Concerns As Naira Emerges Worst Performing African Currency In 3 Months
Despite tough reforms taken by the Nigerian government to fix its financial situation, Naira has emerged as the worst performing African currency in three months and is even missing in the list of the top ten foreign currencies in the market.
This is coming after a global currency ranking report titled: Highest and strongest currencies in Africa by Clacified.com, revealed that Africa’s exclusion from the global currencies is a no-brainer given that it is home to the world’s ten most under-developed and developing countries. Nevertheless, several legal tenders on the continent commanded respect in the foreign currency market.
The report noted that dozens of African countries are higher than the Naira even though the Nigerian economy is Africa’s largest economy with the highest nominal GDP, an influencing factor in currency valuation. It further stated that the United States dollar (USD) remains the global benchmark when ranking currencies and placed the strongest currencies based on each country’s currency dollar strength or purchasing power.
Top on the list of currencies include; Tunisian Dinar, Libyan Dinar, Moroccan dirham, Ghanaian Cedi, Botswana Pula and Seychellois Rupee. Others include Eritrean Nakfa, South African Rand, Zambian Kwacha and Egyptian Pound with Nigeria conspicuously missing from the list.
It will be recalled that President Bola Tinubu had taken steps to revamp the economy by eliminating fuel subsidies in place since the 1970s and diverting money to increased investment in education, agriculture, and job creation. He also stated that there will be reforms carried out in monetary policies.
In June 2023, the Central Bank of Nigeria (CBN) announced the unification of the FX windows. Ever since then, the Naira which was N432/$1 at the official CBN rate is currently at N762.71/$1 while at the parallel rate, it is standing at N920/$1.
Reacting to this development, economic experts who spoke to Daily Sun via a telephone chat, did not seem to agree with the report. They however advised the FG to accelerate more productivity in Nigeria as this will reduce the scarcity of FX. The Managing Director, APT Securities, Kurfi Garba, said, “I do not agree that we have the worst performing currency in the continent. There are others but I can understand that in the last 3 months the Naira has been dwindling, losing almost 100 per cent but extending that beyond three months, I do not think we are the worst even in West Africa. Right, the dollar is at N920/$1”.
Garba stated that there is currently scarcity of FX due to the country not meeting up to the demand of exports of crude oil due to vandalism. According to him, about 800,000 barrels of crude oil is stolen per day. He said, “We were selling 2 million barrels per day and getting a lot of money. However, at the moment, we have allowed criminals to keep stealing our oil products and now export 1.2 million barrels per day which means 800,000 barrels of oil is being stolen daily. If we can stop that and continue selling 2 million barrels, we will have more dollars and we will be able to meet our demands. But if we do not have that, we have to borrow”.
Giving further suggestions on how to tackle FX, Garba said that the government has to stop patronising foreign goods. “We have to accelerate more productivity in Nigeria, this will reduce the scarcity of FX a bit because when we keep patronising foreign goods, getting FX will keep getting difficult. We have so many mineral resources but we are not tapping into their potential enough. Why can’t we accelerate the production of these minerals so that it will fetch us more FX and therefore have this FX to satisfy our needs. These are steps or efforts the government has to take”, he said.