From a fall in Zambia’s Kwacha blamed on halted mining production to a plummet of Nigeria’s naira due to a chronic currency shortage, various African countries saw the value of their currencies depreciates this year, threatening economic growth.
Nigeria’s naira slumped 23 percent against the dollar in June after the central bank had removed its currency peg to alleviate chronic foreign currency shortages choking growth in Africa’s biggest economy.
The country’s economy, which contracted by 0.4 percent in the first quarter, faced its worst crisis in decades after the decline in oil prices.
“We are going to have different sources of inflow on supply to the market, autonomous sources, you know, oil companies, the banks themselves, the CBN (Central Bank of Nigeria) being the big player you know all other sources of currencies,” said Robert Omotunde a research investment analyst based in Lagos.
After decades of economic and political instability, Somalia’s central bank governor was getting the country ready to mint its first currency since the 1980’s, to help rebuild an economy emerging from a history of chaos at the hands of Islamist and clan militias.
While the capital is changing fast with hotels and restaurants sprouting from the rubble, the pace of change is frustratingly slow, with funding shortages and dearth of qualified financial experts.
“This currency is fake. Basically, all the bank notes in circulation are fake, produced by some greedy businessmen and the last legal tender of money that was produced by the central bank, that was in 1988-89. So all the money in circulation, bank notes in circulation is fake now,” said the central bank governor Bashir Issa Ali.
In Zambia the kwacha went into a freefall in September and was down more than 17 percent against the dollar at one point its biggest one-day fall on record, further hampered by a rating downgrade from credit agency Moody’s that the government criticised as unsolicited.
The International Monetary Fund said in May that Zambia’s economy was at risk from budget imbalances, lower copper prices and policy uncertainties.
“If it is tight monetary policy that is causing the exchange rate to appreciate, then we must be mindful that that monetary policy very soon will have a counterproductive effect, causing more depreciation of the kwacha faster and higher inflation, so this is what is obtaining in the economy today,” said Situmbeko Musokotwane, a former minister of finance.
In Zimbabwe a new currency was introduced to try ease a shortage of U.S. dollars.
Formal businesses were told they had to accept the notes as legal tender.
Alphonse Mbizvo an economic analyst based in Harare said times were especially tough before christmas.
“You have a situation where people have not been able to access their money in a long time and most of them are desperate, it’s like a question of grinding people until they are desperate – and people need,” he added.
Zimbabwe’s economy has nearly halved since 2000 after the violent seizure of white-owned commercial farms and disastrous printing of money.