The year 2023 etched itself into history as a year of economic turbulence for several African nations, with their currencies bearing the brunt of the storm. A potent cocktail of internal and external factors conspired to inflict steep depreciation, impacting millions of lives across the continent.
The Nigerian Naira (NGN) led the lineup, which took a commanding lead with a staggering 55% decline. This decline, however, is not isolated but reflective of broader economic challenges faced by nations across the continent.
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According to Bloomberg, here are the 10 best and worst-performing currencies against the US dollar in 2023
Here are the worst 7 of Africa’s performing currencies in 2023
Nigerian Naira (NGN)
Topping the list is the Nigerian Naira, experiencing a staggering 55% devaluation against the US dollar. This freefall can be attributed to a confluence of factors. The Central Bank of Nigeria’s decision to unify exchange rates, coupled with dwindling oil revenues and persistent inflation, created a perfect storm for the naira currency weakness. The oil-dependent economy suffered as global prices fluctuated, reducing vital foreign exchange inflows. Meanwhile, inflationary pressures, fueled by fuel and food price hikes, further eroded the Naira’s purchasing power, plunging millions deeper into poverty.
Angolan Kwanza (AOA)
Following closely behind is the Angolan Kwanza, depreciating by 39.2%. Like Nigeria, Angola’s woes stem from its overreliance on oil exports. As prices dipped, the government struggled to secure vital dollars, weakening the Kwanza and triggering inflationary spirals. Inadequate economic diversification and structural weaknesses in the Angolan economy contributed to its vulnerability.
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Malawian Kwacha (MWK)
The Malawian Kwacha joins the ranks with a 39.1% depreciation. Fueled by rising ]import costs and dwindling foreign direct investments, foreign exchange shortages proved decisive in the Kwacha’s downfall. Tobacco, the country’s primary export, faced headwinds due to global health concerns, further constricting the flow of foreign currency. Moreover, political instability and policy missteps by the government added fuel to the fire, pushing the Kwacha into a vicious cycle of devaluation and inflation.
Zambian Kwacha (ZMW)
Despite boasting abundant copper reserves, the Zambian Kwacha tumbled by 29.5%, highlighting the vulnerability of resource-dependent economies. Falling copper prices on the global market, coupled with mounting public debt and fiscal mismanagement, choked off Zambia’s foreign exchange earnings. The Kwacha’s devaluation has pushed essential goods and services beyond the reach of many Zambians, exacerbating poverty and social unrest.
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Burundi Franc (BIF)
The Burundian Franc, depreciating by 27.6%, Years of political turmoil and human rights abuses have ostracized Burundi from the international community, leading to frozen aid and investment. This, coupled with dwindling foreign exchange reserves and rampant inflation, has decimated Franc’s value, leaving the Burundian people struggling to survive.
Congolese Franc (CDF)
The Congolese Franc’s 24% devaluation is fractured by conflict and economic mismanagement. The ongoing civil war in the eastern provinces disrupts vital export routes and saps resources, stifling economic growth and foreign exchange inflows. Meanwhile, rampant corruption and opaque governance practices erode public trust and deter potential investors. The Franc’s decline fuels inflation, pushing necessities beyond the reach of millions and exacerbating the humanitarian crisis unfolding in the country.
Kenyan Shillings (KES)
Kenya’s 20.9% currency depreciation is a confluence of internal and external factors that contributed to the Shillings’ woes. The prolonged drought in the Horn of Africa disrupted agricultural production, leading to higher food import costs and weakening the currency. Additionally, the global economic slowdown dampened tourism revenues, a vital source of foreign exchange for Kenya.
