The Nigerian Naira has joined the ranks of the Ethiopian Birr and South Sudanese Pound as the worst-performing currencies in sub-Saharan Africa, according to the World Bank’s latest Africa’s Pulse report.
The report reveals that the Naira lost approximately 43% of its value as of August 2024, primarily due to increased demand for US dollars and limited dollar inflows. “Surges in demand for US dollars in the parallel market… combined with limited dollar inflows and slow foreign exchange disbursements to currency exchange bureaus by the central bank explain the weakening of the naira.”
On Tuesday, the Naira plummeted to N1658.97 per dollar, a significant drop from Monday’s rate of N1552.92. This volatility has persisted despite interventions by the Central Bank of Nigeria.
The World Bank attributes the Naira’s decline to:
1. Increased demand for US dollars
2. Limited dollar inflows
3. Slow foreign exchange disbursements to currency exchange bureaus
Despite the Naira’s struggles, the World Bank forecasts Nigeria’s economic growth at 3.3% in 2024 and 3.6% in 2025-26. However, inflation concerns linger, with Nigeria’s inflation rate rising to 32.70% in September.
The Naira’s depreciation has significant implications for Nigeria’s economy and citizens. Will the Central Bank of Nigeria’s efforts stem the tide, or will the Naira continue its downward spiral?
