2014 was a hard year for the local currencies of several African nations; Ghana’s economic recession caused the cedi to fall over 30 percent between January and December, while the collapse in copper and oil prices left the Zambian Kwanza and Nigeria’s Naira in turmoil. These currencies can , however, regain their momentum in 2015 although analysts are sceptical about predicting their recovery, just yet.

The Ghanaian Cedi

Ghana’s 2014 was characterised by economic storms of huge budget deficit, currency free-fall, spiralling government debt, as well as rising costs of living which drew protesters to the streets.

Ghana was once hailed as the shining star of Africa Rising during its economic emergence in the mid-2000s, driven by exports of gold, cocoa and oil, which culminated in its successful re-denomination of its currency. But things have since gone sour despite the government’s several measures to stem the decline.

The Cedi, re-denominated in July 2007 to a rate of GH₵0.9315 to US$1 – the highest valued currency unit ever issued by a sovereign country in Africa, fell over 250 percent to GH₵3.35 as of August 04 2014. However, it gained some strength by the end of the year, closing at GH₵3.18 to a dollar. Despite this little recovery, 2014 was still the re-denominated Cedi’s worst year, as it lost over 35 percent of its value between January and December.

Ghana’s economic woes have led the government to seek an IMF bailout of about $1.5 billion as part of efforts to stabilise the economy and halt a slide in the cedi. The goverment is hopeful that with the IMF bailout plan and the several cost cutting and revenue boosting economic reforms it is putting in place, the currency can begin to recover in 2015. The increase of domestic gas supplies to the market is one of the measures the government is implementing in order to provide cheaper fuel for power generation and minimise the burden of oil imports on the currency. it has struck a $500 million deal between Quantum Power Ghana Gas and Golar to build an LNG Terminal. When completed, the facility is projected to save power producers in Ghana more than a quarter of a billion dollars annually in fuel costs.

Zambia’s Kwacha 

Zambia’s Kwacha is another African currency that had a very torrid 2014 after been hit with falling prices of copper and a tax crisis. Africa’s second largest producer of copper, Zambia, depends on its mining industry for revenue and foreign exchange, but the falling prices of copper and the several tax related conflicts with major Miners have been hurting both government finances and the currency’s value.

The Kwacha was re-denominated in January 2013 and was positively received by the public. But through January to December 2014, the new Kwacha slid down by more than 15 percent. In December alone, the local currency lost 3 percent of its value.

The mining crises have caused Zambia to reduce its 2014 growth forecast from 6.5 percent to 6 percent – which Reuters says is still brisk by global standards – citing operational challenges at some mines.

Zambia’s Chamber of Mines, the body that represents mining companies operating in the country, had warned that the government’s decision to hike royalty rates on open pit mining from 6 percent to 20 percent will lead to shaft closures and 12,000 job losses, according to a Reuters report on Friday. Canadian mining giant, Barrick Gold Corp, said it had begun the process of suspending operations at its Lumwana copper mine because of the passage of the new tax law.

Zambia is also withholding $600 million in VAT refunds owed to mining companies and will only repay the cash when companies produce import certificates from destination countries. They say this is impossible because of middlemen in the trade. But the country’s finance Minister, Alexander Chikwanda, said that the government intends to resolve the issue of VAT refunds with mining companies and hoped to agree with them on new mining taxes.

Zambia is due to have a presidential by-election towards the end of January to replace its late leader Michael Sata, and analysts say a resolution to the tax issue, as well as respite and stability for the currency, may only come after a new government comes to power.

Nigeria’s Naira

The decent of the Naira began far into 2014, no thanks to the fall in global oil prices which kicked in from the middle of the year. Regardless, the fall of the Naira was so drastic in the later part of 2014 that the currency lost more than 13 percent of its value in the last five months of the year. The fall of the Naira led to its devaluation by the Central Bank, but even that did not stop the downward slide.

Alongside the falling of the Naira has been the shrinking of Nigeria’s oil revenue, on which the government depends for over 70 percent of its funding and also contributes over 90 percent of the foreign exchange.

The economic crises brought by falling oil prices have led the government to seek a more prudent  2015 budget appropriation with a focus on cutting recurrent expenditures and unnecessary financial leakages. The executive submitted to the the country’s legislature, a 2015 budget proposal of N4.36 trillion ($23.9 billion) with a revised oil benchmark price of $65 per barrel, lowered from previously stated $73 and $78 per barrel.

OPEC however, sees oil prices rising back again in the 3rd quarter of the year, a much needed respite for the Nigerian economy and the currency. The Naira has already gained back some weight through the festive period, albeit analysts say it is because of the skeletal trading in the season. The presidential elections coming up in February mean investors continue to harbour fears over the economy and the Naira. The CBN is however adamant in its belief that the Naira will finally stabilise to its current rebased value of 165-169, once it is freed of the negative speculation that hit severely in December.