CEM REPORT, FINANCE | The year 2023 was a turbulent one for many African economies, as they faced a series of internal and external shocks that weakened their currencies. Millions of people across the continent felt the impact of the weakened African currencies, as the cost of living soared and poverty deepened.
According to Bloomberg, the 10 best and worst-performing African currencies against the US dollar in 2023, the Nigerian Naira (NGN) was the worst currency performer in the period losing a little over half of its value.
This article explores the 7 worst-hit African currencies and the devastating impact they had on people’s lives.
Nigerian Naira (NGN)
The Nigerian Naira (NGN) was the worst performer, losing 55per cent of its value against the US dollar. The Naira plunge was driven by a combination of factors, including the Central Bank of Nigeria’s move to unify exchange rates, the decline in oil revenues due to global price volatility, and the persistent inflation caused by rising fuel and food prices. The Naira’s loss of purchasing power pushed millions of Nigerians into poverty, as the oil-dependent economy struggled to cope.
Angolan Kwanza (AOA)
The Angolan Kwanza (AOA) followed suit, dropping by 39.2 per cent. Angola’s economy also relies heavily on oil exports, which suffered as prices fell. The government faced difficulties in securing foreign currency, which weakened the Kwanza and triggered inflation. The lack of economic diversification and structural reforms made Angola more vulnerable to external shocks.
Malawian Kwacha (MWK)
The Malawian Kwacha (MWK) was another casualty, falling by 39.1 per cent. The Kwacha’s downfall was fueled by rising import costs and falling foreign direct investments, which led to foreign exchange shortages. The country’s main export, tobacco, faced challenges due to global health concerns, which reduced the inflow of foreign currency. Political instability and policy blunders by the government also contributed to the Kwacha’s woes, as it entered a vicious cycle of devaluation and inflation.
Zambian Kwacha (ZMW)
The Zambian Kwacha (ZMW) also suffered, declining by 29.5 per cent. Zambia’s economy is dependent on copper exports, which faced headwinds as prices dropped on the global market. The country’s foreign exchange earnings were also affected by its high public debt and fiscal mismanagement, which eroded investor confidence. The Kwacha’s depreciation increased the cost of living for many Zambians, who faced poverty and social unrest.
Burundian Franc (BIF)
The Burundian Franc (BIF) depreciated by 27.6 per cent. Burundi’s economy has been isolated from the international community, due to its political turmoil and human rights violations, which led to frozen aid and investment. The country’s foreign exchange reserves were also depleted, and inflation was rampant. The Franc’s devaluation made life harder for the Burundian people, who struggled to survive.
Congolese Franc (CDF)
The Congolese Franc (CDF) lost 24 per cent of its value. The Congo’s economy is plagued by conflict and corruption, which disrupt its export potential and deter potential investors. The civil war in the eastern provinces also drains resources and hampers economic growth. The Franc’s decline worsened inflation, which made basic goods and services unaffordable for millions of Congolese, who faced a humanitarian crisis.
[READ ALSO] Financial Possibilities and Economic Outlook for Nigerians in 2024
Kenyan Shilling (KES)
The Kenyan Shilling (KES) dropped by 20.9 per cent. Kenya’s economy faced a mix of internal and external challenges, which contributed to the Shilling’s weakness. The severe drought in the Horn of Africa affected its agricultural sector, which is a key source of income and employment. The country also faced a decline in tourism and remittances, which are important sources of foreign exchange. The Shilling’s depreciation increased the cost of imports and debt servicing, which strained the economy.
A Stark Reminder of Africa’s Vulnerabilities
The currency crisis of 2023 serves as a stark reminder of Africa’s vulnerability to external shocks and internal mismanagement. It underscores the urgent need for economic diversification, sound fiscal policies, and strong governance to create resilient economies that can weather future storms. The human cost of this crisis is a call to action for leaders across the continent to prioritize the well-being of their people and build a more prosperous future for all.
This is just a glimpse into the devastating impact of African currency crashes in 2023. By sharing these stories, we can raise awareness, hold leaders accountable, and work towards a more equitable and resilient future for Africa.
