World Bank, Naira
By Akeem Atoyebi
In the latest edition of Africa’s Pulse, a new report by World Bank, the naira has been listed among the worst-performing currencies in Sub-Saharan Africa in 2024.
As of the end of August 2024, the naira had declined by approximately 43 per cent year-to-date, making it one of the region’s weakest currencies alongside the Ethiopian birr and South Sudanese pound.
The decline of the naira is imputed to several reasons, which include surging demand for United States dollars in the parallel market, limited dollar inflows, and delays in foreign exchange disbursements by Nigeria’s central bank.
The World Bank’s report further noted that demand for dollars, spurred by financial institutions, non-financial end-users, and money managers, has exacerbated the pressure on the naira.
It noted, “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 per cent as of end-August.
“Surges in 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 explain the weakening of the naira.”
This situation has continued despite some foreign exchange market reforms introduced by the Nigerian government, including the liberalization of the official exchange rate that began in June 2023.
However, these efforts have so far been insufficient to stabilize the currency.
The naira’s struggle reflects broader economic challenges in Nigeria, including limited foreign currency reserves and ongoing inflationary pressures.
