The 20 currencies african underperforming on the decade 2013-2022

Twenty currencies in Africa have experienced a decline of at least 50 % of their value against the u.s. dollar over the period 2013-2022, three of which are almost completely collapsed. In most cases, this reflects very poor economic health resulting from poor governance, as evidenced by the presence of several countries with significant natural resources among those whose currency has collapsed.

The 41 currencies African, twenty have seen their value divided by at least two over the period of ten years from the beginning of 2013 to the end of 2022 (followed by the Tunisian dinar, which is close to the 50% level, with a decline of 49,9 %). Among these twenty currencies, ten have seen their value divided by at least three (spurred by the Ethiopian birr and the naira in Nigeria, whose course has been divided by a 2.9).

On the francophone side, the two currencies are part of the twenty currencies that were the least efficient in this period, namely, the Congolese franc, the democratic Republic of the Congo, and the ariary Madagascar. However, they arrive at 13th and 20th place, respectively, with currencies experiencing the greatest impairment.

Moreover, in another register, 14 of these 20 currencies less efficient ones are manufactured overseas, as the vast majority of other currencies are in Africa.

Among the ten countries that have seen the most significant drop in their currency, the two have been marked by a long civil war, South Sudan and Libya), and the other four are known to have significant natural resources, Sudan, Ghana, Angola and Zambia). In addition, five of these countries are among the ten most indebted countries in Africa (Sudan, Zambia, Zimbabwe, Ghana, and Egypt), and seven are part of the ten African countries suffering from the highest inflation rate in 2022 (Zimbabwe, Sudan, Ghana, Sierra Leone, Angola, Malawi and South Sudan).

Three currencies are almost completely collapsed

The Sudanese pound and the Zimbabwean dollar arrive, therefore, at the head of the currencies being the most collapsed on the continent during the last decade, with a depreciation of more than 99 % (99,2 % after rounding, that is, a value divided by 129 !). Despite its significant natural resources, as Africa’s third largest producer of gold, and thanks to the huge agricultural potential offered by the Nile river, which crosses it, Sudan, has known for several years a severe economic crisis that made him the country’s most indebted of the continent, with a public debt that is estimated by the IMF to not less than 189,5 % of GDP by the end of 2022 (the second level of debt, the highest in the world after Japan).

This African country has also been hit by terrible inflation in 2022, which would have amounted to about 155 % according to the latest forecasts by the IMF (after a rate of 359,1 % in 2021). It would be the third highest inflation rate in the world, after those recorded in Zimbabwe and Venezuela. The crisis in Sudan has been exacerbated by the political instability that has afflicted the country, and which was also reflected by a new coup in October 2021.

As in Zimbabwe, the southern African country has still not recovered from the economic chaos left by the former dictator Robert Mugabe, who had introduced one of the regimes most corrupt and ineffective in the continent (while pretending to be a hero African…). Something rare in the history of the world, the national currency had been purely and simply abandoned it in 2009, after having lost any value (the u.s. dollar up to $ 35 million billion zimbabwe dollars !). Replaced by foreign currencies, especially the dollar, u.s. (USD) and south african rand, it was reintroduced in February 2019, at a rate of 0.4 USD for 1 zimbabwe dollar (or 2.5 Zimbabwean dollar for us $ 1).

However, it is again quickly collapsed, never to submitted as 0.003 USD (or a course divided by 129 in less than three years). Like Sudan, Zimbabwe has experienced in recent years very high inflation, and that would have amounted to about 285 % in 2022, making the country the world champion in the field (after a rate of 98.5% in 2021, and 557,2 % in 2020). In addition, the country is now the sixth country with the largest debt on the continent, with public debt estimated at 92.6 % of GDP.

The Sudanese pound and the Zimbabwean dollar are followed by the pound to south Sudanese, which arrives in the third position of the coins less efficient over the last decade, with a decline of 97.5 % (or a value divided by 39). It would be even more heavily dropped, if it had not been pegged to the dollar since October 2017. The collapse of almost the total of the Sudanese pound is largely explained by the fact that the country has been ravaged by a terrible civil war, which was triggered shortly after its independence, achieved in July 2011, and which has lasted more than six years (from December 2013 to February 2020).

With more than 400 thousand dead, this conflict has been, by far, the most deadly of the continent during the last decade, and has weakened a country that had already been greatly exhausted by two long civil wars before its independence, at a time when it was still part of Sudan (and which had lasted 38 years in total). South Sudan has enjoyed 44 years of war since the departure of the British in 1956. A sad world record!

This country of East Africa, an area historically been the least stable, and the poorest on the continent, is now the poorest country in Africa. The under-development is so important, that the country is often absent in the various international rankings on the continent, in the absence of available data (with Somalia, and other countries of East Africa). This sometimes leads to be placed, artificially, a French-speaking country in the last position…

The two currencies have seen their value divided by five

Outside of these three extreme cases are Sudan, Zimbabwe and South Sudan, two other countries have experienced a collapse of more than 80 % of their national currency, namely, Ghana, and Angola, with a decrease of 81.3% and of 81.2 % (or a value divided by 5.4 and 5.3, respectively). In the absence of good governance and diversification (especially for Angola), these two countries are facing a serious economic crisis, spite the very important natural resources that they have. Indeed, Ghana is the largest producer of gold on the continent, and the fifth-largest producer of oil in sub-Saharan Africa, while Angola is the second-largest producer of oil and diamonds (and the world’s fourth largest for the latter).

However, Ghana is now the eighth country with the largest debt in Africa (with a public debt estimated at 90.7 % of the GDP by the end of 2022), and Angola was still the fifth largest country in the more in debt in 2020 (136.5 % of GDP by the end of 2020). Despite their considerable wealth, these two countries have registered an economic growth disappointing over the last ten-year period 2013-2022, with an average annual rate of 4.6% for Ghana and only 0.4 % for Angola, according to the World Bank, compared to, for example, a rate of 7.0 % for the Ivory Coast.

The latter has managed to exceed them in wealth produced per capita, despite its poor natural resources non-renewable (Ivory Coast produces three times less gold and six times less oil than Ghana, and about 35 times less oil in Angola). In effect, the Ivory Coast had a GDP per capita of 2 549 dollars by the end of 2021, compared to 2 364 dollars for Ghana and 1 953 Angola (according to the latest world Bank data). A performance that also allowed him to become the richest country in Africa to the West of the mainland.

Moreover, Ghana and Angola have experienced inflation high enough in 2022, estimated to be approximately 27 % and 22 %, respectively, and after having an average of 12.0% and 17.8 %, respectively, over the previous decade 2012-2021.

The three currencies have lost three-quarters of their value

These five currencies in african are the least efficient, followed by the three currencies that have lost about three-quarters of their value against the dollar, namely the leone, the Egyptian pound and the dinar (dzd) Libyan (the value of which has, therefore, been divided by about four). Although the terrible civil war is over for more than twenty years (January 2002), Sierra Leone continues to experience significant economic difficulties and is featured by the fact that it has recently become the poorest country in West Africa, after having been exceeded by the Niger (with a per capita GDP of $ 480 end of 2021, compared to $ 591).

It should, moreover, very soon outpace also Liberia, not English-speaking neighbouring Sierra leone, whose currency has depreciated 53.2 % over the last decade (ranking in the 15th position of the currencies of the least performing on the continent).

For its part, the Egyptian pound has continued to be affected by the level of debt is very high in the country, often around 90 % of GDP, and is estimated to reach 89.2 % at the end of 2022. However, in contrast to the countries mentioned above, Egypt has recently undertaken important reforms that enabled him to consolidate and boost its economy.

Aided, moreover, by demographics (a country of 104 million inhabitants), it should soon become the first african economy in terms of nominal GDP, in excess of those in Nigeria and South Africa, both in economic decline for several years.

Finally, the dinar, Libya has been weakened by the civil war situation in Libya since the fall of the dictatorship of Gaddafi, who had ruled the country for 42 years, without giving him strong institutions (the country did not even have a constitution), and to diversify the economy still heavily dependent on hydrocarbons (more than 95% of exports).

Four currencies have lost two-thirds of their value

The dinar in Libya is followed by four currencies, having lost about two-thirds of their value against the dollar, namely the Zambian kwacha, the kwacha in Malawi, the birr and the naira. With a drop of 70.8 %, the evolution of the Zambian kwacha reflects the serious economic problems of this country, in the basement, however, very rich (Zambia is the second largest producer of copper and the eighth at the global level), but who is among the most indebted countries in the continent, with a public debt which stood at 119 % of GDP by the end of 2021, which is the fourth highest level Africa (data for the year 2022 are not yet available from the IMF). The country was even distinguished in 2020, becoming the first african country to default on its debt.

For its part, the collapse of the naira (-65,2 %) also reflects the economic problems in Nigeria, the absence of good governance and diversification, as evidenced by the fact that this country has, also, been overtaken by the Ivory Coast in terms of wealth produced by habitat (with a GDP per capita of 2 066 dollars the end of 2021), despite an oil production between 40 and 60 times in the last ten years. Nigeria has recorded an economic growth rate of 2.3% on an annual average over the last decade 2013-2022, or a lower rate than its population growth (2.5 per cent).

And according to many experts, the country, which is also experiencing very high inflation (estimated to be about 19 % in 2022, after having declined by 12.3% on average over the previous decade), should undertake a new devaluation of the national currency soon after the next presidential elections, in February 2023 (knowing that she has already lost more than 99 % of its value since its inception in 1973). A write-down of as much more probable that it is necessary to reduce the gap now considerable between the official exchange rate of the naira ($1 worth 455 nairas as of January 20, 2023), and the exchange rate on the parallel market (approximately 750 nairas to a dollar).

As for the Ethiopian birr, the currency has been weakened by the civil war that has been experienced in Ethiopia between November 2020 and November 2022, and that has caused the death of tens of thousands of people in just two years. In addition, after having experienced strong economic growth before the covid and the civil war, amply aided by the fact that the countries of East Africa were the second poorest country in the world at the beginning of 2012, Ethiopia is expected to see its growth tapering off over the next few years, although it is still at the 33rd position on the continent in terms of GDP per capita (925 dollars in late 2021).

Eight currencies have lost half their value

Finally, and among the other eight countries with an impairment of at least 50 % of their money over the last decade, it is important to note the presence of South Africa, the Rand has lost 50,3 % of its value (ranking as the 16th place of currencies depreciated). Again, this deterioration reflects the serious economic problems of this country, which have, nevertheless, huge natural wealth (the first african producer of coal, iron, manganese, or nickel, is the second largest producer of gold…), but with very poor governance and corruption.

Thus, South Africa has recorded economic growth of just 0.9% in the annual average over the decade 2013-2022, in addition to lower than its population growth (1.4% on average). And according to the latest data from the World Bank, South Africa has reportedly been one of only two african countries that have experienced a decline in the rate of access to electricity in 2020, even though a non-negligible part of the population is still not connected to the electrical network to 15.6 % at the end of 2020, compared to, for example, less than 1 % in each of the countries of the Maghreb).

In addition, the significant decline of the rand has brought in its wake the decline of the other three currencies in southern Africa that are secured, namely, the Namibian dollar, the lilangeni of Eswatini, and Lesotho loti Lesotho. In fact, these three currencies are linked to the rand by a fixed exchange rate, as are a few other currencies from the continent with foreign currencies, like the CFA franc with the Euro. The CFA franc for about half of the population of Saharan francophone Africa (54 %) and almost two-thirds of the francophone countries of sub-saharan (13 out of a total of 21 out of equatorial Guinea, who have chosen to share that currency).

To these, add the two countries that have also, and to freely chosen to join the single currency, several years after their independence, namely the Spanish-speaking (and partially French-speaking Equatorial Guinea, since 1985, and Portuguese Guinea-Bissau (since 1997).

During the last decade, the CFA franc has been part of the stable currencies on the continent, with a depreciation of only 18.5 % against the dollar. In addition, the free zone has also displayed the level of inflation, the lowest in the continent in recent years (about 2 % annually on average over the decade 2012-2021, and approximately 6% in 2022), as well as the level of economic growth, the higher (3.5% in annual average over the decade 2012-2021, and even 4,2 % off as a special case of equatorial Guinea’s oil, compared to only 2.3 % for the rest of sub-saharan Africa). This growth is particularly driven by the UEMOA zone, which is the largest of strong growth in the continent, although it is not the poorest (5.7% on average over the period 2012-2021).