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The African Development Bank (AfDB) has projected a further weakening of Nigeria’s naira and Ghana’s cedi in 2025, attributing the anticipated depreciation to falling export earnings and heightened global economic uncertainty.
In its 2025 African Economic Outlook released on Wednesday, the AfDB warned that 21 out of 54 African countries could see their currencies lose value this year. The report highlighted that several economies—namely Egypt, Ethiopia, Ghana, Libya, Nigeria, Rwanda, Zambia, and Zimbabwe—may experience currency depreciations of 6% or more.
“The depreciation in most of these countries will be driven by the potential decline in export earnings, which could put upward pressure on national currencies,” the Bank noted.
Conversely, currencies in countries like Kenya, Morocco, and those within the CFA franc zone may appreciate by more than 3% against the US dollar, buoyed by stronger macroeconomic fundamentals and improved investor sentiment.
The Kenyan shilling, for instance, has reversed earlier losses with a 3.1% gain in 2024, bouncing back from a 15.4% decline the previous year. This recovery followed the successful issuance of $1.5 billion in Eurobonds, which facilitated the repurchase of a $2 billion Eurobond maturing in June 2024. The move led to a 121% surge in portfolio investment inflows, reversing net outflows of $233.4 million recorded a year earlier.
South Africa’s rand has also shown resilience, recovering 0.7% year-on-year after a nominal depreciation of 11.3% in 2023.
For Nigeria, a major concern remains the vulnerability of the naira to fluctuations in global oil prices. As Africa’s largest oil producer, Nigeria’s foreign exchange inflows are closely tied to crude exports. The naira has been under pressure since President Bola Tinubu ended longstanding currency controls in 2023, allowing the local currency to float freely.
Despite losing over 40% of its value last year, the naira has shown signs of stabilisation following a series of monetary reforms introduced by the Central Bank of Nigeria (CBN) to restore investor confidence and market transparency.
CBN Governor Yemi Cardoso recently stated that these policy adjustments are beginning to yield positive outcomes. He cited a sharp drop in foreign exchange market volatility—from 4% to below 0.5%—and a rise in foreign reserves driven by renewed investor interest.
Currently, the naira trades between ₦1,588 and ₦1,611 to the dollar, demonstrating modest gains despite persistent global headwinds, including trade tensions and geopolitical uncertainty.
The AfDB emphasised that while external shocks continue to influence currency movements, domestic structural weaknesses—such as misaligned exchange rate policies, fiscal deficit financing, political instability, and low productivity—remain significant challenges that must be addressed to enhance macroeconomic stability across
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