Borrowing rates may fall, says CBN report

A recent consumer survey by the Central Bank of Nigeria showed that members of the public expected a fall in the cost of borrowing this year.

The statistics department of the CBN stated this in its ‘Consumer Expectations Survey’ report for the fourth quarter of 2019.

Highlights of the Q4 2019 CES showed that consumers’ overall outlook was positive in that quarter.

Part of the report read, “Consumers also had a positive outlook for the next quarter (current quarter) and the next 12 months.

“Majority of consumers believe that the next 12 months would not be an ideal time to purchase big-ticket items like motor vehicles and house.

“Most respondents expected the naira to remain unchanged; inflation rate to rise, and borrowing rate to fall in the next 12 months.”

The report said the major drivers of the expected upward movement in prices were food and other household needs, savings, purchase of appliances/consumer durables, education and purchase of houses and vehicles.

It stated that the consumers’ overall confidence outlook rose in Q4 2019, as consumers were optimistic in their outlook.

The index at 3.3 points was 6.4 points lower than the index in the corresponding period of 2018.

Respondents attributed this favourable outlook to improved family income and family financial situation.

The consumer outlooks for the next quarter and next 12 months were positive at 19.7 and 30.2 points respectively, it added.

According to the CBN, this outlook could be attributed to the expected increase in net household income, expectations to save a bit and/or have plenty over savings and an anticipated improvement in Nigeria’s economic conditions in the next 12 months.

It added that most respondents expected prices of goods and services to rise in the next 12 months, with an index of 17.0 points.

According to the report, the overall buying conditions index for big-ticket items in the current quarter stood at 29.7 points.

Overall buying intention index in the next 12 months stood at 36.5 index points, indicating that most consumers did not intend to buy big-ticket items during this period.

The buying intention indices for consumer durables, motor vehicles and house and lot were below 50 points, indicating that respondents had no plans to make these purchases in the next 12 months

With indices of -6.3 and 16.5 points, consumers expect the borrowing rate to fall, but expect the naira to appreciate in the next 12 months.

The unemployment index remained positive at 21.0 points in Q4 2019, indicating that consumers generally expected the unemployment rate to rise in the next one year.