Nigerian Consumer Confidence Remains Highly Optimistic – MasterCard Index

Results of the latest MasterCard Worldwide Index of Consumer Confidence reveal that Nigerian consumer confidence remains highly optimistic.

While the Index has recorded a marginal 2.4 point decline from a score of 93.8 a year ago, and a five point decline compared to six months ago, the latest result of 91.4 out of a possible 100 shows that Nigeria’s citizens display continued strong optimism and an extremely high level of confidence in the country’s economy overall.

Now in its fourth year in Nigeria, the MasterCard Worldwide Index of Consumer Confidence is one of Africa’s most comprehensive consumer confidence surveys, and is conducted twice yearly. Interestingly, the latest finding of 91.4 points reflects the precise average of the survey results since its commencement in 2009.

The Index is based on a survey which measures consumer confidence on prevailing expectations in the market for the next six months based on five economic indicators: Economy, Employment, Stock Market, Regular Income and Quality of Life. The Index score is calculated with zero as the most pessimistic, 100 as most optimistic and 50 as neutral.

The most recent survey was conducted between 24 April 2012 and 10 June 2012, and involved 11,376 respondents aged 18 to 64 across 25 markets spanning the Asia Pacific, Middle East and Africa regions. On the African continent, the survey was conducted in Egypt, Kenya, Morocco, Nigeria and South Africa. [1] The Index and its accompanying reports do not represent MasterCard financial performance.

“MasterCard Worldwide carries out this Index in order to provide informed understanding in the shifts of Nigerian consumer sentiment, as well as to assist in the identification of market trends over time,” says Omokehinde Ojomuyide, Country Manager, West Africa, MasterCard Worldwide.

“Nigerians remain one of the most optimistic groups of consumers among those surveyed by MasterCard on the continent, with an Index score of 91.4 points in this latest set of results – over 12 points higher than the average of the five African countries surveyed,” says Ojomuyide.

“The high level of confidence in Nigeria’s economy held by its citizens is also supported by the International Monetary Fund (IMF) that believes booming oil prices and an ambitious reform agenda have helped Nigeria ride the worst of the global economic downturn. The IMF has forecasted Nigeria’s Gross Domestic Product (GDP) to grow by 6.9% during 2012,” she continued.

Compared to Nigeria’s Index results six months ago, four of the five indicators – Employment, Economy, Regular Income, and Quality of Life - showed very minor declines of between 0.5% - 3.5%.

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[1] Asia Pacific: Australia, China, Hong Kong, India, Indonesia, Japan, South Korea, Malaysia, New Zealand, Phillipines, Singapore, Taiwan, Thailand and Vietnam. Middle East: Egypt, Kuwait, Lebanon, Qatar, Saudi Arabia, United Arab Emirates. Africa: Kenya, Morocco, Nigeria, South Africa

However, all four of these indicators remained remarkably positive with each scoring over the 90-point mark. Regular Income, at 97.9 points, was the most optimistic of the five indicators for Nigerians, followed by Quality of Life with a score of 94.9.

When asked whether they were expecting their regular income to either increase, remain the same or decrease over the next six months, nearly 92% of Nigerian respondents said that they were expecting it to increase; 6% said they were expecting it to remain the same and only 2% said that they were expecting it to decrease.

The Stock Market indicator however showed a significant decline in confidence of nearly 17 points and was the indicator with the lowest score of 78.6.

Commenting on the Stock Market indicator Ojomuyide said, “Even though the Stock Market indicator shows a noticeable decline and should not be dismissed, the current score is still very optimistic, with nearly seven out of ten respondents expecting the Stock Market to improve in the coming months, and a further 13% expecting it to remain consistent.”

Ojomuyide added, “The highest level which the Nigerian consumer confidence reached was in the second half of 2011 at 96.4 points –which was one of the highest recorded levels of consumer confidence in the 25 markets surveyed at the time. Even though the most recent results are lower than this, they remain significantly higher than their lowest level of 83.2 points in the first half of 2010.”

The only African country revealed to be more optimistic than Nigeria in the Index is Morocco, which yielded a score of 94.1. Egypt, Kenya and South Africa all yielded less optimistic results in the survey.

“It is very encouraging to see that the Nigerian consumer confidence levels remain strong and higher than the average results of the other African countries surveyed,” concluded Ojomuyide.

Methodology

Respondents were asked five questions pertaining to their 6-month outlook on the economy, employment prospects, the local stock market, their regular income prospects and their quality of life. The results of their responses were converted in 5 component indexes, which were averaged to form the MasterCard Worldwide Index™ of Consumer Confidence (MWICC) score. The MWICC Index score and the 5 components index scores range from 0 – 100 where 0 represents maximum pessimism, 100 represents maximum optimism and 50 represents neutrality.

About the MasterCard Worldwide Index™ of Consumer Confidence

The MasterCard Worldwide Index™ of Consumer Confidence survey has a 20-year track record of consumer confidence indices collected from over 200,000 interviews, unequalled both in scope and history across Asia/Pacific, Middle East and Africa.

The Index is calculated based with zero as the most pessimistic, 100 as most optimistic and 50 as neutral.  Five economic factors are measured: Employment, the Economy, Regular Income, Stock Market and Quality of Life. The responses are consumers' thoughts on the six months ahead. Data collection was via Internet surveys and face-to-face interviews, with the questionnaire translated to the local language wherever appropriate and necessary. 

MasterCard and its Suite of Research Properties

The MasterCard Worldwide Index suite in Asia/Pacific, Middle East and Africa includes the long-running MasterCard Worldwide Index of Consumer Confidence, as well as the MasterCard Worldwide Index of Women’s Advancement, Online Shopping, Index of Financial Literacy, and the Index of Global Destination Cities. In addition to the Indices, MasterCard’s research properties also include a range of consumer surveys including Ethical Spending and a series on Consumer Purchasing Priorities (covering Travel, Dining & Entertainment, Education, Money Management, Luxury and General Shopping).

MasterCard also regularly releases Insights reports providing analysis of business dynamics, financial policies and regulatory activities in the Asia/Pacific, Middle East and Africa region. Over 80 Insights reports have been produced since 2004.