In a complex and evolving economic environment, the status of the Nigerian naira in 2024 raises major concerns about its stability and impact on the country’s economy. According to the World Bank’s latest Africa’s Pulse report, the naira is among the weakest currencies in sub-Saharan Africa, depreciating by about 43% since the beginning of the year, alongside the Ethiopian birr and the South Sudanese pound.
This decline is attributed to increasing demand for US dollars in the parallel market in Nigeria, limited foreign exchange inflows and slow foreign exchange disbursements by the central bank. Pressures on demand for dollars from financial institutions, non-financial users and fund managers have also contributed to the weakening of the naira. Despite foreign exchange market reforms in Nigeria, including the liberalization of the official exchange rate in June 2023, these efforts have proven insufficient to stabilize the currency.
Broader economic challenges, such as limited foreign exchange reserves and inflationary pressures, have exacerbated the naira’s challenges. The depreciation of the currency has had a significant impact on domestic prices, particularly for imported goods, worsening the living conditions of Nigerian consumers.
However, some recovery has been observed recently, with the naira appreciating by 5.69% against the dollar on 14 October, from N$1,641.27 to N$1,552.92. Despite this, the volume of foreign exchange trade fell by 44.27% over the same period.
The World Bank projects that the Nigerian economy will grow by 3.3% in 2024, accelerating slightly to 3.6% between 2025 and 2026 as reforms take effect. However, inflation remains a concern, especially after the removal of fuel subsidies in mid-2023, which tripled petrol prices and increased transport and logistics costs across the country.
In the face of these economic challenges, it is imperative for Nigeria to continue its efforts to reform and prudently manage economic policies to strengthen the resilience of its national currency and support sustainable economic growth. Coordination among domestic and international stakeholders, strengthening foreign exchange reserves, and promoting investment and economic diversification are emerging as key priorities to stabilize the naira and foster long-term economic prosperity in Nigeria.