While African currencies generally stabilized in 2024 following earlier reforms, three currencies stood out for their sharp losses in value: the Nigerian naira, the Ethiopian birr, and the South Sudanese pound.
According to the World Bank’s latest Africa’s Pulse report, each of these currencies fell by over 40 percent during the year.
The Nigerian naira’s decline came amid policy efforts aimed at creating a unified and market-determined exchange rate. The Central Bank of Nigeria allowed a freer floating of the naira, hoping to attract more foreign exchange inflows and make the currency more competitive.
Although the naira dropped sharply in 2024, slightly improved foreign exchange liquidity and reduced volatility have been observed in early 2025.
In Ethiopia, major monetary and financial reforms contributed to the birr’s fall. The National Bank of Ethiopia introduced an interest rate-based monetary policy in July 2024, pegging the national bank rate at 15 percent.
The country also shifted towards a market-based exchange rate system with limited interventions. While the birr lost more than half its value during the year, the currency has since shown signs of stabilization in 2025 as inflation rates begin to settle at lower levels.
South Sudan faced even starker challenges. Economic fragility, compounded by foreign exchange shortages and ongoing political uncertainty, pressured the South Sudanese pound significantly. Despite attempts at monetary management, the pound’s value erosion reflects broader issues with external debt servicing and limited export revenues.
In contrast, some other African currencies fared better. The Kenyan shilling appreciated by 20 percent throughout 2024, buoyed by improved financial conditions and reform momentum. The South African rand, alongside currencies pegged to it, fluctuated only modestly around their late 2023 values.
The broader context shows that inflation across Africa eased substantially, dropping from a median rate of 9.8 percent year-on-year in November 2022 to 4.2 percent by January 2025.
Yet, high inflation rates persist in countries where currency weaknesses remain acute. Central banks across the continent have adopted varied policy responses—ranging from interest rate cuts to cautious holds or hikes—depending on inflationary pressures and domestic economic slack.
Africa’s experience in 2024 underlines how currency performance remains a critical indicator of macroeconomic health, with reforms offering potential for recovery, but risks still looming amid global and domestic uncertainties.
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