In a forecast that sends ripples through economic landscapes, The Economist Intelligence Unit (EIU) projects a double-digit depreciation of the naira in 2024, positioning Nigeria among the major economies facing such currency challenges. The report, part of the Africa Outlook 2024, foresees ongoing inflation and a widening gap between official and parallel markets, resulting in an unstable exchange rate and periodic devaluations.
While Africa is predicted to be the world’s second-fastest-growing major region in 2024, the EIU underscores concerns for Nigeria, where an unsupportive monetary policy is expected to keep the naira under pressure. The central bank’s limitations in supplying the market and clearing foreign exchange orders are noted as factors that may unsettle foreign investors.
The report highlights that 12 of the world’s 20 fastest-growing economies in 2024 will be in Africa, contributing to a forecasted real GDP growth of 3.2 percent, up from 2.6 percent in 2023. However, the bright growth prospects are tempered by the persistent challenge of inflation, particularly in oil-dependent economies like Angola, the DRC, Egypt, Ethiopia, Ghana, Nigeria, Sudan, and Zimbabwe.
EIU emphasizes the financial strain induced by excessive debt and a burdensome repayment load in 2024. Elevated external debt, coupled with the aftermath of various shocks such as the COVID-19 pandemic, Russia’s invasion of Ukraine, and adverse weather conditions linked to climate change, are expected to weigh on economic growth and stability across African nations.
The looming risks underscore the need for external debt restructuring to avert a deepening financial crisis in the region. As Africa grapples with economic complexities, the EIU’s projections for 2024 signal a challenging road ahead.
