The Nigerian naira has been named one of the worst-performing currencies in Sub-Saharan Africa in 2024, according to the latest report from the World Bank.
The Africa’s Pulse report revealed that the naira has depreciated by about 43% this year.
The report, which was released in August 2024, highlighted that the naira ranks among the weakest currencies in the region, along with the Ethiopian birr and the South Sudanese pound. The steep decline is due to the high demand for U.S. dollars in Nigeria’s parallel market, limited dollar inflows, and slow foreign exchange disbursements by the Central Bank of Nigeria.
The World Bank pointed out that Nigeria’s foreign exchange reforms, such as the liberalization of the official exchange rate in June 2023, have not been enough to stabilize the naira. Financial institutions, money managers, and other end-users increasing dollar demand have also added pressure on the currency.
The depreciation of the naira has had a major impact on the Nigerian economy, particularly by raising the prices of imported goods and worsening inflation. Nigerian consumers are facing rising costs, making it more difficult to afford essential items.
However, some improvement was noted recently, as the naira gained 5.69% against the U.S. dollar on October 14, moving from N1,641.27/$1 to N1,552.92/$1. Despite this recovery, foreign exchange turnover dropped by 44.27% during the same period.
Looking ahead, the World Bank projects that Nigeria’s economy will grow by 3.3% in 2024, with a slight increase to 3.6% between 2025 and 2026 as reforms take effect.
However, inflation remains a serious concern, especially after the removal of fuel subsidies in mid-2023, which caused gasoline prices to triple and increased transportation and logistics costs across the country.
