According to the International Monetary Fund, weaker currencies in Nigeria and other Sub-Saharan African countries are increasing state indebtedness. Sub-Saharan African currencies have declined against the US dollar by an average of 9% since January 2022, according to the fund.
The cedi in Ghana and the leone in Sierra Leone both fell by more than 45 percent. In Sub-Saharan Africa, around 40% of national debt is foreign, with most countries owing more than 60% in US dollars. The naira fell by 52.52 percent versus the US dollar over the seven-year period under consideration.
The IMF further noted that the depreciations were mostly driven by external factors, adding that lower risk appetite in global markets and interest rate hikes in the United States pushed investors away from the region towards safer and higher paying US treasury bonds.
