Table 3 Household Expenditure by Commodity: Urban Sector
Table 4 Household Expenditure by Commodity Type: Rural
Further disaggregation by the 6 geo-political zones reveals that the South-West region recorded the highest overall household expenditure as well as the highest expenditure on food and in non food categories, while the North East (excluding Borno) recorded the lowest. As can be seen in the table below, the South-West at about 29.95% of total expenditure, South South at 20.94% and North West at about 17.02% recorded the highest expenditure in 2019. These three regions were therefore responsible for over 67% of total consumption expenditure in the country in 2019.
Table 5 Consumption Pattern of Households by Zone
Table 6 Consumption in North-Central Zone, 2009/10
Table 7 Consumption for North-East Zone, 2009/10
Table 8 Consumption for North-West Zone, 2009/10
Table 9 Consumption for South-East Zone, 2009/10
Table 10 Consumption for South-South Zone, 2009/10
Table 11 Consumption for South-West Zone, 2009/10
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