Nigerians reduction in purchasing power have led to a decline in electronic payment transactions and this has been reflected in a broader cut in consumer spending.
The Financial Vanguard reports that the value of e-payment transactions fell by 5.7% month-on-month (MoM) in June, the second MoM decline in three months, with total transactions dropping to N87.45 trillion from N92.8 trillion in May.
The decline is primarily driven by a 9.0% fall in NIBSS Instant Payment (NIP) transactions and a 27% fall in cheque transactions.
However, there was growth in transactions via PoS and Nigeria Electronic Funds Transfer (NEFT), which increased by 7.4% and 62% respectively in June.
This trend highlights the impact of lower consumer spending, as inflation continues to strain the economy.
According to data from the National Bureau of Statistics (NBS), the cost of a healthy diet rose by 32% from N786 per adult per day in December 2023 to N1,041 in May 2024.
The lack of commensurate income increases has forced Nigerians to cut back on non-essential spending to afford basic food needs.
The decline in consumer spending is also affecting firms’ ability to expand production.
The Stanbic IBTC Purchasing Managers Index (PMI) survey reported the lowest expansion in output in seven months, driven by subdued demand and intense price pressures.
The survey indicated that private sector firms faced slowdowns in growth of output and new orders, with employment rising only fractionally.
Economic pessimism is pervasive among consumers, particularly those on the lower end of the income scale.
The Central Bank of Nigeria’s (CBN) Monetary Policy Committee (MPC) members have confirmed that high inflation and economic challenges are severely impacting consumers’ outlook and spending capabilities.