The World Bank on Thursday said that the policy reforms of the Central Bank of Nigeria (CBN) have led to a more stable Naira in recent months.
The bank made this known in the latest edition of its Africa’s Pulse report, which documents the key issues shaping Africa’s economic future. The report was released as part of activities at the ongoing World Bank/IMF spring meetings in Washington.
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The World Bank’s report said that the weakest performing currencies over the past year were the South Sudanese pound, the Ethiopian birr, and the Nigerian naira, with reductions in value that exceeded 40 per cent in 2024.
“Policy efforts are aimed toward a unified and market-determined exchange rate to make the naira more competitive,” the report said.
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“As a result of these policies, improved foreign exchange liquidity and reduced volatility have led to a more stable naira so far this year.”
Last October, data compiled by Bloomberg showed that the Naira weakened significantly against the dollar, following a 72% plunge in dollar liquidity to $81 million. The local unit was also rated the third worst performing currency in the world after the Lebanese Pound and the Ethiopian Birr.
Nigeria has in recent times introduced sweeping reforms to unify the nation’s multiple exchange rates, clear its backlog of foreign exchange payment obligations, improve liquidity in the market and boost diaspora remittances as part of measures to ensure a stable currency.
Global ratings agency, Fitch, recently raised Nigeria’s credit rating to B, on the back of improved policy credibility and lower short-term risks to economic stability.
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“These have improved policy coherence and credibility and reduced economic distortions and near-term risks to macroeconomic stability, enhancing resilience in the context of persistent domestic challenges and heightened external risks,” Fitch said.
Earlier on Wednesday, CBN Governor Olayemi Cardoso told a gathering of investors and fund managers at an investor forum in Washington that the nation’s difficult reforms are beginning to yield positive fruits.
Mr Cardoso argued that the CBN and the fiscal authorities have been able to build confidence and trust in the local market and the Nigerian currency.
The World Bank report added that Nigeria is projected to increase its current account surplus significantly due to the naira’s depreciation, with lower imports and rising worker remittances.
“Its surplus is expected to increase slightly, from 9.2 percent of GDP in 2024 to 9.4 percent of GDP in 2026,” the report said.
The Africa’s Pulse report is produced by the office of the chief economist for the African region at the World Bank.
