As at year end 2019, Nigerian household spending was about N107.6 trillion while the economic size was N145.6 trillion, meaning that household spending accounted for up to 74 percent of Nigeria gross domestic product (GDP). Economists expect that household spending will come under increased pressure as unemployment skyrockets beyond 30 percent and inflation continues to forward march above 12 percent. If household spending was to drop by around 3.4 percent (IMF forecast Nigeria’s economy will shrink by -3.4 percent in 2020) due to the current health and economic crisis, Household spending could drop by as much as N3.65 trillion in our best case scenario. To protect households from feeling the full brunt of the weaker economy, the government could provide monthly stimulus checks of N10,000 each to its 40 million households for the next 9 months which will bring about a monthly cost of N400billion and a total stimulus package of N3.6trillion. If household spending were to shrink faster than 3.4 percent to say 10 percent, then a stimulus package of up to N10.7 trillion will be what is required to save lives and the economy.
The current stimulus package of N3.5 trillion by the Central Bank of Nigeria is focused on supporting the businesses with cheap credit rather than family grants which is what households require today. As we have seen in recent weeks, non-payment of stimulus checks has led to a surge in crime in the country. Numerous individuals who have lost their means of livelihood are now forced to seek extreme ways to feed themselves and their families, leading to a security crisis in an already unstable economy.