Wednesday, October 16, 2024 - The Nigerian naira has been listed as one of
the worst-performing currencies in Sub-Saharan Africa in 2024.
This is according to the World Bank’s latest Africa’s Pulse
report.
As of August 2024, the naira had depreciated by approximately 43%
year-to-date, ranking it among the weakest currencies alongside the Ethiopian
birr and the South Sudanese pound.
The decline is attributed to surging demand for U.S. dollars in
Nigeria’s parallel market, limited dollar inflows, and slow foreign exchange
disbursements by the central bank.
The report highlights that financial institutions, non-financial
end-users, and money managers driving dollar demand have further pressured the
naira. Despite Nigeria’s foreign exchange market reforms, including the
liberalization of the official exchange rate in June 2023, these efforts have
been insufficient to stabilize the currency.
Broader economic challenges, including limited foreign reserves and
inflationary pressures, have exacerbated the naira’s struggle. The currency’s
depreciation has significantly impacted domestic prices, particularly for
imported goods, worsening conditions for Nigerian consumers.
However, some recovery was noted recently, with the naira appreciating
by 5.69% against the dollar on October 14, improving from N1,641.27/$1 to
N1,552.92/$1. Despite this, foreign exchange turnover dropped by 44.27% within
the same period.
The World Bank projects that Nigeria’s economy will grow by 3.3% in
2024, with slight acceleration to 3.6% between 2025 and 2026 as reforms take
hold. However, inflation remains a concern, particularly following the removal
of fuel subsidies in mid-2023, which has caused gasoline prices to triple and
increased the cost of transportation and logistics across the country.
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