Russia-Ukraine war has brought out the danger of some serious macroeconomic impacts in Uganda, such as the increasing numbers of unemployment, and slow economic growth, both impacts leading to higher inflation or even stagflation. Some impacts may be weak and negligible. However, many of them contain a big impact in the long term, especially on the people of developing countries.
One of the socio-economic impacts of the war is vehicle financing. Due to the shortage of automotive parts, the prices of both used and new cars have gone above the horizons since the pandemic started, as the pandemic posed many problems for car manufacturers. Since the last year, there has been an increment of 12% in the price of new vehicles. However, the prices of used vehicles have skyrocketed, getting a massive increase of 41%.
This skyrocketing has a massive effect on the Africans, who are already struggling to gather money to buy cars for personal use or business. Moreover, the Russia-Ukraine war encouraged the shortage of semiconductor chips, resulting in a high decrease in the production of new vehicles. Due to this, some global automakers, such as Toyota Motor, Hyundai Motor Co., Ford Motor, and HYMLY Ltd, have suspended their business in Russia. Some of them have even closed down their factories indefinitely and are not willing to do any further business with Russia.
Fourteen million used vehicles were exported worldwide by the European Union, Japan, and the United States between 2015 and 2018. Forty percent of them were sent to African countries due to their low prices. The low prices of these used vehicles create a high demand for them in developing regions such as Africa. In sub-Saharan Africa, more than ninety-five percent of vehicles are used cars. However, because of the condition, maintenance of assets, and value, financing used vehicles is quite dicey, especially for the people of developing regions like Africa who are already facing financial problems.
For Africa to survive the crisis, automobile industries in leading countries like Nigeria and Morocco should manufacture the country’s cars, available at low prices, especially to the Africans. Moreover, partnerships with leading companies should be done in combined future projects towards developing the latest cars or developing good civic cars under a low budget overall cost. Through all these definitive steps, Africa won’t be further affected by the Russia-Ukraine war.
