As of August 2024, the Nigerian naira has depreciated by 43%, positioning it among the worst-performing currencies in Sub-Saharan Africa, alongside the Ethiopian birr and South Sudanese pound, according to the World Bank’s Africa Pulse report. This decline is attributed to heightened demand for US dollars, limited dollar inflows, and slow disbursements by Nigeria’s Central Bank.
Despite efforts to reform the foreign exchange market, including liberalizing the official exchange rate, the naira’s value continues to drop. The depreciation has contributed to increased inflation, with consumer prices, particularly for imported goods, climbing further. Inflation, which peaked at 34.2% in June 2024, has since moderated slightly to 32.2% by August.
In contrast, currencies like the Kenyan shilling have shown improvement, gaining 21% year-to-date by August. However, many African economies, including Nigeria, continue to face foreign exchange shortages and exchange rate volatility. The World Bank projects Nigeria’s economic growth at 3.3% in 2024, rising to 3.6% by 2025-26, as fiscal reforms begin to take effect.
Meanwhile, Nigeria’s inflation is expected to worsen with the forecasted 40-45% rise in fuel prices by September, further increasing transportation and logistics costs across the country.