World Bank lists naira among Africa’s worst performing currencies in Africa
The Nigerian naira has been identified as one of the worst-performing currencies in Sub-Saharan Africa for the year 2024.
According to a report by the World Bank titled “Africa’s Pulse,” as of the end of August 2024, the naira had depreciated by approximately 43% year-to-date. This significant depreciation places it alongside other struggling currencies such as the Ethiopian birr and South Sudanese pound.
Several factors have contributed to this decline in value. A primary reason is the surging demand for United States dollars in the parallel market. This demand is driven by various entities, including financial institutions, non-financial end-users, and money managers, all seeking dollars amid limited inflows and delays in foreign exchange disbursements from Nigeria’s Central Bank. The report highlights that despite some reforms aimed at stabilizing the currency—such as the liberalization of the official exchange rate initiated in June 2023—the naira has continued to lose value.
The economic implications of this depreciation are profound. The weakening of the naira has led to increased domestic prices, particularly for imported goods, which exacerbates inflationary pressures on consumers. As a result, many Nigerians face heightened financial strain due to rising costs associated with essential goods and services.
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In contrast to Nigeria’s struggles, some African currencies that faced challenges in previous years have shown signs of recovery. For instance, by August 2024, the Kenyan shilling had strengthened by 21%, marking it as one of the region’s top performers.
While there have been attempts at reforming Nigeria’s foreign exchange market and addressing inflationary issues—such as removing fuel subsidies—the effectiveness of these measures remains uncertain as they have not yet stabilized or improved the naira’s position against major currencies like the dollar.
