The Economist Intelligence Unit in a new report for 2024 has stated that many countries across Africa will continue to witness currency depreciation next year with Nigeria- a major economy to be affected.
The report noted that the impact of the devaluation in 2024 will be less severe compared to those experienced this year.
South Africa, Nigeria, Ghana, Kenya, Zambia etc have seen their currencies weaken by double-digit percentages against the USD in 2023.
Furthermore, the report stated that Zimbabwe will be the only exception among the Southern African economies as South Africa, Namibia and Botswana will see moderate levels of currency depreciation.
The report stated,
- “We forecast currency depreciation against the US dollar across much of Africa in 2024, although adjustments are expected to be less severe than those recorded in 2023.
- The Southern African economies of South Africa, Namibia and Botswana saw their currencies lose considerable value against the US dollar in 2023, but currency stabilization appears the most likely outcome in 2024.”
Nigeria to see further currency depreciation in 2024
It further explained that Egypt, Ethiopia, Angola and Nigeria will see their currency weaken in value against the USD in the coming year.
The IMF had downgraded Egypt’s economy to grow by 4.2% in 2023 down from 6.7% in 2022.
Also, analysts have warned that renewed conflicts in Gaza will negatively impact Egypt’s tourism industry which contributes significantly to its economy.
The report also explained that Nigeria’s currency will continue to remain under pressure if the CBN promotes unsupportive monetary policies.
It also noted that the CBN does not have the “firepower” expected to clear the backlog of forex estimated at $7 billion which will restore confidence in the market.
It stated,
- “In Nigeria, an unsupportive monetary policy implies that the naira will remain under pressure, while the central bank lacks the firepower to adequately supply the market or clear a backlog of foreign-exchange orders, which will keep foreign investors unnerved.”
For African countries who have their currencies tied to the Euro that is CFA countries, the report noted that their currencies will fluctuate according to the U.S dollar and the Euro.