R
Richard Ogunsile
Guest
The Nigerian naira has been identified as one of the least-performing currencies in Sub-Saharan Africa for 2024.
The World Bank revealed this in its latest Africa’s Pulse publication.
Naija News understands that by August 2024, the naira had experienced a depreciation of around 43% year-to-date, placing it among the weakest currencies, alongside the Ethiopian birr and the South Sudanese pound.
This decline is largely due to a heightened demand for U.S. dollars in Nigeria’s parallel market, coupled with limited dollar inflows and sluggish foreign exchange allocations from the central bank.
The report indicates that financial institutions, non-financial end-users, and money managers driving the demand for dollars have further strained the naira.
Despite Nigeria’s efforts to reform its foreign exchange market, including the liberalization of the official exchange rate in June 2023, these measures have not been adequate to stabilize the currency.
Wider economic issues, such as dwindling foreign reserves and inflationary pressures, have intensified the naira’s challenges.
The depreciation of the currency has notably affected domestic prices, especially for imported goods, thereby worsening the situation for Nigerian consumers.
Nevertheless, a recent uptick was observed, with the naira appreciating by 5.69% against the dollar on October 14, moving from ₦1,641.27/$1 to ₦1,552.92/$1.
However, it is important to note that foreign exchange turnover fell by 44.27% during the same timeframe.
The World Bank anticipates that Nigeria’s economy will grow by 3.3% in 2024, with a slight increase to 3.6% projected for 2025 and 2026 as reforms take effect.
Nonetheless, inflation continues to be a significant concern, particularly following the removal of fuel subsidies in mid-2023, which has led to a tripling of gasoline prices and increased transportation and logistics costs throughout the country.
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