The Nigerian naira has been identified as one of the worst-performing currencies in Sub-Saharan Africa for 2024, 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, placing it alongside the Ethiopian birr and the South Sudanese pound as some of the weakest currencies in the region.
The significant decline is primarily attributed to a surge in demand for U.S. dollars within Nigeria’s parallel market, coupled with limited dollar inflows and sluggish foreign exchange disbursements by the central bank.
Financial institutions, non-financial end-users, and money managers driving this dollar demand have further intensified pressure on the naira. Despite recent reforms aimed at liberalizing the foreign exchange market most notably the official exchange rate adjustment in June 2023 these measures have not sufficiently stabilized the currency.
Broader economic challenges, including dwindling foreign reserves and persistent inflationary pressures, have exacerbated the naira’s woes. This depreciation has notably impacted domestic prices, particularly for imported goods, worsening conditions for Nigerian consumers.
However, there was a recent uptick in the naira’s performance, with an appreciation of 5.69% against the dollar on October 14, improving from N1,641.27 to N1,552.92 per dollar. Despite this positive movement, foreign exchange turnover has decreased by 44.27% during the same period.
The World Bank projects Nigeria’s economy to grow by 3.3% in 2024, with a slight acceleration to 3.6% anticipated between 2025 and 2026 as economic reforms begin to take effect.
Nonetheless, inflation remains a pressing concern, especially following the removal of fuel subsidies in mid-2023, which caused gasoline prices to triple and subsequently increased transportation and logistics costs nationwide.
