UNCOVERING NEPALI CONSUMERS
An update on the consumers of Nepal's rural and urban market centres.
A recent survey by Nepal Rastra Bank has shed new lights on the profiles of Nepali consumers in rural and urban market centres.
According to the survey conducted between mid-November 2005 and mid-November 2006 covering 48 rural and urban market centres across the country, the modal household has 5-6 members (representing 35.4 percent of all Households) and it is followed by a 3-4 member household representing 32.4 percent. Therefore, more than two-third of the households interviewed in the survey comprised of 3 to 6 members. The poorest households have, as usual, the larger family size (more than six members) while the richest households have a size of 4.41 members. In the rural areas, the average household size is 5.49 while it is 5.21 in urban areas.
The data collected from 5095 households cover almost all the major markets of the country including the district headquarters where there is a significant market. Thus, the present survey is wider in scope than the previous surveys, in which, the data were collected from the urban centres only.
Young Market
The report reconfirms the fact that the average Nepali consumer is young. This is so in both urban and rural markets.
In rural market centres, about 39 percent people belong to the age group of 25-59 followed by 32.5 percent in the age group 0-14 and 21.2 percent in the age group 15-24, says the report of the survey. Similarly, in urban market centres, about 43 percent people fall under the age group of 25-59 followed by 25 percent in 0-14 and about 23 percent in 15-24 year groups.
The market for the products targeted to the old age people is relatively attractive in the urban areas, as the data from the report show. For example, the report shows, the proportion of population aged above 60 years in rural and urban market centres are 7.5 percent and 10 percent respectively.
Household Heads
Majority of the households in Nepal, both in rural and urban markets, are headed by males. In rural market centres, 86.1 percent households are found to be headed by male while in the urban market centre, this is 78.9 percent. Across the ecological regions, hills have relatively higher number of households headed by female (about 20 percent). However, the highest frequency of households headed by female is found in urban Kathmandu, Bhaktapur, Lalitpur (KBL) region (about 22 percent).
The age of the household heads is relatively higher in the rural markets than in the urban markets. The report shows that in rural market centres, 78.2 percent household heads are in the age group of 25-59 followed by 19.6 percent in the age group 60 and above. The rest 2.2 percent are headed by people of the age group of 15-24. In the urban market centres, 65.6 percent of household heads are of the age group of 25-59 followed by 33.7 percent under the age group of 60 and above. Less than 1 percent households in urban market centres are headed by people of the age group of 15 to 24.
Urban KBL has the highest percent of household heads under the age group of 60 years and above when compared to other areas. As such, 39.2 percent household heads in urban KBL are aged 60 years and above.
Education of Household Heads
In rural market centres, 34.8 percent household heads are found to have secondary education followed by 23.5 percent who can read and write only. Similarly, 19.2 percent household heads in rural market centres are illiterate and 10.8 percent have obtained primary education. The proportion of household heads in rural market centres having tertiary education is 11.7 percent. In urban market centres, 27.8 percent household heads have secondary education followed by 22.8 percent with tertiary education.
Similarly, 21.7 percent household heads in urban market centres are illiterate and 21.0 percent can read and write only. The proportion of household heads in urban market centres having primary education is 6.7 percent. Urban KBL has the highest percent (29.3 percent) of household heads having tertiary education than in other areas.
Occupation of Household Heads
In rural market centres, 27.0 percent household heads are engaged in agriculture followed by 25.9 percent with business/industry as their principal occupation. Similarly, 17.9 percent household heads in rural market centres are in service/teaching sector and 8.2 percent are wage earners.
In urban market centres, 21.7 percent household heads are engaged in business/industry followed by 21.4 percent who have service/teaching as their principal occupation. Similarly, 11.4 percent household heads in urban market centres have agriculture as their principal occupation and 9.7 said they are housewives. The proportion of household heads who are wage earners is 6.7 percent in urban market centres. Urban KBL has the least proportion of household heads having agriculture as their principal occupation compared to the household heads in such occupation in other areas. Similarly, KBL also has the higher proportion of household heads engaged in service/teaching sector compared to other areas.
Literacy Profile
Of the total population aged six years and above, the literacy rate of the male is 90.9 percent and that of female is 73.9 percent in rural market centres. The overall literacy rate in rural market centres is 82.1 percent. The literacy rate of male in urban market centres is 92.6 percent while it is 78.5 percent for the female.
In the age group of 6-9 years, 91.9 percent are literate in rural market centres. This is 97.7 percent in the age group 10-14 years. The overall literacy rate of rural market centres is 82.1 percent, according to the report.
In urban market centres, the literacy rate of 6-9 years group is 92.7 percent. The proportion is 96.4 percent for the age group of 10-14. The overall literacy rate of urban market centres is 85.4 percent.
Of the total population, in terms of educational attainment, rural market centres comprise of 16.4 percent population who can read and write only whereas 26.7 percent have primary level of educational attainment. Similarly, 45.8 percent have secondary level educational and the rest 11.1 percent have tertiary level of education.
In urban market centres, 14.5 percent can only read and write whereas 18.4 percent have primary level of education. Similarly, 42.5 percent have secondary level educational attainment and the rest 24.5 percent have tertiary level of education.
Housing Facilities
The survey has revealed that in rural market centres, 67.7 percent households have access to pipe or tap water, while in urban market centres, 72.5 percent have such facility. In case of toilet facility, 42.5 percent in rural market centres and 74.7 percent in the urban centres have toilets within the dwelling units. The rest have the toilet outside the dwelling unit or at a nearby place outside the dwelling unit. However in urban KBL, 92.7 percent households have toilets inside the dwelling units.
In terms of kitchen facility, the survey reports that only 7.2 percent households in the rural markets possess modern kitchen while 19.7 percent have kitchen in their living room. In urban market centres, 24.6 percent households have modern kitchen while 14 percent have kitchen in their living room.
Similarly, 88.4 percent households in the rural market centres have access to electricity and 20.7 percent have access to telephone. In urban market centres, 94.9 percent households have access to electricity and 61.8 percent have access to telephone. Access to electricity and telephone facilities is found highest in urban KBL (around 100% having electricity and 79% having telephone).
Around 82 percent households of the rural market centres have reported that they are using fire wood as cooking fuel. In contrast, LP gas plays a dominant role in the urban KBL with around 82 percent households using LP gas as cooking fuel.
Ownership of Household Durables
Overall, of the total households surveyed, 52.3 percent have gas stove, 21.2 percent have refrigerator and 2.1 percent households have micro oven. Of the households categorized as the richest group, 84.2 percent have gas stove, 46.9 percent have refrigerator, 57.4 percent have rice cooker, 56.9 percent have water filter and 6.6 percent have micro oven, thus, giving a good scope for the marketers to sell such products. Out of the households in the richest group, 80.3 percent have colour TV, 8.9 percent have VCD, 13.7 percent have DVD, 39.9 percent have camera and 6.0 have percent have video camera. In terms of possession of vehicles, 34.4 percent of the richest group has motorcycles and 8.9 percent have cars.
Employment Profile
According to the results of the survey, 23.8 percent of the employed population in rural market centres are engaged in agriculture, 26.4 percent in business and industry, 16.7 percent in service, 8.5 percent work as wage-earner, 2.5 percent serve as domestic worker and the rest 22.3 percent are engaged in other types of occupation.
Similarly, in urban market centres, 9.4 percent employed population are engaged in agriculture, 24.5 percent in business and industry, 25.6 percent in service, 7.2 percent work as wage-earner, 3.3 percent serve as domestic worker and the rest 30.2 percent have other types of occupation.
Income Profile: Household Income by Source
In rural market centres, agriculture, livestock and fishery constitute 10.8 percent of the households’ income whereas salary, allowance, wage and pension have 22.7 percent share. Similarly, business/service, enterprise and other related activities constitute 29.4 percent and remittance 20.6 percent of the total income. Imputed rent has 7.5 percent share and the miscellaneous category accounts for nine percent share in households’ income in rural market centres.
In urban market centres, agriculture, livestock and fishery constitute 5.1 percent of the households’ income while salary, allowance, wage and pension have 31.4 percent share. Similarly, business/service, enterprise and other related activities constitute 29.6 percent, remittance constitute 13.3 percent and imputed rent have 11.9 percent share while the rest is shared by miscellaneous having 8.7 percent in households’ income in urban market centres.
Average Monthly Household Income
In rural market centres, the average monthly household income is found to be Rs 22,225. Of this, agriculture, livestock and fishery account for Rs 2,403 while salary, allowance, wage and pension account for Rs 5,047, and business/service, enterprise and other related activities account for Rs 6,523. The share of the remittance is Rs 4,582, imputed rent Rs 1,667, and the rest is shared by miscellaneous with Rs 2,003.
In urban market centres, the average monthly household income is Rs 31,935 in which the contribution of agriculture, livestock and fishery is Rs 1,634, while salary, allowance, wage and pension account for Rs 10,029, business/service, enterprise and other related activities Rs 9,458, remittance Rs 4,254, the imputed rent Rs 3,789, and the miscellaneous Rs 2,771.
Household Per Capita Income by Source
In rural market centres, per capita monthly income stands at Rs 4,264 of which, agriculture, livestock and fishery contribute Rs 461, salary, allowance, wage and pension contribute Rs 968, business/service, enterprise and other related activities Rs 1,251, remittance Rs 879, imputed rent Rs 320; and miscellaneous Rs 384.
In urban market centres, per capita monthly income stands at Rs 5,817. In this, the contribution of agriculture, livestock and fishery is Rs 298, salary, allowance, wage and pension Rs 1,827, business/service, enterprise and other related activities Rs. 1,723, remittance Rs. 775, imputed rent Rs. 690, and miscellaneous Rs. 505.
Expenditure Pattern: Monthly Household Expenditure
Average monthly expenditure of households in rural market centres is found to be Rs. 11,982.
In this, the share of food expenditure and the non-food expenditure is 44.09 percent and 55.91 percent respectively.
In urban market centres, the average monthly expenditure of the households is Rs. 17,896. Of this, food expenditure accounts for 35.81 percent and the non-food expenditure for 64.19 percent.
Regional variations in the average monthly expenditure reveal that the highest share of expenditure is in food among the households in mountain region. Of the total monthly expenditure of Rs. 14,319 in mountain region, 47.53 percent is spent on food items. But, of the total monthly expenditure of Rs. 13,956 in Terai region, 38.62 percent is on food and of the total monthly expenditure of Rs. 16,075 in hills, food expenditure constitutes 38.25 percent.
In absolute terms, expenditure on food items is the highest in urban KBL (Rs. 7,311) compared to the other regions. However, this is mere 35.22 percent of the corresponding total monthly expenditure of the people of this region.
Households Consumption Pattern
Of the average monthly expenditure of the households (Rs. 11,982) in rural market centres, the value of grains and cereal products accounts for 14.29 percent. This is followed by vegetables (5.26 percent), restaurant & hotel (4.01 percent), milk products & eggs (4.04 percent), meat &fish (4.50 percent), ghee & oil (2.54 percent), legume verities (1.91 percent), hard drinks (1.90 percent), fruits (1.58 percent), spices (1.49 percent), sugar & sweets (0.98 percent), tobacco products (0.87 percent) and soft drinks (0.74 percent).
Thus, food and beverage group, as a whole, accounts for 44.09 percent of the average monthly expenditure of the households in rural market centres.
In the monthly non-food expenditure of the households in rural market centres, the value of housing & utilities is the highest (19.30 percent) followed by recreation & culture (8.86 percent), education (6.43 percent), clothing & footwear (5.37 percent), miscellaneous goods & services (4.79 percent), furnishing & household equipments (3.67 percent), transport (3.50 percent), health (2.43 percent) and communication (1.56 percent). Other goods and services constitute 55.91 percent share in total expenditure of the households of rural market centres.
Of the average monthly expenditure of the households (Rs 17,896) in urban market centres, the value of grains and cereal products accounts for 10.56 percent followed by vegetables (4.39 percent), restaurant & hotel (4.12 percent), milk products & eggs (3.92 percent), meat & fish (2.97 percent), fruits (1.97 percent), ghee & oil (1.95 percent), legume varieties (1.48 percent), hard drinks (1.17 percent), spices (1.02 percent), soft drinks (0.83 percent), sugar & sweets (0.82 percent) and tobacco products (0.62 percent).
This means food and beverage group, as a whole, accounts for 35.81 percent of the average monthly expenditure of the urban households.
On the average non-food monthly expenditure of households in urban market centres, the value of housing & utilities again stands highest at 27.16 percent.
This is followed by recreation & culture (8.67 percent), education (8.29 percent), clothing & footwear (4.93 percent), miscellaneous goods & services (3.90 percent), transport (3.84 percent), furnishing & household equipments (3.04 percent), health (2.18 percent) and communication (2.18 percent). As such, the value of non-food items is 64.19 percent in total expenditure of the urban households.
The share of monthly expenditure on housing and utilities is at the highest place in both market centres basically because of the contribution of imputed rent of the dwelling units. According to the report, the rent of owner-occupied dwelling unit has been imputed with prevailing rent of a similar housing unit in the market.
Average Per Capita Monthly Expenditure
In rural market centres, per capita monthly expenditure is Rs 2,296, out of which Rs 1,012 is spent on food and beverages and the rest is spent on non-food items.
In urban market centres, the per capita monthly expenditure is Rs 3,255, out of which Rs 1,165 comprises of expense on food and beverages and the rest on non-food items.
In food and beverages category, urban KBL households report the highest level of expenditure amounting to Rs 1,382. This is followed by mountain (Rs 1,332) and hills (Rs 1,188). Urban area other than KBL has Rs 1,064 and terai Rs 952 as per capita monthly expenditure on food and beverages.
In non-food category, urban KBL again has the highest level of per capita expenditure, which stands at Rs 2,542. This is followed by hills (Rs 1,918). The per capita monthly expenditure on non-food category in urban areas other than KBL is Rs 1,877. Such amount is Rs 1,513 in Terai and Rs 1,470 in the mountains.
Credit Behaviour of the Households: Households having Outstanding Loans
Of the total households surveyed, 2,087 households (41 percent) are reported to have outstanding loans with various institutional and/or non-institutional lending agencies. Among them, 55 percent are in rural market centres and the rest 45 percent in urban market centres.
Urban KBL reported the least number of households (5.3 percent) having outstanding loan with institutional and non-institutional lending agencies.
Loan & Lender
Of the total households having outstanding loan in rural market centres, 35.3 percent have outstanding loan with relatives and friends; 28.0 percent with development banks, 26.9 percent with sahu/mahajans, 13.8 percent with cooperatives, 11.7 percent with commercial banks; 3.8 percent with finance companies and the rest 9.2 percent with others.
Of the total households having outstanding loan in urban market centres, 35.6 percent have outstanding loan with relatives and friends, 24.8 percent with development banks, 19.0 percent with sahu/mahajan, 16.9 percent with commercial banks, 11.6 percent with cooperatives, 9.0 percent with finance companies and the rest 7.4 percent with others.
Remittance
During the survey period, information on family members working abroad and remittance sent by them was also collected. According to the report, 624 of the total households surveyed are reported to have their family members working abroad. The total number of their family members working abroad was found to be 779. The countries they were working numbered more than 38 ranging from India to Nigeria. However, the majority of such people were in India, Gulf countries, Malaysia and Hong Kong.
Remittance and its Uses
Of the total amount of remittance received by the households in rural market centres, 45 percent is found to be used in buying land and house. This was followed by repayment of debt (31 percent). 12 percent of the received amount is used in education, health and others while five percent was deposited in bank as a saving, four percent used in social works, two percent kept as cash in hand and one percent used in investment.
The use of remittance in urban market centres differs slightly compared to that in rural market centres.
Out of the total amount of remittance received by the households in urban market centres, a little more than half (i.e. 52 percent) was utilized in buying land and house. This was followed by repayment of debt (21 percent) while 15 percent was deposited in bank as a saving. Similarly, seven percent of the amount was used in education, health and others while three percent was used in investment, two percent in social works and one percent kept as cash in hand.
(Source for all the data and information: Fourth Household Budget Survey, Nepal Rastra Bank)
