The World Bank says the policy reforms by the Central Bank
of Nigeria (CBN) have led to a more stable naira recently.
In its regional economic outlook report, ‘Africa’s Pulse,’
on Thursday, the Britton Woods institution said the naira, the South Sudanese
pound, and the Ethiopian birr were the weakest performing currencies over the past
year.
However, the World Bank said the apex bank’s reforms and
policies have made the naira more stable.
The bank said policy efforts are aimed at a unified and market-determined exchange rate to make the naira more competitive.
“As a result of these policies, improved foreign exchange
liquidity and reduced volatility have led to a more stable naira,” the World
Bank said.
The Bretton Woods institution also said that in Nigeria,
economic growth was higher than expected in the fourth quarter of 2024 due to
faster growth in the non-oil economy, particularly in services.
“Real GDP growth accelerated from 3.1 percent y-o-y in the
third quarter of 2024 to 4.6 percent in the final quarter. The solid growth of
the service sector (5.4 percent y-o-y) was, in turn, driven by financial
institutions and information and telecommunications services,” the report said.
“The crude oil sector grew 5.5 percent in 2024, with the
industrial sector as a whole growing by 2.4 percent. Recovery of oil production
from 1.47 million barrels per day in 2023 to 1.55 million barrels per day in
2024 supported the expansion of this sector.”
The World Bank also said Nigeria is projected to increase
its current account surplus significantly.
The bank said this is due to the naira’s depreciation, lower
imports, and rising worker remittances.
“Its surplus is expected to increase slightly, from 9.2
percent of GDP in 2024 to 9.4 percent in 2026,” World Bank added.
Recently, Fitch, a global rating agency, reviewed Nigeria’s credit rating to B, citing
improved policy credibility and lower short-term risks to economic stability.
According to the agency, the stable outlook reflects its
expectation that the macroeconomic policy stance will support the move to lower
inflation and sustain improvements in the foreign exchange (FX) market’s
operation, but added that it will likely remain much higher than rating peers.
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