Consumer demand for financial products in Nigeria remains strong despite pandemic and recession

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Nigeria slumped back into recession as Covid-19 bites. The country’s economy shrunk two quarters in a row amid a contraction in its oil sector. On the other hand, Covid-19 left no section of the economy untouched. Insurance stocks are badly battered.

While Covid-19 and the recession mean less consumer spending, it is expected to see the saving rate going up as people move into cash preservation. In fact, data from consumer research and insights firm Kasi Insight shows that there is hope when it comes to consumers’ willingness to purchase or use certain financial products, such as mobile money, investments, and credit cards.

Consumer demand for financial products in Nigeria remains strong despite pandemic and recession

The tracking study reveals that 88% of consumers are still attracted by financial products despite the recession and the current pandemic. Albeit, some were investing less than they usually did as they were wary of risks. Only 12% said they don’t know or don’t buy financial products.

Kasi Insight surveyed 3,323 people in Nigeria to inquire about their need for financial products throughout this pandemic.

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According to a Nigerian quantitative financial and economic analyst, Uchenna Ukpe, brands must take advantage of the pandemic and economic crisis.

“Now is the time to invest. People are spending less, which is bad for their social and daily lives but good for their wallets,” Ukpe said.

He said any extra cash could be an opportunity to invest in assets, shares, and even savings.

Consumer demand for financial products in Nigeria remains strong despite pandemic and recession Brandspurng1

Mobile money use in phone-packed Nigeria still low

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The survey also looked at the use of mobile money. In some parts of the continent, COVID-19 is viewed as a catalyst for mobile money growth. But in phone-packed Nigeria, with a huge unbanked population, the country lags behind when it comes to mobile banking take-up.

When the country went into lockdown in April, banks shut their doors. This left thousands without access to hard cash to buy commodities. An opportunity for mobile money investment.

According to the World Bank, Nigeria has over 200 million mobile subscriptions but less than 6% of Nigerians use their handsets to transact using mobile money.

Data from Kasi Insight also revealed that despite the increase in the population of mobile money, cash remains the king.

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In fact, of the 3,323 people polled, 41% use mobile money less compared to pre-Covid-19 while 27% said they are using mobile money more and 25% have kept their usage the same. Only 7% don’t know or don’t use mobile money.

Ukpe said mobile banking in the country is a far tougher market to crack.

“This is a huge challenge considering that 80 million Nigerians do not have access to financial services. Mobile money is supposed to be filling the gap left by banks and ATMs in this country,” Ukpe said.

He said companies must do more to educate communities about how they can use these financial products. “You can’t just put out billboards, radio, and TV adverts and expect people to be comfortable. There is a need to talk to consumers and educate them,” he added.

Recently MTN, Africa’s largest mobile phone group, grew the number of MTN Mobile Money (MoMo) users on its network, a trend that has accelerated during the COVID-19 pandemic.

MoMo initiative is innovatively designed to benefit Nigerians, provide financial inclusion and take the country to the next level of digital financial service.

On credit cards, the Kasi survey revealed that the usage for the majority (37%) has not changed since the start of the pandemic while 28% of consumers say they use their credit cards more.

Loan usage is high especially amongst men

The survey also showed that consumers’ usage of loans has been high especially among males. Of those who said they were using more loans, 76% were men. Despite the need by most consumers, millennial males have been the highest 72% when it comes to usage of loans followed by Gen X (19%), Gen Z (5%) and Baby Boomers at 3%.

When it comes to usage of insurance products, 1 in 4 respondent say they purchase more in insurance throughout this pandemic. Lastly about a quarter of respondents also say they are investing more since the pandemic started.

Millennials and Gen X could save 2020’s credit card holiday shopping season

According to the survey, nearly seven-in-10 (69%) of millennials said they would spend more on credit cards this holiday. These are followed by 18% of Gen X, 7% Gen Z and 6% baby boomers. 16.53% of Gen X and 8% of Gen Z said they will spend the same amount.

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