You are here: HomeWallOpinionsArticles2021 10 05Article 484216

Opinions of Tuesday, 5 October 2021

Columnist: Dr Uchenna Uzo

VAT and Nigerian consumers

File photo to illustrate the story File photo to illustrate the story

As Nigeria’s state and federal governments fight over Value Added Tax collections, nobody has tracked the effect of the battle on Nigerian consumer behaviour. Analysts worry that the debacle will lead to double taxation, trigger non-compliance, and increase tax burdens for the SMEs. Findings from my research and consulting reveal four trends to prepare for.

One, bargain hunters will increase: The VAT uncertainty will increase bargain hunting. The appetite to negotiate prices and service offerings will grow. Manufacturers and service providers offering flexible pricing and monitoring consumer bargain satisfaction will win. Elsewhere, I offered some reflections on how to tap into customer bargain satisfaction.

Two, consumers will buy in sachets: The risk of double taxation will increase the consumer’s appetite for sachet products and services. Consumers will advocate premium offerings at the lowest possible prices. Organisations that do not plan for sachet products or services may lose market share.

Three, brand challengers will rule: As consumer spending habits evolve towards necessities, consumers will question brand relevance. Tax increases will make customers challenge the value propositions of brands. Brands will have to build new value propositions and pricing strategies. Consumers will be loyal to brands they can hire rather than brands that focus only on emotional appeals.

Four, creative consumption will stay: My research findings reveal that Nigerian consumers are fast using products for purposes beyond those envisaged by the producers. Increased taxation will accelerate the propensity for consumers to use fewer products for multiple purposes. It is time for businesses to recreate products and services for multiple usage situations.

It is up to businesses, retailers, salespeople, advertisers, marketing managers, CEOs and other experts to reflect on these trends as they plan for the last quarter of 2021.