New Survey: Nigerians Shun Shares

Oct 4, 2011 – Less than one fifth of Nigerians with adequate disposable income think of investing in quoted equities, according to a sample survey of the middle class.

A survey conducted with 1,004 middle-class Nigerians residing in the three key cities of Lagos, Abuja and Port Harcourt, showed that if given a large sum of money, 89 per cent will deposit it in a bank; 32 per cent will invest in land or property.

The survey indicated that only 19 per cent will invest in shares; five per cent and 4.5 per cent will invest in government bonds and foreign exchange.

The survey conducted by Renaissance Capital, showed that average monthly income within the middle class ranged between N75, 000 and N100, 000 monthly.

 The middle class make up about 23 per cent of the population, according to African Development Bank (AfDB) data.

“Strong economic growth is fostering an entrepreneurial culture. When our sample was asked what investments they have planned in the next 12 months, more cited “starting a business” (19 per cent) than any other answer; though investing in land came a close second at 17 per cent, with purchasing a property following at 15 per cent.

When asked what they currently invest in, the greatest response was in their “own business”, 48 per cent,” the survey reported.

The survey indicated that the middle class has a culture of saving, but it cares little about the deposit rate and would not want to borrow from a bank.

However, most respondents were concerned about the deteriorating public infrastructure and unemployment over the immediate and short-term periods. Nineteen to 23 per cent expressed as concerns over there problems; while 3.5 per cent and five per cent were concerned about crime and corruption.

Three-quarter of the respondents expressed optimism about the future of Nigeria.

The survey showed that almost all Nigerians put their faith in God. Ninety-six per cent affirmed their religious belief, with the third most cited reason for optimism about Nigeria’s future is “God would make it better”.

Analysts at Renaissance Capital, meanwhile, said the prospects of the economy appeared brighter, stating that it might surpass single-digit projection projections by many forecasts.

 “We think the plans to improve electricity generation and transmission could help GDP growth to accelerate in the coming years. We would not be surprised if Nigeria is achieving double-digit real GDP growth on a sustained basis, and nominal GDP growth of 15-25 per cent, by 2015-2016. A $247 billion economy in 2011 could be a $460 billion economy by 2016, assuming nominal GDP growth of 20 per cent and a naira to dollar exchange rate of N155 for $1,” Renaissance Capital said.

Analysts noted that the expected growth in the economy provide dramatic opportunities to investors noting that per capita GDP at market exchange rates has already soared from just $361 in 2001 to $1,541 by 2011, based on the International Monetary Fund (IMF) data.

The report pointed out that the population has risen from 119 million in 2000 to 160 million this year while the IMF expects population to rise to 184 million by 2016.

“Based on the IMF’s pessimistic numbers, per capita GDP will rise by another third to $1,957 over the next five years, but we forecast a rise to $2,500 in 2016 under our more positive scenario,” the analysts added. (The Nation)