Finance

Nigerian Naira Devaluation Reignites Debate on CFA Franc and ECOWAS Shared Currency

Nigerian Naira Devaluation Reignites Debate on CFA Franc and ECOWAS Shared Currency
Friday, 14 July 2023 06:19

Like the Ghanaian Cedi, the Nigerian Naira showcased its vulnerability to external shocks. This resets the UEMOA's CFA Franc as a stability factor in the ECOWAS' common currency project, the ECO.

For years, Nigeria has kept its currency on par with the US dollar, through artificial means, such as opening its domestic securities market to foreign investors and enforcing a fixed exchange rate for official transactions. However, the recent decision by the current Nigerian administration to unify conversion rates with the US dollar resulted in an official devaluation of the Nigerian currency, making it weaker than the CFA Franc.

According to the Central Bank of Nigeria's website, it now takes 746.7 Naira to buy $1. Previously, the official exchange rate was 427 Naira per dollar. Meanwhile, it only takes 596.7 CFA Francs to buy $1. Even at its lowest level, which was reached in late September 2022, the UEMOA currency never crossed the 700 units per dollar threshold.

Meanwhile, ECOWAS countries are still working on adopting a single currency, the ECO, and UEMOA countries have decided to rename their currencies as part of this sub-regional project. This decision was met with controversy and was not favored by former Nigerian President Muhammadu Buhari.

However, the current development demonstrates that the Nigerian Naira may not have had the capacity to support the common currency project, contrary to what some commentators had suggested.

For economic actors in neighboring countries using the CFA Franc, the depreciation of the Nigerian currency presents new investment opportunities in Nigeria at reduced costs. However, with an inflation in Nigeria that surged to nearly 22%, the situation needs to be assessed with care.

Despite the criticisms it faces, the CFA Franc has proven to be the most resilient West African currency among the major economies in ECOWAS when faced with external shocks. In Ghana, another strong economy in the sub-region, the currency has gradually depreciated over the past decade, going from an exchange rate of 2 cedis per dollar in 2013 to a rate of 11.6 cedis per dollar currently.

On the same topic
• IFC teams up with AfDB and Nigeria’s EbonyLife to assess a new fund for African cinema• Sector could grow to $20 bln annually and create 20 mln...
• BRICS plans a guarantee fund to reduce political and financial risks in developing countries.• The fund will be managed by the New Development Bank...
BEAC granted Afreximbank the first-ever foreign access to the CEMAC public securities market. Cameroon raised $359.3 million via a...
(EBID) - The Board of Directors of the ECOWAS Bank for Investment and Development (EBID) held its 92nd Ordinary Session on June 30, 2025. The Board...
Most Read
01

• Global coffee consumption projected to hit a record 169.4 million 60-kg bags in 2025/2026, up from...

Coffee: Global Consumption Expected to Reach Record Level in 2025/2026
02

In a West African financial landscape marked by tighter regulation of the fintech sector, digital fi...

In Five Years, Francophone Africa Will be A Major Force in African Tech –Régis Bamba
03

• BOAD releases CFA10 billion ($17.8 million) to support Boungou and Wahgnion gold mines.• Burkina F...

BOAD Grants CFA10 Billion to Revive Boungou and Wahgnion Gold Mines in Burkina Faso
04

Transport and food prices have been climbing steadily across Africa in recent years. In Côte d’Ivoir...

Côte d’Ivoire’s Fuel Price Cuts Haven’t Slashed Transport Costs–Yet
05

• Burkina Faso-based financial group, Vista Group Holding, has acquired a majority stake in Société ...

Burkina Faso: Vista Group Acquires Controlling Stake in Société Générale
Enter your email to receive our newsletter

Ecofin Agency provides daily coverage of nine key African economic sectors: public management, finance, telecoms, agribusiness, mining, energy, transport, communication, and education.
It also designs and manages specialized media, both online and print, for African institutions and publishers.

SALES & ADVERTISING

Benjamin FLAUX
bf@agenceecofin.com 
Téls: +41 22 301 96 11 
Mob: +41 78 699 13 72
Média kit : Download

EDITORIAL
redaction@agenceecofin.com

More information
Team
Publisher

ECOFIN AGENCY

Mediamania Sarl
Rue du Léman, 6
1201 Geneva
Switzerland

 

Ecofin Agency is a sector-focused economic news agency, founded in December 2010. Its web platform was launched in June 2011. ©Mediamania.

 
 

Please publish modules in offcanvas position.