The naira has emerged as one of the worst-performing currencies in Sub-Saharan Africa in 2024, according to the World Bank’s latest Africa’s Pulse report.
News About Nigeria understands that by August, the naira had depreciated 43% since the start of the year, joining the ranks of other struggling currencies like the Ethiopian birr and South Sudanese pound.
It read: “Ethiopia, Ghana, and Nigeria are among the worst performing in Africa this year, and their currencies continue weakening while demand for foreign exchange remains pressing. Measures to mitigate social unrest associated with the high cost of living in Angola (doubling of the minimum wage) and Nigeria (partially reinstating fuel subsidies) are putting pressure on their public finances.”
This decline in the naira’s value is largely due to high demand for U.S. dollars in the parallel market, limited dollar inflows, and delays in foreign exchange allocations by Nigeria’s central bank.
Increased dollar demand from financial institutions, asset managers, and non-financial entities has further strained the currency.
The federal government’s floating of the official exchange rate in mid-2023 was intended to stabilise the naira.
However, challenges have persisted with the weakening currency driving up inflation, particularly for imported goods.
While some African currencies, such as the Kenyan shilling, have shown signs of recovery, the naira continues to face economic hurdles, including low foreign reserves and inflationary pressures.
Notably, the naira appreciated slightly by 5.69% against the dollar in mid-October, moving from N1,641.27/$1 to N1,552.92/$1.
However, foreign exchange turnover decreased by 44% over this period.
The World Bank forecasts Nigeria’s economy to grow by 3.3% in 2024, with growth expected to rise to 3.6% by 2026 as reforms take effect.
