The World Bank‘s latest Africa report ranks the Nigerian Naira as one of the worst-performing currencies in Sub-Saharan Africa in 2024.
As of August 2024, the Naira had depreciated by approximately 43% year-to-date, ranking it alongside the Ethiopian birr and the South Sudanese pound as the region’s weakest currencies.
This decline is largely attributed to the surging demand for U.S. dollars in Nigeria’s parallel market, limited dollar inflows, and slow foreign exchange disbursements by the central bank.
“The depreciation is also due to increasing demand for U.S. dollars in the parallel market, limited dollar inflows, and delays in foreign exchange disbursements by Nigeria’s Central Bank,” the report stated.
Additionally, the inconsistent policies of the federal government and the Central Bank of Nigeria have contributed to the currency’s depreciation. Varied economic challenges, including limited foreign reserves and inflationary pressures, have exacerbated the Naira’s struggles.
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. However, some recovery was noted recently, with the Naira appreciating by 5.69% against the dollar on October 14.
The World Bank projects that Nigeria’s economy will grow by 3.3% in 2024, with a slight acceleration to 3.6% between 2025 and 2026 as reforms take hold. Nevertheless, inflation remains a concern, particularly following the removal of fuel subsidies in mid-2023.
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