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.