Last updated on October 25th, 2022 at 08:47 pm
All over the world, a currency can either be strong or weak, depending on many factors and economic policies of such country, financial experts say.
Most of the currencies in Africa have weak exchange rates against the United States Dollar (USD) even before the World was hit by the coronavirus pandemic.
But the pandemic has even made more currencies lose their value against the US dollar, Euro, and British Pound which are mostly used for international trade exchange. But then, USD is not the strongest currency in the world.
In this post, we’ve compiled the list of the weakest currencies in Africa against the USD. A number of factors like interest rates, inflation, economic policies, current account balance, and political instability among others are some of the things threatening the strength of currencies across the continent.
Already, we’ve covered extensively what makes a currency to be weak against other international currencies used for trade.
For instance, interest has to do with how the government of your country borrows. The cost of borrowing from international lenders like the IMF, and World Bank will definitely have an impact on the strength of the local currency against the US dollar.
The interest rate level could either be moved higher or lower.
In most African countries, their political leaders borrow to ‘finance’ corruption and finance projects that have no impact on their poor masses.
We determine the worst currencies in Africa on this list by placing each of the currencies viz-a-viz the US dollar.
Why Using The U.S. Dollar As Global Trade Exchange?
The U.S. Dollar is a global currency mostly used for international trade which has dominated the global market for decades in terms of global reserves.
For instance, $10,000 USD is worth NGN7,550,000 at the black market rate. The black market because it is more accessible to traders and even investors.
Though the official CBN rate is NGN437.68/1 USD, the price of USD/NGR at the parallel market plays a major role and it’s significant to the immediate forex consumers. At the time of this update, it is $/NGN755 at the black market.
We will use the exchange rate of the dollar as the standard unit of value of the most seemingly powerless currencies in Africa.
Surprisingly, Nigeria’s currency Naira is one of the worst currencies on the continent, despite its economic strength and crude oil.
No thanks to extravagant political officeholders. Most of them take the largest chunk of their investment to another country.
What are the worst-performing currencies in Africa?
- Sao Tome & Principe Dobra (1USD is Db 20,901)
- Sierra Leonean Leone (1USD is Le10,105)
- Guinea-Bissau (1USD is 9,953.00000 GNF)
- Guinea (1USD is 9,930.00 Guinean Franc)
- Equatorial Guinea (1USD is 9,904.50 Guinean Francs)
- Malagasy Aariary (1USD is AR3,735.00)
- Ugandan Shilling (1USD is USh3,670.85)
- Tanzanian Shilling (1USD is TSh2319.26)
- Burundi Franc (1USD is FBu1,944)
- Rwandan franc (1USD is RF986.50)
- Malawian Kwacha (1USD is K765.00)
- Somali Shilling (1USD is Sh585.00)
- Cape Verde(1USD is 539.77Central African CFA franc)
- Burkina Faso West African CFA franc (1USD is CFA541)
- Cote d’Ivoire (1USD is 540.957 CFA Francs)
- Togo (1USD is 540.957 CFA Franc)
- Benin Republic (1USD is 540.957 CFA Francs)
- Gabon (1USD is 539.77 Central African CFA franc)
- Mali CFA (1USD is CFA541.00)
- Niger CFA (1USD is CFA541)
- Senegal CFA (1 USD is CFA541)
- Cameroon’s West African CFA francs (1USD is 538.724 XAF)
- Comoros (1USD is 406.55 Comorian franc)
- Nigerian Naira (1 USD is NGN437.68) However, $1 was N755 at the black market rate at the time of this update.
- Zimbabwean Dollar (1USD is K361.900)
Sao Tome & Principe Dobra (Db)
The dobra is the official currency of São Tomé and Príncipe which is abbreviated as Db and divided into 100 cêntimos
With cocoa as its major export, Sao Tome & Principe Dobra is on the number one list of the weakest currency in Africa.
We hear that the country is witnessing significant changes due to investment in the development of its oil industry, but at the moment 0ne US dollar is worth Db20, 906 in that country.
Sierra Leonean Leone (Le)
Apart from being among the countries with the worst currency in Africa, ranking number two Sierra Leone’s economy is rated as one of the least developed countries on the continent.
But since the end of the civil war in 2002, the economy seems to be bouncing on its toes, as we write 1USD is Le10,105.
Next on the list are Guinea-Bissau, one US dollar is worth GNF9,953, followed by Guinean Franc (1USD is 9,930.00 Guinean Franc) then Equatorial Guinea where 1USD is 9,904.50 Guinean Francs.
Ugandan Shilling (USh)
Despite the fact that Uganda is blessed with some natural resources like fertile land, regular rainfall, and mineral deposits, its leaders have done little to lift the country out of the poverty zone.
1USD is Uganda is worth USh3,670.85 at the official rate, it cost more at the parallel market, making Ugandan currency ranks number three among currencies with less value than the USD. It’s one of the lowest currencies on the continent.
Nigerian Naira
We’re jumping the list. Another notable country with a weak and cheapest currency is Nigeria, ranking number 24 among the poorest currency on the continent. The naira has little value among its pairs in Africa and is poor against other countries across the world
With 397.3 billion USD as Gross Domestic Product (GDP) according to the World Bank and the biggest economy on the continent, most of its citizens live in poverty.
It is ranked as the 26th-largest economy in the world in terms of nominal GDP, yet its leaders run around the World to borrow money thereby putting pressure on its local currency Naira in terms of the interest rate.
The country is currently suffering brain drainage as a result of the mismanagement of public funds while there is no social security.
To complicate Nigeria’s economic problems, its leaders mostly the Senators in a recent report by Aljazeera says they “ship” over $37K to a foreign country for investment, the report says the wealthy Nigerians are buying citizenship overseas.
“It is a dangerous spiral: The more wealth taken out of Nigeria, the fewer jobs available to its poorest,” Ollie Williams writes.
Nigeria is so weak that the black market rate at the exchange market overpowers the CBN official rate.
For instance, $100,000 USD would fetch you N41,600,000 at the official rate of N416/1USD while the same volume would turn to N71,000,000 at the parallel market at NGN710/1 USD (as of July 27, 2022).
Final thought:
We hope that African leaders look inward and consolidate on some of their economic gains to join the league of strongest currencies in Africa.
There are several ways a weak currency can regain its value against major competitors in the international market. They can also learn from Kuwaiti, where its leaders are using their rich oil to pull a huge weight on the oil global market.
As we write, Kuwaiti Dinar remains the strongest currency in the world, beating US Dollar, Euro, & Pounds hands down.
