Comparison of Economic Determinants of Household Spending in Africa: A Case Study of Nigeria and Seychelles

In developing countries, household spending is pivotal in shaping economic growth, social well-being, and sustainable development. However, understanding the determinants of macroeconomics and how they impact household spending is an open research challenge within the economic society. Thus, this study delves into the economic determinants shaping household spending patterns in Africa, specifically focusing on the divergent cases of Nigeria and Seychelles. Despite the growing importance of understanding household spending patterns in the context of African economies, a notable gap exists in comprehensive empirical research, particularly with a comparative focus on nations with diverse economic structures. This study seeks to address this gap by investigating the specific factors influencing household spending in Nigeria and Seychelles, considering variables, such as inflation, population, GDP growth, and government expenditure. To test this study’s hypothesis, the nonlinear stationary autoregression distributive lag (ARDL) model in Nigeria and Seychelles covers from 2001 to 2021. The ARDL was used due to its characteristics in forecasting long-run relationships. The results show that in Nigeria, the population has a statistically significant impact on household spending. This suggests that population changes positively and negatively impact household spending depending on the time lag. While in Seychelles, this macroeconomic factor does not appear to influence expenditure and consumption, and this could be due to its smaller economy which may exhibit sensitivity to population changes as a larger and more diverse economy like Nigeria. These findings underscore the importance of considering country-specific economic and policy contexts when analyzing the relationship between macroeconomics and household spending in Africa.