Naira Identified Among Worst-Performing Currencies In Sub-Saharan

The World Bank has highlighted the Nigerian naira as one of the weakest currencies in Sub-Saharan Africa for 2024. This was disclosed in the Bank’s latest ‘Africa’s Pulse’ report, which tracks the region’s economic developments.

According to the report, the naira had depreciated by approximately 43% by August 2024, ranking it alongside the Ethiopian birr and the South Sudanese pound as one of the least-performing currencies.

The sharp decline is attributed to an increased demand for U.S. dollars in Nigeria’s unofficial exchange markets, coupled with limited inflows of foreign currency and slow disbursements from the Central Bank of Nigeria (CBN). Financial institutions, non-financial entities, and money managers seeking U.S. dollars have further worsened the strain on the naira.

Nigeria had introduced reforms aimed at stabilizing the currency, including the liberalization of its official exchange rate in June 2023. However, these efforts have not been sufficient to address the naira’s decline. Broader economic challenges, such as shrinking foreign reserves and rising inflation, have compounded the currency’s struggles.

The impact of the naira’s depreciation has been felt across the economy, particularly in the rising cost of imported goods, putting additional pressure on Nigerian consumers.

Despite these difficulties, there was a brief positive trend in mid-October 2024, when the naira appreciated by 5.69% against the U.S. dollar, moving from ₦1,641.27/$1 to ₦1,552.92/$1. However, foreign exchange turnover dropped by 44.27% over the same period.

Looking ahead, the World Bank projects Nigeria’s economy will grow by 3.3% in 2024, with a modest improvement to 3.6% by 2025 and 2026 as the effects of economic reforms take hold. Nevertheless, inflation remains a critical concern, particularly following the removal of fuel subsidies in mid-2023, which triggered a sharp increase in gasoline prices and higher transportation costs across the country.

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