The Nigerian naira is among the worst-performing currencies in Africa, the World Bank has said.
The currency has weakened by nearly 40% against the US dollar since a mid-June devaluation, the bank said in its latest Africa’s Pulse report.
Other currencies with significant losses so far in 2023 include the Angolan kwanza, South Sudan pound, Burundian franc, Congolese franc, Kenyan shilling, Zambian kwacha, Ghanaian cedi, and Rwandan franc.
The World Bank said the weakening of the naira was triggered by the central bank’s decision to remove trading restrictions on the official market. For the kwanza, it was the decision of the central bank to stop defending the currency as a result of low oil prices and greater debt payments.
The bank also noted that parallel exchange market rates are compounding inflationary problems for some countries in the African region.
Nigeria’s growth rate to decelerate in 2023
Nigeria’s growth rate is expected to decelerate from 3.3% in 2022 to 2.9% in 2023, the World Bank said.
The bank cited a number of factors for the slowdown, including low oil production, rising input costs, and the inflationary effects of recent reforms by the new administration of Bola Tinubu.
The World Bank said the Tinubu administration’s removal of fuel subsidies and devaluation and unification of the exchange rate system are intended to improve the fiscal and external accounts of the nation, but their inflationary effects in the near term can erode the purchasing power of households and weigh on economic activity.
The bank’s report comes as Nigeria faces a number of economic challenges, including high inflation, unemployment, and poverty. The naira’s poor performance is making it even more difficult for the government to address these challenges.