Nigerians committed to saving for future, survey reveals
On January 31, 2012 · In Business
A NEW study has revealed that Nigerians understand the importance of savings with 87 per cent of respondents to the latest MasterCard survey on Consumer Purchasing Priorities committing to increasing their savings in the six months following the survey.
When questioned about their primary reason for wanting to increase their rate of saving over the subsequent six months, 82% of the respondents indicated that they were wary of the impact that global economic events may have on the Nigerian market, and that they needed to prepare for unforeseen emergency expenditure.
The survey also illustrated that the percentage of their total salaries that Nigerians intended to save in the following six months was diverse, with 28% saving one tenth or less, 39% saving between 11-30%, and 20% saving more than one third of their salaries.
“Setting money aside for emergencies is one of the first steps to saving that smart consumers should take to protect themselves from the negative effects of global economic events, and they should for a savings buffer of at least three months’ salary,” says Daniel Monehin, Area Head, East & West Africa and Indian Ocean Islands, MasterCard Worldwide.
“The results of this survey showed that Nigerians were aware of the potential impacts of the global and local economic conditions, and they were taking measures to insulate themselves from adverse financial repercussions of events in the global economy.”
The survey undertaken by MasterCard was part of a 2011 research project that involved 17,620 consumers from 24 markets  across the Asia/Pacific, Middle East and Africa region. Respondents were asked a series of questions to investigate their financial and savings plans over the course of the subsequent six months.
Data collection in Nigeria was via face to face interviews, with the questionnaire translated to the local language wherever appropriate. The Survey and its accompanying reports and results do not represent MasterCard financial performance.
Investments, buying a house or upgrading their existing property, and retirement were the most popular reasons for saving a portion of their monthly income, with a large percentage of Nigerians saving for more than one purpose.
“The high number of Nigerian consumers who choose to invest their savings is impressive” says Monehin. “It illustrates that there are a number of available investment opportunities for Nigerians – a great example being that the Nigerian Stock Exchange offers investment opportunities from as little as N1000.”
Other positive results emanating from the Nigerian survey, according to Monehin, include that a significant 96% of respondents believed that they should save a portion of their monthly income, with a further 71% saying that this saving should total at least three to six months’ worth of income set aside for potential emergencies. Reinforcing these positive results is the fact that 94% believed it was never too early to have a financial plan, and 83% agreed financial planning was not just for the rich.
Emphasising the high proportion of Nigerians who said that they were saving specifically for their retirement years, Monehin commented: “As the country’s prosperity grows, we’re seeing a trend of Nigerians setting money aside for their golden years, so that they can stop working in their old age while maintaining their current living standards.”
However, the survey also revealed that while Nigerians are setting money aside for their retirement years, only 24% of respondents had calculated the total amount that they would need to retire to maintain their lifestyle when the time comes for them to stop working.
“It is vital that Nigerians planning for their retirement adopt a long term view with the assistance of a financial planner who is able to calculate the impacts of inflation and other market forces,” says Monehin.”An effective retirement plan requires more than just setting money aside each month, and a financial advisor will be able to offer guidance on the appropriate amount and investment vehicles.”
Approximately three quarters of Nigerians said they understood the terms and conditions that are presented in financial products; they took time to compare financial products before they commit to an investment, and they regularly monitored the progress of their investments.
“This clear understanding of potentially complex products is an endorsement of the banks’ extensive consumer education programs, and their commitment to promoting financial inclusion by making documentation surrounding their financial products easy to understand,” said Monehin.
The survey also revealed that Nigerians manage their money carefully and effectively, with 83% believing that they have the ability and understanding to budget their day-day finances. Sixty-seven percent track their spending on a weekly basis, and 63% said they had no problems setting money aside for big purchases.