Naira devaluation: Nigerian shoppers now pay more for international shopping

Posted by Felix Okoli on Saturday December 6, 2014 at 11:5:34:

It's no longer news that the CBN has devalued the Nigerian Naira and in this way practically made a lot of people poorer and some of the effects of the Naira devaluation includes increasing shopping costs for international buyers. However, the only people that may remain safer from the Naira devaluation action are the ones who held on to assets rather than the Naira. People who have houses, lands, stocks, domiciliary accounts, foreign bank accounts and so on are the ones who would hardly feel the pain of Naira devaluation. However, for those who still operate savings accounts in Naira, have debtors owing them in Naira and so on are the ones more likely to have lost some value of their money.

Also, for Nigerians who love to buy things from foreign countries or websites like Amazon, they now have to spend more Naira to get the items they want and this is because the exchange rate has increased by about 8%.

I buy things from Amazon at times using my Naira Visa card and the last time I checked which was in May 2014, I noticed that the exchange rate used for me on Amazon was at about N172 to a US dollar and that was about the black market price for the dollar in Nigeria then. However, lately as I tried to buy something else this December, it has gone up to N187. Wow! It shows how bad things can go in Nigeria but for those with foreign capital, they see this as the best time to bring back money home.

In Nigeria's financial history, I've never known of a time when the Naira was ever made stronger by the CBN as most of their decisions have been to devalue the Naira and this is mostly because they keep most of their money in foreign currencies since they are paid by multinational oil companies into their foreign bank accounts. The CBN holds her money in US dollars and so one reason why I feel they normally devalue the Naira is when they want to bring back money into Nigeria to finance the economy. A stronger Dollar makes it easier for the CBN to fund projects in Naira.

Devaluation of the Naira will only increase the cost of imported products and since Nigerians mostly buy imported products, chances are that they are going to have less savings after doing their shopping.

For those who have kept their money in foreign currencies by using a foreign bank account, domiciliary account, USD Visa/Mastercard or already imported their stock into the warehouse, they are safe from the Naira devaluation action but for the many others who still earn the same salary in Naira, hold onto savings, current and fixed deposit accounts, the CBN's action has only made them poorer.

It's like the Naira normally loses value at the end of the year before an election year in Nigeria. If it continues, chances are that the labour union will demand for a salary increase and the cost of things in Nigeria such as food, books, housing and so on will also increase.