Nigerians spend 67.7% of monthly income on utilities

Nigerian households spend over two-thirds of their monthly incomes on utilities, including water and gas, electricity, broadband and mobile data, a new study by a United Kingdom firm, Utility Bidder, which covered 51 countries, has said. 

With an average of 67.7 per cent of monthly income spent by Nigerian households on key utilities, Nigeria ranked second after Pakistan with 82.9 per cent, while The Philippines, with 61.5 per cent, came third, the study showed.

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The study conducted by a British company that offers advice on utility rates for consumers noted that Nigerians pay one of the highest monthly prices for internet broadband, with citizens paying more than half of their monthly wages purely for internet access. 

However, while some experts here in Nigeria faulted the claim by the British firm on the premise that it neither resonates with the realities of the population’s spending on these utilities nor the official statistics of the country, some civil servants, self-employed individuals and those working in the private sector said the study unravelled the truth. 

Daily Trust reports that Nigeria’s minimum wage is N30, 000 even as many state governments are yet to implement it. There are people working in the private sector or those doing menial jobs that are getting as low as N20, 000 per month. 

In some states, workers have not been paid for months while others receive half of their salary because of the alleged paucity of funds. 

Aliyu Shuaibu, who works for a private company in Abuja and earns around N350, 000 per month said the money rarely settles his bills.

“Every month I pay N30,000 for electricity; N20, 000 for cooking gas, N18, 000 for data and more than N20, 000 for calls.

“I give N100, 000 to my wife for upkeep and to buy perishables. On the other hand, I buy the grains we use. I fuel my car and the family utility car. So, the truth is that the whole salary is not even enough for utilities,” he said.

On his part, Yusuf Khalid who also works for a private firm in Abuja said he spends more than 50 per cent of his income on utilities.

Aminu Danmalam, who has a small rice mill in Kano, said it is by the grace of God that they survive.

“Most households spend at least N500 on water and this gives you N15, 000 in a month. We also spend an average of N10, 000 on electricity every month. You spend more than 70 per cent of your turnover on utilities. What is the average income of Nigerians?” he asked.

Also speaking, a civil servant, who simply identified herself as Adepeju, said, “Utility bills generally are high. As it is now, fuel is on the increase, diesel is on the increase.  People find it difficult to even put on the generator because of the money involved. I will disagree with 67.7 per cent. I will say 70 or 80 per cent of your salaries goes for utility bills. And then 10 or 15 per cent goes for transportation… It is the leftover that goes into other things.”

The National President of the National Association of Nigerian Traders (NANTS), Barrister Ken Ukaoha said it is difficult to fault the study.

He said: “We all know what has become of the cost of diesel or even PMS. I spend on average N12, 000 on fuelling the car weekly. It is even more for diesel for the generator in the near absence of public power supply.

“We all provide our water because the public water system that served most urban centres in the 70s into the 80s has all packed up, so boreholes are springing up everywhere and if you cannot afford one, you have to buy some quantities daily.

“My personal estimation is that it may be more and even so for low-income earners because these costs are constants. You are only able to cope if you fall into the big income bracket.”

Barr. S.O Lawal who is into private legal practice said spending on utilities is even higher because the majority of the people are low-income earners.

According to him, only through proper planning that one could spend less on utilities.

He said, “For some people, before the end of the month, the salary has already finished as a result of inflation. There are some salary earners, especially low-income earners, their salary doesn’t take them anywhere when you look at the inflationary trend.”

According to him, only high-income earners are coping with the rate of inflation in Nigeria.

“The study by the British firm is apt and it speaks the minds of Nigerians,” said Henry Abraham, a school teacher in Kubwa, Abuja. 

“I receive N25, 000 as monthly salary, which is not enough to feed my wife and three children,” he said.

“I think the researchers were generous because the truth is that more than 70 per cent of salary earners in Nigeria devise other ways to beef up what they actually earn before the end of the month. I cannot remember the last time I bought a bag of rice or a bag of semovita for my family,” he said.

British firm report faulty

Abiola Rasaq, a financial analyst and former Chief Economist for United Bank for Africa Plc, noted; “To start with, it’s staggering to read that Nigerians spend two-thirds of their income on utilities.

While the study concludes that the average Nigerian spends about 53 per cent of the average monthly wage or £65, estimated at N34, 000 on broadband internet every month, those statistics do not seem to represent the realities in Nigeria.

“The primary data on Nigerians’ spending on these basic utilities do not seem to support these findings, especially as the primary data on the average revenue per subscriber of telecommunication companies in Nigeria says otherwise. Notably, MTN, which has the highest average revenue per user amongst Nigerian telecommunication careers, reported an average of N15,000 annual data spend for each of its data subscribers, putting the monthly revenue per data subscriber at barely N1,250 or £2.4, as against the report’s submission that Nigerians spend a whopping £65 on broadband internet,” Rasaq noted.

He contends that an average Nigerian cannot afford such a bill on broadband internet. “Contrarily, whilst the British firm suggests Nigerians spend 0.4 per cent of their income or £0.49 or N260 on electricity every month, Nigerians actually spend a lot more than this on electricity.”

Besides the agony of what many Nigerians call “crazy bill” for those with the analog post-paid electricity meters, an average Nigerian spends a lot more than N260 every month on electricity tariff, not to say the cost of the self-generated energy supplies, which possibly cost Nigerians multiples of what they pay to the electricity distribution companies, as they rely more on self-generated power, given the low supplies from the national grid.

“So, the statistics need to be reviewed in the context of the realities of Nigeria before drawing conclusions from the report of Utility Bidder,” Rasaq added.

Dr. Lizzie Kings-Wali, the Chief Executive Officer at Blackstone Capital Limited, says whilst the Nigerian Bureau of Statistics may need to revise the CPI basket for possible changes that may have occurred in Nigerians’ spending pattern, the current basket shows that an average Nigerian only spend some 17.4 per cent of their income on utilities, including electricity, communication, water and gas.

“Thus it is important to double-check the report that Nigerians spend two-thirds of monthly income on basic utilities. Reflective of the poverty level and inequality in the country, most primary data align with the data of the Nigerian Bureau of Statistics, which suggests that Nigerians spend over half of their income on food, which accounts for some 50.7 per cent of the consumer price index,” she concluded.