The naira has been identified as one of the weakest currencies in Sub-Saharan Africa in 2024, according to a recent report by the World Bank. By the end of August 2024, the naira had depreciated by about 43%, alongside the Ethiopian birr and South Sudanese pound. Factors contributing to the naira’s decline include high demand for US dollars in the parallel market, limited dollar inflows, and delays in foreign exchange disbursements by the Nigerian central bank.
Despite some foreign exchange market reforms by the Nigerian government, such as the liberalization of the official exchange rate starting in June 2023, the currency continues to struggle. This reflects broader economic challenges in Nigeria, including low foreign currency reserves and ongoing inflationary pressures. The depreciation of the naira has led to increased domestic prices, particularly for imported goods, impacting Nigerian consumers.
In contrast, currencies like the Kenyan shilling and South African rand, which faced challenges in 2023, have shown signs of recovery in 2024. The Kenyan shilling strengthened by 21% by the end of August, making it one of the top-performing currencies in the region. However, foreign exchange shortages and exchange rate pressures remain concerns for many African economies.
Despite a recent appreciation of the naira against the dollar, foreign exchange turnover decreased significantly. The World Bank projects Nigeria’s GDP to grow by 3.3% in 2024, with a slight increase to 3.6% in 2025-2026. Inflation in Nigeria peaked at 34.2% in June 2024, easing slightly in the following months. The removal of fuel subsidies in mid-2023 led to a surge in gasoline prices, impacting inflation rates. The recent increase in gasoline prices is expected to further affect inflation in the coming months.