The Naira, the currency of Nigeria, Africa’s largest economy in terms of GDP, has lost much of its value over the past decade. Because of the health crisis and its impact on the world economy, the Naira no longer has the power it was renowned for in 2010. The Nigerian currency has lost 171% of its value on the dollar over the past decade. A situation that is likely to worsen due in particular to a deficit of 4000 billion naira (about $9.8 billion) on its trade with foreign countries in the first quarter of 2021.
The Naira could again be devalued. The Nigerian currency lost 171% of its value on the dollar from 2010 to 2021. According to the Office of Official Statistics (National Bureau of Statistics), Nigeria experienced a deficit of 4000 billion naira (about $9.8 billion) on its trade with foreign countries in the first half of 2021. The year before (2020), the country had a deficit of 7375 billion naira ($18 billion). The difficulties do not stop there. Nigeria has an external debt of 33 billion. In fact, from January to March 2021, the country had to pay $1 billion in debt service charges, both in principal amounts and in interest. Add to this the difficulty of Nigeria in attracting foreign investors. For example, in the first half of 2021, Africa’s largest economy received only $2.7 billion in foreign capital, compared to $7.15 billion and $14.5 billion over the same period in 2020 and 2019, respectively.
In a country where imports cover a large part of food needs, the difficulty of accessing foreign exchange is likely to lead to higher prices for staple foods. Already in June 2021, according to recent inflation data, imported food increased by 21%. A situation that, over time, could lead to a further devaluation.