The World Bank has described the Nigerian naira as one of the worst-performing currencies in Africa.
The currency, according to the report, weakened by nearly 40 per cent against the US dollar since a mid-June devaluation.
In a report by the global bank titled, ‘Africa’s Pulse: An analysis of issues shaping Africa’s economic future (October 2023 | Volume 28),’ it stated that so far this year, the Nigerian naira and the Angolan kwanza are among the worst performing currencies in the region, saying that the currencies have posted a year-to-date depreciation of nearly 40 per cent.
According to the report, “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.”
Other currencies, according to the World Bank report with significant losses so far in 2023, included South Sudan (33 per cent), Burundi (27 per cent), the Democratic Republic of Congo (18 per cent), Kenya (16 per cent), Zambia (12 per cent), Ghana (12 per cent), and Rwanda (11 per cent).
The report explained that the Central Bank of Nigeria in June 2023, directed Deposit Money Banks to remove the rate cap on the naira at the official Investors and Exporters’ window of the foreign exchange market, and allow the free float of the naira against the dollar and other global currencies.
Since then, the naira has fallen from N473.83/$ to around N800/$ officially, the report said.
The bank stated that this had been the case from March 2020 until June 2023 with the widening difference between the parallel and official exchange rates of the naira.
The report stated that the Central Bank’s interventions to restrict foreign exchange demand and keep the exchange rate artificially low were met with declining FX supply from oil revenues, stressing that the parallel rate premium increased to 80 per cent in November 2022, and then to about 60 per cent in June 2023.
It added that the unification and liberalisation of the exchange rates in June 2023 allowed the NAFEX rate to converge to the parallel one, closing the gap, saying that the resistance toward the increasing pressure on the Nigerian naira coupled with limited supply of FX at the official window has led to the reemergence of the parallel market premium.
The Washington-based bank highlighted that the Nigeria’s growth rate would decelerate from 3.3 per cent in 2022 to 2.9 per cent in 2023
The country’s oil production, according to the report, had remained below OPEC quota amid capacity issues and lower international oil prices and while non-oil economic activity, particularly industry and services still supported growth, policy actions to remove fuel subsidies and unify the exchange rates might be weighing on those activities in the short term.
It noted that the weak business confidence and rising input costs are driving the contraction of activity as business confidence appears to have weakened in Nigeria.
The World Bank noted that activity in Nigeria’s manufacturing and services’ sector contracted in August.
The global bank disclosed that purchasing power of households was expected to suffer in the short term following the recent reforms of the new administration of Bola Tinubu.
It stated that the incoming Tinubu administration implemented a series of reforms that included the removal of fuel subsidy and the devaluation and unification of the exchange rate system, stressing that petroleum prices have more than tripled since the subsidies were lifted at the end of May.
It said that the naira has weakened by nearly 40 per cent against the US dollar since the mid-June devaluation.
The bank noted that the measures were 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.
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Chartered bankers pledge support for Nigeria’s economy
By Chesa Chesa
Nigeria’s chartered bankers say will continue to contribute to national development, by contributing to the agricultural and manufacturing sectors.
President of the Chartered Institute of Bankers of Nigeria (CIBN), Ken Opara, made the pledge in Abuja on Thursday, when he led a delegation of his members on a courtesy visit to Vice President Kashim Shettima, at the State House, Abuja.
He said the slowdown in economic activities was responsible for depletion in the banking sector’s contribution to the nation’s GDP but that tide is already changing.
“Essentially the banking sector represents the engine of growth and that is very important. They serve as catalysts for economic growth. What you saw with the growth in terms of our GDP contribution is what happened during the period of the last quarter where there was a slowdown in economic activities.
“But what we are seeing now is that banks are also deepening access to financial support especially to the key sectors like agriculture, manufacturing, small businesses and infrastructure.
‘So, we are going to see growth in the financial system as we move on, especially before the end of this financial year,” he assured Nigeirans.
Mr Okpara also highlighted other areas of collaboration between the Nigerian government and the Chartered Institute of Bankers.
“The Vice President used the opportunity to share his vision and how we can work together; he talked about digital education, which is very important and we assured him that the Chartered Institute of Bankers will actually identify with the key initiatives in that area especially in the financial and economic sectors of our country,” he added.
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Food security critical to ‘Renewed Hope’ agenda, says FG
By Chesa Chesa
The Minister of Information and National Orientation, Alhaji Mohammed Idris, has highlighted food security as a crucial component of President Bola Ahmed Tinubu’s ‘Renewed Hope’ agenda.
He made this statement during a courtesy visit by the Ambassador of the Republic of Belarus to his office in Abuja on Wednesday.
“One of the key priority areas for President Bola Ahmed Tinubu is food security, which he declared an emergency from day one, because it is the only way to curb food importation and strengthen our economy”, he said, noting that Belarus has technology and expertise in agriculture that Nigeria can tap from.
Nigeria, he said, wants to avoid food imports by enhancing its ability to produce adequate food for its citizens. With the availability of arable land, human resources, and a large market, what is lacking is technology and the necessary investment in the value chain.
The Minister assured the Ambassador that Nigeria is ready to partner in that regard.
“I am happy that you are already partnering with the Ministry of Agriculture so that our two countries can work together to boost food production,” he said.
Earlier in his remarks, the Ambassador of the Republic of Belarus, His Excellency Vyacheslav Bril, said that the Republic of Belarus is export-oriented and strong in agriculture.
Belarus accounts for almost 30% of fertilizer production, which is very important for food security in the world. His country, he said, has had long and fruitful relations with Nigeria since 1992.
“We can support Nigeria with farm inputs, food processing plants, storage facilities, and different kinds of equipment,” he added.
Belarus is strong in terms of mechanization of agriculture, and the Belarusian tractors are well-known for their durability around the world, noted a statement issued on the visit by Suleiman Haruna, the Deputy Director of Press in the Federal Ministry of Information and National Orientation.
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