A groundbreaking survey and report on Nigeria’s expanding middle class, has been issued by Renaissance Capital, the emerging markets investment bank, focused on the emerging markets of Russia, the CIS, Eastern Europe, Asia and Africa.

The survey reveals a nation that is optimistic about economic growth, values entrepreneurship and is positioned to capitalise on a boom in consumption. The survey and accompanying report, authored by Renaissance Capital’s Global Chief Economist Charles Robertson; Head of Sub-Saharan Research Nothando Ndebele and Sub-Saharan Economist Yvonne Mhango, turn the spotlight on the wealth of opportunity presented by one of the world’s fastest-growing economies, as an expanding middle class fuels GDP growth in Africa’s most populous country.

The report draws out the investment opportunities and implications presented by Nigeria’s rapidly growing middle class, against a highly favourable macroeconomic backdrop. It notes that GDP rose fivefold from $46bn in 2000 to $247bn in 2011, according to IMF estimates, while the population increased by more than one-third over the same period, from 119mn to 160mn. Nigeria’s middle class accounts for about 23% of the Nigerian population, according to African Development Bank data. Renaissance economists add that, “The magnitude of the increase in Nigeria's population between now and 2016 is the equivalent of adding another Romania; while, based on cautious IMF forecasts, the increase in Nigeria's GDP in five years will be equivalent to the addition of another Vietnam or Bangladesh. Nigeria's per capita GDP at market exchange rates has already increased from $390 in 2001 to $1,541 in 2011 based on IMF figures, and will reach nearly $2,000 in 2016 if the pessimistic IMF forecasts are accurate, or $2,500 in our more benign scenario.”

The Renaissance Capital survey was conducted with 1,004 middle-class Nigerians, residing in the cities of Lagos, Abuja and Port Harcourt, 70% of whom were aged 40 or younger. “The Nigerian middle class we surveyed has a monthly income of some $500-600 and nearly half will be buying fridges, freezers and other white goods, suggesting a consumer boom is under way,” says Charles Robertson. “We cite the upside for consumer lending retail, white-goods retail, lifestyle and leisure, housing development and home improvement.”

The survey makes the following findings on Nigeria’s middle class:

•Average monthly income is in the range of NGN75,000-100,000 ($480-645, or roughly $6,000-7,000 pa).

•They are well educated: 92% have obtained post-secondary education or have studied at an institution of higher learning. Educating their children well is a top priority, and over half send their children abroad to complete their education.

•A sizeable 76% of Renaissance’s sample works in the public sector; of those working in the private sector, 38% run their own businesses.

•Most live in leased/rented accommodation (68%) with an average household size of 3.7 people. The average number of children in each household is 1.6 (excluding those away at school) vs a national average that is closer to 3; larger families are more common in rural areas.

•Nearly half have no immediate plan to move house, 18% are planning to move to a newly completed self-owned apartment and 8% are planning to move to another rented apartment.

•The average number of cars per middle-class household is 0.8 (around one third of middle-class Nigerians have a car that is less than five years old); 5% of homes have two cars. Car ownership remains well below levels seen in Zimbabwe, among others.

•The Nigerian middle class has a culture of saving: they care little about the deposit rate and do not expect to borrow from a bank. If they had the funds, they would rather invest in land/property than shares or bonds. Most do not have mortgages (which represent approximately 1% of GDP) or credit cards, although many expect to apply for the latter. As in many emerging markets, the consumer lending sector is woefully underdeveloped.

•Their principal sources of information are TV and radio. Forty-eight percent have internet access, but only 2% shop online at least once a month. There is huge scope for internet shopping, if logistics allow.

•The majority shop at open-air markets (73%), as well as use convenience stores (62%). Twenty percent dine out at least once a week.

•Only 15% have travelled abroad; 35% of households have at least one person with an international passport. The UK is the most favoured travel destination.

•Their key areas of concern over the next 12 months are the supply of electricity and unemployment, with between 19-23% citing these as concerns; while crime (5%) and corruption (3.5%) are seen as far less concerning.

•Three-quarters are optimistic about the future of Nigeria.

For more information, Contact:
Solomon Mahinda
Vice President
Group Marketing and Communications Manager, Africa  Renaissance Capital
Tel +254 (020) 368 2300 ext. 2328
Mobile +254 721 263 420
SMahinda@rencap.com