According to a McKinsey & Company report, Nigeria’s development story in the past decade is such that a growing percentage of its population has begun to reap the benefits of its development.
“By 2030, some 160 million Nigerians, out of a projected population of 273 million, could live in households with sufficient incomes for discretionary spending. That would be more Nigerian consumers than the current populations of France and Germany combined,” McKinsey said in their report.
“Therefore, we estimate that sales of consumer goods could more than triple by 2030, to almost 1 trillion dollars.”
(WATCH VIDEO: McKinsey exploring Nigeria's economic potential)
The consuming class, according to McKinsey, are households with annual incomes of 7,500 dollars per year and upward, where a household is estimated to comprise of just over four people.
McKinsey added that only 14 per cent of Nigeria’s GDP came from resources, with the remainder coming from the country’s retail and wholesale trade sectors. Consumer markets will however have to factor in the in local players, who meet the everyday needs of consumers. Despite the thriving consumer class, Nigeria has a complex employment industry.
“In Nigeria’s cities, where the majority of the population now lives, very high rates of informal employment and underemployment contribute to a 34 per cent poverty rate. We estimate that 68 per cent of urban Nigerians live below the Empowerment Line, which we define as 1,016 dollars per year per person in urban areas,” McKinsey explained.
“In both rural and urban Nigeria, high costs of living, particularly for food and housing, exacerbate poverty; it costs more than twice as much to achieve an economically empowered standard of living in Nigeria as in India.”
(READ MORE: Nigeria, the rising African economic player)
In addition, low incomes exacerbate the high costs of living. According to Mercer’s 2014 Cost of Living city rankings, Lagos in Nigeria was ranked the 36th most expensive city in the world. Other cities on the list include Luanda in Angola, which was ranked as the most expensive in the world, N'Djamena in Chad was second, and Libreville in Gabon came in at 19.
“Nigeria has achieved significant economic progress since the turn of the century, but much remains to be done, particularly in raising productivity and reducing poverty,” the report said.