Weakening Purchasing Power Pushes Preference for Second-hand Goods
*Nigeria’s high out-of-school children worries World Bank
*IMF: Reforms causing hardship, but necessary for sustainable growth
Eromosele Abiodun and Nume Ekeghe in Washington DC, Sunday Ehigiator, Dike Onwuamaeze in Lagos, Blessing Ibunge in Port Harcourt and Ahmad Sorondinki in Kano.
With inflation eroding purchasing power in the country, households and firms are increasingly turning to second-hand markets in the country for their shopping needs.
From clothing, cars, electronics to furniture and home decoration, the major second-hand markets in Lagos, Port Harcourt, and Kano, are experiencing a surge in demand according to an investigation by THISDAY.
This is as the World Bank expressed concern over the high number of out-of-school children in Nigeria, urging both federal and state governments to take urgent steps to address the situation.
Speaking in an interview with Arise News Channel on the sidelines of the ongoing IMF/World Annual Meetings in Washington DC, yesterday, World Bank Country Director for Nigeria, Dr. Ndiamé Diop, tasked policymakers in the country to work towards creating conducive environments that would attract children to schools.
Also, in an exclusive interview with THISDAY yesterday in Washington DC, Deputy Director in the African Department at the International Monetary Fund, Catherine Pattillo, urged policymakers in Nigeria and other African countries to ensure that social safety nets are put in place to protect the poor and vulnerable. She also noted that lack of access to finance, poor infrastructure, red tape and corruption were affecting the growth of firms in the region.
Likewise, President of the African Development Bank (AfDB), Dr. Akinwumi Adesina, called for bold reforms in Africa, noting that climate change, global financial shocks and growing food insecurity were threatening Africa, the world’s fastest-growing continent and hampering the achievement of global development goals.
For the rising demand in second-hand goods, the shift in consumer behaviour reflects a growing awareness of both economic necessity and sustainability, with inflation presently at 32.7 per cent, spike in cost of petrol and stagnant wages.
In Lagos, at the Odo Olowu market at Ijesha; the Westminster market at Apapa, as well as the Yaba market, that are all notably for Tokunbo, shoppers and sellers told THISDAY that the weak purchasing power and spike in cost of new goods and electronics were major factors influencing the increased patronage.
A drycleaner, Joseph Ogunmola said, “I am here to buy a steaming iron because my electronic steaming iron, which I bought brand new for N8, 000 two years ago, got burnt, so I needed to replace it.
“I went to the same place I bought the old one, and they now sell it for N55, 000. And I intended to buy three. That would cost N165, 000. How could I have afforded that when I am not a ritualist?
“Business has even dropped within one year, and I don’t make much profit anymore. People now prefer to do their laundry themselves. This is why I had to come here to buy a fairly used one, imported from Belgium and it cost N18, 000. I can’t even buy three anymore, but it is reasonable compared to the cost of N165, 000.”
Also, an electronic dealer, Denilson Okeke, stated, “People are now more concerned about what to eat first before going to buy new electronics. We are all barely surviving. As at two years ago, I used to travel to buy goods outside Nigeria at least once in two months.
“It’s been five months now. I am struggling to sell just two containers. The situation is now very bad.”
In Port Harcourt, some of the residents that spoke with THISDAY said they have resorted to buying second-hand products due to the high cost of new commodities in the market not being proportionate to their income.
When THISDAY visited some of the markets in the city, including, Rumuwoji Mile 1 market, Creek Road market at the Township axis of Port Harcourt, Railway market, and Mile 3 market, shoppers and dealers spoke on the increased patronage of second-hand products.
Mr. Chikaodili Okafor said he resorted to buying used products because he could no longer afford the new products.
According to him, “I used to detest second-hand products, but I have found out that it’s becoming an alternative because of the biting economic hardship in the country now.”
In Kano, second-hand goods thrive as residents continue to patronise such items.
Dealing in second-hand items, also known as resale or pre-owned, is driven by consumer demand for affordability, durability, because of its uniqueness, they argued.
The ancient city of Kano is also the commercial nerve center of the northern part of Nigeria, with numerous markets scattered all over the city dealing with second-hand items due to their affordability to low-income individuals. Many of those markets have a long history of selling second hands clothing, accessories furniture, electoral appliances, second-hand books, media accessories, vehicles, antiques and collectibles among others.
For instance, the Bata market is a hub for affordable educational resources, where not only underprivileged students patronise but, students from middle-class families rush to purchase variety of second-hand textbooks.
In an interview with Hussainy Muhammad, one of the second-hand book dealers at Bata market, he said due to the prices of goods and services which have affected most Nigerians, his firm has recorded an increase in the demand.
“In the last two years, we have witnessed an unprecedented number of customers including less-privileged students and parents at the end of every session, who have actively opted for second-hand textbooks from us,” he explained.
Also, at the Kofar Wambai yan Gwanjo market, or Okirka market in Kano, hundreds of customers flock to buy second-hand clothes. The market was bustling with activities as customers poured in to get the best deals.
According to one of the dealers, Aminu Isah, the demand for second-hand cloth has sharply increased compared to previous years.
Explaining the reason why she opted for second-hand clothes, Hajiya Isa revealed that the current harsh economic condition in Nigeria forced her to go for affordable and second-hand materials.
Another second-hand market in Kano is the popular Kofar Ruwa market, which deals with second-hand automobiles, where you can buy cheaper spare parts.
Commenting on the surge for fairly used goods, an Economist and Founder of the Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, told THISDAY that the rising patronage of used household items was a reflection of the growing number of people that are entrapped in poverty because people can only buy what they have the capacity to pay for.
Yusuf, noted that the Nigerian situation was that demand for very cheap products was increasing while companies that are engaged in premium products are struggling.
He said: “So, increasingly more and more people, including those in the middle class, are buying all manners of fairly used items, from cooking utensils to furniture, textiles, under wears, name them. Not to talk about cars.
“It has become the in-thing because poverty and issue of high cost of goods due to intense inflationary pressure.”
He added: “The thing is that not many incomes are growing enough to match the rate of increases in prices.
“Therefore, the real income has dropped considerably across all the income classes.
“And you can see that some companies as a matter of business model are devising strategies to reduce quality and quantity just to come down to the level of those whose incomes have dropped considerably.”
Likewise, the Chief Executive Officer of De-SME Facilitators Limited, Mr. Tony Chinwe, told THISDAY yesterday that the surge in patronage of used household items imported from Europe, Asia and America was significantly triggered by weak Naira and low purchasing power of Nigerian Consumers.
Chinwe, who was formerly the group head of SME Banking, Fidelity Bank Plc, said a weak Naira implied overvalued foreign currencies that come with high import costs.
He said: “With a weak Naira, importing new goods becomes very expensive, making used items more affordable in satisfying the same needs. These used items are cheap alternatives to new ones and their lower prices make them more accessible to Nigerians.”
According to him, Nigerians have reduced purchasing power or limited disposable income is attributable to economic challenges occasioned majorly by the twin factors of fuel subsidy removal and floatation of Naira thereby making used items a more viable option.
He said: “In terms of affordability, used household items are often significantly cheaper than new ones, fitting within consumers’ limited budgets.
“The harsh economic climate in Nigeria has made Consumers to prioritise essential needs over luxury goods, opting for affordable used items.
“Also, used items are widely available in Nigeria, particularly in markets and online platforms.”
He added that many Nigerians perceive used items from Europe, Asia, and America as higher quality and durable items.
Chinwe also said that the decline in local manufacturing capacity has exacerbated the situation due to reliance on imports of inputs.
“An import-dependent economy with low infrastructural provision for supporting manufacturing (like power) should not adopt an option of floating its currency. Development of local manufacturing base should precede such policy,” he said.
He said that to address these issues, the Nigerian government should implement policies to strengthen the Naira, encourage local manufacturing and entrepreneurship, and promote sustainable consumption and waste management practices.
Nigeria’s High Out-of-school Children Worries World Bank
The World Bank has expressed concern over the high number of out-of-school children in Nigeria, urging both federal and state governments to take urgent steps to address the situation.
Speaking in an interview with Arise News Channel on the sidelines of the ongoing IMF/World Annual Meetings in Washington DC, yesterday, World Bank Country Director for Nigeria, Dr. Ndiamé Diop, tasked policymakers in the country to work towards creating conducive environments that would attract children to schools.
The United Nations Children’s Fund (UNICEF) had estimated that the number of out-of-school children in Nigeria was 18.3 million.
According to Diop, “the number of out-of-school children in Nigeria is very large, around 15 to 17 million.”
He added: “You need to get all those kids to school and improve the quality of their learning so that the learning outcomes would be there. That would prepare them for the labor market, and there are issues relating to tradition and how you match skills with the needs of firms.
“One thing that is a gold mine for Nigeria is the National Youth Service Corps (NYSC). To me, if you leverage that and then help that institution to really provide the right skills to these 300,000 pre-adults, this would be super helpful, and in fact, the World Bank is looking into that to try and help on that.”
He urged the federal and state governments to focus on “keeping girls in school, as well as training them in Information and Communication Technology (ICT) and digital skills and helping them to access Science, Technology, Engineering, and Mathematics (STEM) fields.
“The number of girls or enrollment of girls in STEM fields is quite low compared to men, with about 13 per cent in engineering programs, 20 per cent in polytechnics, and 30 per cent in other programs, which is very low. We need to address the stereotypes that are pushing young girls towards an inclination to arts and similar fields, which is good, but we also need women in STEM areas because that is what will drive technology and transformation in the future.”
IMF: Reforms Causing Hardship, But Necessary for Sustainable Growth
Meanwhile, the IMF yesterday, urged Nigeria to allocate savings from subsidy removal and forex rates unification towards social protection for the vulnerable.
The IMF recognised that while the essential reforms were steps towards economic sustainability, they have increased hardship in the West African country due to rising inflation and the cost of essential goods.
Director, African Department, IMF, Abebe Aemro Selassie, said this yesterday at the African Department press briefing to unveil the Regional Economic Outlook update for Sub-Saharan Africa.
Selassie also noted that there has been no request from Nigeria for funding.
Responding to a THISDAY’s question on recent reforms and their impact on Nigerians, Selassie said: “The immediate effect, of course, of doing these changes always causes quite a lot of dislocation. You have noted the inflation, we have absolutely no doubt that conditions at the moment are extremely difficult on top of a situation, as I noted earlier, where, you know, the effect of the food price shock in recent years has been quite acute in our countries, in our region, food accounts for a higher share of the consumption basket. Now, you have fuel prices going up, which will have an additional effect on other essential goods.
“So, all of these are well recognised. It is also why we have been on record again and again about the need to put in place measures to target the most vulnerable and social protection over the years, as these reforms have been implemented.
“I know there are some steps that have been taken in that direction, but I think some of the savings from the fuel subsidy reforms, the exchange rate subsidy being removed, should in our view be directed to helping cushion the effect on the most low-level households.”
Also responding to an ARISE news question, on if Nigeria has approached the fund for concessional funding, he said: “There has not been a request for funding from the IMF from Nigeria.
“It is the right of every country that’s in good standing with IMF to borrow and have access to the concessional financing that we provide them. So, there is no request for funding from Nigeria at the moment.”
He said: “At the end of the day, these are deeply domestic and deeply political choices that governments have to make. They have made choices that we think move in the direction of better use of public resources in a way that will unlock this incredible potential that the economy has to make it more dynamic, to invest to facilitate growth.
“We welcome those reforms, while also recognising, as I said earlier, that it has entailed quite a lot of cost, internal adjustment costs, and a better job, as I said, can be done by rolling out social protection, particularly for the most vulnerable.”
Adesina, while speaking during a session during a meeting of multilateral development bank (MDB) heads with the G20 Global Alliance against Hunger and Poverty at the IMF/World Bank meetings, said: “We need bolder resolve, innovative and practical solutions, and stronger coordinated action at scale.”
Adesina who is leading the Bank’s delegation participating in key sessions of the Bretton Wood institutions’ meetings, highlighted his priority concerns for Africa: combatting hunger and eliminating malnutrition, providing electricity to 300 million people by 2030, scaling up infrastructure for agricultural and industrial transformation, combatting climate change, and supporting some of the world’s most fragile nations by mobilizing additional resources for the African Development Fund – the Bank Group’s concessional lending arm.
“Our strength lies in consolidating our collaboration, mobilizing resources at speed and scale, and deploying them where they are needed most,” Adesina said.
Africa Gets Additional Seat on IMF Board
IMF’s Managing Director, Kristalina Georgieva, while responding to questions during a press briefing by the International Monetary and Financial Committee, revealed that Africa has been given an additional seat on the board of the IMF.
“The most significant step we have taken to increase the voice and representation of Africa is to add another third chair for Sub-Saharan Africa around the board table at the Fund.
“We have 24 executive directors representing 191 members, and as of November 1, we would have 25 executive directors. That means that the Sub-Saharan African countries will have better representation of their issues. Africa, as you know, is a diverse group of countries. When we only had two directors, it meant constituencies of 23 or 22 countries, and it was very difficult for these executive directors to voice the concerns of each and every one of the members.
“Now, they will have three directors, bringing them on par with other parts of the world. So now, Sub-Saharan Africa is not going to be an outlier, and that would allow the executive directors, along with offices with advisors and executive directors from the constituency, to better represent their concerns.”
