Interest Rates and Deposit Choices: How Economic Factors Shape Nigerian Saving Habits
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Interest Rates and Deposit Choices: How Economic Factors Shape Nigerian Saving Habits
According to a Dataphyte analysis of deposit data from the Central Bank of Nigeria (CBN), savings deposits recorded the fastest growth among the three major deposit categories: savings, demand, and time deposits. While granular, real-time data on deposit types remains limited, the available figures help illuminate how Nigerian private sector deposit behaviour responds to macroeconomic conditions, particularly interest rate and inflation trends.
Between January 2018 and November 2019, Nigerians in the private sector steadily grew their bank deposits. However, the pattern of this growth didn’t always align with classical economic expectations, where individuals are expected to make rational decisions based on their expectations of future prices, wages, and interest rates.
Despite a slight dip in interest rates, from 14% to 13.5%, and persistent inflationary pressures that eroded the real value of money, both savings and time deposits increased steadily. Savings deposits grew the fastest, followed by time deposits, while demand deposits grew slowly.
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