The Nigerian Naira has emerged as one of the worst-performing currencies in sub-Saharan Africa as of the end of August 2024, according to the World Bank‘s latest Africa’s Pulse report. The report placed the Naira alongside the Ethiopian Birr and the South Sudanese Pound in terms of decline within the region.
The report attributed the Naira’s depreciation to the persistent increase in demand for US dollars and limited dollar inflow, factors that have intensified over recent months. As per the findings, the Naira has experienced a year-to-date depreciation of approximately 43 percent by the end of August.
“By August 2024, the Ethiopian birr, Nigerian naira, and South Sudanese pound were among the worst performers in the region. The Nigerian naira continued losing value, with a year-to-date depreciation of about 43 percent as of end-August,” the report stated. It further explained that the surging demand for US dollars in the parallel market—driven by financial institutions, money managers, and non-financial end-users—combined with limited dollar inflows and slow foreign exchange disbursements to currency exchange bureaus by the Central Bank of Nigeria (CBN), contributed to the currency’s decline.
Daily fluctuations have added to the Naira’s instability. The Naira’s value dropped sharply on Tuesday to N1658.97 per dollar, down from N1552.92 on Monday. Despite various interventions by the Central Bank of Nigeria, the Naira has continued to fluctuate against the dollar in the foreign exchange market over the past few months.
Additionally, inflation in Nigeria has been on the rise, with the rate increasing to 32.70 percent in September, up from 32.15 percent recorded in August 2024. This inflationary pressure, coupled with currency depreciation, has created further challenges for the Nigerian economy.
Despite these economic hurdles, the World Bank projects Nigeria’s economic growth at 3.3 percent for 2024 and expects growth to improve to 3.6 percent in 2025–26. The forecast indicates optimism for Nigeria’s economic prospects, provided measures are taken to stabilize the currency and manage inflation effectively.
The Naira’s decline highlights the ongoing challenges facing Nigeria’s economy, particularly in terms of foreign exchange management and currency stability. The government and financial regulators will need to implement effective strategies to address these issues and restore confidence in the nation’s currency.
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