2023 is a significant year in Nigeria, for obvious reasons.
It’s the much-awaited election year, and amidst upheavals in the global economy, country-specific challenges, and more, it is important to discuss how the elections will affect your personal finances.
Every time I teach about personal finance, I make a point of emphasizing that everyone operates in three economies: personal, national, and global. What this means is that beyond the things you do regarding making and spending money, there are policies and factors outside of your control that affect your personal finances, and it is important you keep an eye on them.
Events in Nigeria leading up to 2023 have highlighted the importance of financial literacy, as inflation, currency risks, insecurity, and violence have largely plagued the national and personal economies.
It is advisable to take proactive efforts to protect your finances because there is a chance that the economic and political landscape will shift significantly.
Here are seven things to keep in mind as we get ready for the Nigerian presidential elections in 2023.
1. Inflation and interest rates: The inflation rate in Nigeria as of December 2022 was about 21.34%, and the election’s results may have an impact on both inflation and interest rates. This in turn may impact the cost of living and, invariably, your daily expenses and investment returns. It is important to build an emergency fund just as a buffer in case there’s any further economic turbulence.
2. Currency fluctuations and devaluation risks: The value of the Nigerian naira has largely been affected by political and economic events, and as the elections draw nearer, it might worsen. If you have foreign-denominated obligations, such as payment of school fees or business obligations, it may be a good time to consider taking steps to hedge against currency risk, such as holding a portion of your funds in foreign currencies or investing in instruments that provide exposure to multiple currencies.
3. Key industry performance: The stability and performance of key industries will have an impact on the economy and, in turn, the costs of goods and services. Changes in agriculture, oil, and gas, as well as the manufacturing sectors, usually have a huge impact on the economy. The incoming government may also make changes to regulations affecting business and investments right after the election, which could have an impact on businesses.
4. Political stability: A new government will impact the economy and financial markets in the long and short runs. Election reruns and possible outbursts of political crisis may necessitate staying at home. The new government’s immediate macroeconomic and fiscal policies will also affect the overall health of the economy and the stability of the financial sector, leading to potential economic uncertainty.
5. Availability of funds in the business sector: The outcome of the election may have implications regarding the availability of funds for business purposes, which can affect people’s ability to access financing for personal or business purposes.
6. International and trade relations with other countries may be slightly affected by the choice of the winning party or candidate, and this will inadvertently have an impact on the economy. More than ever before, it is important to keep an eye on the news to watch out for some of these things. International events and trade relations can have a significant impact on the economy and your financial assets.
7. Financial sector stability: The economy and your investments can be significantly impacted by the financial sector’s stability as well as the performance of banks and other financial institutions. Keep abreast of the financial industry’s stability, and think about consulting a financial counselor to help you manage your assets in the event of economic turmoil.
In mitigating all of the factors discussed above, the importance of emergency funds comes into play as the economy can be significantly impacted by political instability and crises. It’s also very important to stay informed about the political landscape and the likelihood of economic changes as the election approaches.
If you are in doubt about anything, you may consider seeking the advice of a financial advisor to help you navigate your finances in the face of the uncertainties that come with an election season.
In conclusion, the 2023 presidential elections in Nigeria have the potential to have a significant impact on the economy and your finances. By staying informed and taking proactive measures to protect and grow your wealth, you can prepare for any potential changes to the overall economic and political landscape.
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