In the latest edition of Africa’s Pulse by the World Bank, the Nigerian naira has been identified as one of the worst-performing currencies in Sub-Saharan Africa for the year 2024. With a depreciation of approximately 43 per cent year-to-date, the naira joins the Ethiopian birr and South Sudanese pound as one of the weakest currencies in the region. Factors contributing to the naira’s devaluation include high demand for US dollars in the parallel market, limited dollar inflows, and delays in foreign exchange disbursements by Nigeria’s central bank.
Despite some foreign exchange market reforms implemented by the Nigerian government, such as the liberalization of the official exchange rate, the naira continues to struggle. This currency decline reflects broader economic challenges in Nigeria, including limited foreign currency reserves and ongoing inflationary pressures. The depreciation of the naira has also led to increased domestic prices, particularly for imported goods, impacting consumers.
While some African currencies have shown signs of recovery in 2024, foreign exchange shortages and exchange rate pressures remain prevalent in many African economies. The World Bank projects Nigeria’s GDP to grow by 3.3 per cent in 2024, with a slight increase to 3.6 per cent in 2025-2026, as macroeconomic and fiscal reforms gradually take effect. Despite some improvements, challenges persist in Nigeria’s economic landscape, with inflation fluctuations and policy changes affecting fuel subsidies and gasoline prices.
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