According to the World Bank, in sub-Saharan Africa, the naira will be one of the worst performing currencies in 2024.
The World Bank stated in its recently released “Africa’s Pulse” regional economic outlook report that the naira depreciated by roughly 43% as of August, indicating that it was still losing value.
The World Bank claims that the naira was devalued due to restricted dollar inflows and the Central Bank of Nigeria’s (CBN) sluggish foreign exchange (FX) disbursements to bureaus de change (BDC) operators.
The foreign lender added that the pressure on the naira has increased due to the demand for dollars from money managers, non-financial end users, and financial institutions.
The World Bank stated that the South Sudanese pound, Nigerian naira, and Ethiopian birr were among the worst performing currencies in the region by August 2024.
As of the end of August, the value of the Nigerian naira had depreciated by roughly 43% year to date.
“The weakening of the naira can be explained by the surges in demand for US dollars in the parallel market, which are being driven by financial institutions, money managers, and non-financial end-users. Additionally, there are limited dollar inflows and slow foreign exchange disbursements to currency exchange bureaus by the central bank.”
The report also points out that higher domestic prices, especially for imported goods, have resulted from the naira’s depreciation, making things more difficult for Nigerian consumers.
October 15th was the closing price of the naira at the official market, according to FMDQ Exchange, a platform that manages the official window.
The Bretton Woods organization added that this year saw a stabilization or strengthening of African currencies like the South African rand and Kenyan shilling, which had declined in 2023.
By the end of August 2024, the Kenyan shilling had increased in value by 21% year over year, making it the best-performing currency in Sub-Saharan Africa, according to the World Bank.
According to the World Bank, pressure on exchange rates and shortages of foreign exchange continue to be major concerns for many African countries even with the recovery.
Furthermore, the Bretton Woods institution provided a cautious assessment of Nigeria’s economic growth, estimating that GDP would rise to 3.3 percent in 2024 and then marginally to 3.6 percent in 2025 and 2026.
Nigeria’s economy is expected to grow by 3.3% in 2024 and 3.6% in 2025–2026 as macroeconomic and fiscal reforms begin to show some signs of improvement. The bank stated that inflation peaked in June 2024 at 34.2% annual rate, then decreased to 33.4% in July and then to 32.2% in August.
