Nigeria’s economy ranks low on weaker currency

Nigeria’s economy ranks low on weaker currency, rising inflation and other economic challenges, according to the ‘Africa Country Instability Risk Index’ report by SBM Intelligence, released in November 2024.

The report revealed that Botswana, Seychelles, Nigeria, Namibia and Zimbabwe were the biggest losers as Nigeria, Namibia and Zimbabwe recorded -6 score change, while Seychelles recorded -8 score change. Botswana recorded -15 score change.

“Nigeria, Africa’s fourth largest economy, ended the year with a score change of -6, following the exit of foreign businesses over weaker currency, rising inflation and other economic challenges,” the report stated.

“Botswana, Seychelles, Nigeria, Namibia and Zimbabwe were the biggest losers. Botswana experienced a GDP decline of nearly 2 percent in the first quarter of 2024, and Zimbabwe experienced economic challenges such as debt and currency crises,” it stated.

On the flip side, the biggest gainers are Angola and Burundi with 13 score change, Chad and Togo with 12 score change, Madagascar with 11 score change.

“Nigeria’s economy continues to worsen, with rising food inflation, persistent insecurity across all geopolitical zones, and many people falling into extreme poverty.

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“It is more polarised now than ever after the 2023 election and the unpopular reforms of the new government, such as the removal of petrol subsidies, which has worsened living conditions and led to the closure of businesses,” the report stated.

Nigeria, Africa’s most populous nation which has held the title of ‘Africa’s largest economy’ since the GDP rebasing in 2014 saw its economy dip to $253 billion in 2024, primarily due to the devaluation of the naira, according to the International Monetary Funds (IMF).

Nigeria now ranked fourth largest economy with South Africa leading as Africa’s largest economy with a GDP of $373 billion, followed by Egypt with $348 billion, and Algeria with $267 billion.

Based on the Fund’s estimates, Nigeria’s GDP in US dollars declined from $477 billion in 2022, to $375 billion in 2023, it is estimated to drop to $253 billion in 2024.

However, in naira terms, the economy improved from N202.4 trillion in 2022 to N234.4 trillion in 2023. For 2024, the GDP is projected to hit N296.4 trillion.

The IMF had estimated that Nigeria’s GDP will grow by 3.34 percent in 2024 up from the 2.86 percent growth rate posted in 2023, but a weaker-than-expected growth saw the Washington-based Fund downgrade the country’s economic growth to 3.1 percent.

CFG Advisory, a Lagos-based financial reporting firm, said in a report recently that GDP growth of “three percent is not sustainable for our population of 200 million. Nigeria requires 8-10 percent GDP growth for sustainability.”