On the 26th of October, the Central Bank of Nigeria disclosed its plan to redesign the Naira. The concerns CBN cited were that of illicit funds in circulation, which bandits and kidnappers have been exploiting from Nigerians.
The scheduled date given for the introduction of the redesigned Naira was the 15th of December, 2022. The apex bank also gave January 31st, 2023, as the expiry date for changing old money to the newly redesigned Naira.
Recall that the first redesign of the Naira was done in 1984 when Muhammadu Buhari was the Military Head of State. His reasons then were that of fighting corruption, especially against the political class who had embezzled funds while in government.
Between 2005 to 2007, CBN introduced the Polymer version of the Naira, starting with the ₦20 note in 2005, and afterwards, it spread to other lower denominations of the Naira, including ₦50.
The reason cited by Emefiele then was that the Polymer notes were user-friendly, looked better, and remained crisp over a long period without stain, rumple or tear easily.
In 2014, new features were included in the ₦100 note to commemorate Nigeria’s centenary.
However, the CBN Governor, Emefiele, has given economic reasons as the major reason for redesigning the Naira. Many financial experts have noted that it’ll bring a lot of economic deficits to the country, considering the huge debt it will be falling into through its borrowing to finance the project.
With this, experts argue that it’ll deepen the inflation rate in the country. While the thickening inflation affects every aspect of the country, one aspect I’ll still hit heavily is the Nigerian car market.
What Does This Mean For Car Dealers & Buyers?
For car dealers and buyers in Nigeria, it means that the rate of inflation will affect the cost and prices of cars. Car dealers will have to deal with the unstable black market rates constantly rising daily. For some car dealers, this will also entail adding more money to already existing cars in their dealership to wedge the blow of inflation and how it’s affected the business flow.
On the other hand, car buyers will mean buying less expensive cars for twice their supposed prices. If the 2005 Toyota Corolla should be sold at the rate of ₦2.5 million in the market today, there’s every likelihood an extra million will be added on top. The buying potential of the Naira will decrease, and this will impact the ability of most Nigerians to afford a car.
How Can Car Dealers & Car Buyers Protect Themselves During This Time?
Inflation is unstable, there’s never any certainty about when it could go. In the case of Nigeria, financial experts note that there’s no certainty the inflation rate in the country will be reduced any time soon. For car dealers, the best way to protect themselves now is to reduce importation until black market prices stabilize.
There’s never the best time to buy a thing for car buyers. That thing you’re patiently waiting for the price to decrease, it could triple more than the current cost. The best way to protect yourself today as a car buyer in Nigeria during this time is to go for quality cars.
In reality, the amount of money you spend to buy a car stops mattering when you’ve purchased a quality car with great market value. So, for buyers, quality and market value should be guiding factors while buying cars during this time.
Conclusion
The redesigning of the naira and other economic activities has affected the state of the Naira. As such, this has impacted every sector in the country, including the car market. But protecting yourself as a car dealer or buyer during this time is essential.
Have 1 million naira and above to Buy or Sell Cars In Nigeria? Check carlots.ng
All rights reserved. Reproduction, publication, broadcasting, rewriting, or redistribution of this material and other digital content on CarPulse.ng is strictly prohibited without prior express written permission from CarPulse Nigeria - Contact: support@CarPulse.ng
