May 20, 2022

Ghana has highest interest rates among top 11 African countries – Report

New data shows that Ghana presently has the highest interest rates among top 11 African countries.

According to Databank Weekly Fixed Income Update, the country’s 18.23% and 19.26% rates for the 91-day and 182-day Treasury bills respectively are the highest on the continent.

The Treasury bill rates in the country are however lower than the inflation rate of 23.6%.

Indeed, the relentless pace of inflation has stretched real returns on short term securities further down into the negative territory. So if you have bought Treasury bills in recent times, the return on your investments is negative.

This situation will compel the Bank of Ghana to increase its Monetary Policy Rate which currently stands at 17% further, to help mop up excess liquidity in circulation, and consequently halt the rising inflation rate.

“However, Ghana cedi liquidity levels are already tight on the interbank market, and a further tightening of the MPR could stifle economic growth. So, while we maintain an additional 200 basis points (2%) hike in the policy rate in 2022, we expect the MPC to exercise restraint in May 2022, deferring a potential 100 basis points (1%) hike in MPR to July 2022.

The rising interest rates are expected to increase the cost of borrowing and production cost per unit of most businesses.

At the same time, government will borrow at a higher cost on the financial markets.

Its currency – the Egyptian Pound – has been recording rapid depreciation to the dollar.

Nigeria has the lowest interest rate of 1.74% among the top 11 African countries.

Countries with lowest interest rates

COUNTRIES 91-Day T-bills 182-Day T-bills RANKINGS
Nigeria 1.74% 3% 1st
Tanzania 2.60% 2.78% 2nd
South Africa 4.28% 5.50% 3rd
Namibia 5.34% 4.84% 4th
Rwanda 6.10% 6.40% 5th
Uganda 6.77% 8.16% 6th
Kenya 7.68% 8.72% 7th
Zambia 9.30% 9.90% 8th
Malawi 9.74% 13.00% 9th
Egypt 13.67% 13.68% 10th
Ghana 18.23% 19.26% 11th

 

 

 

 

 

 

SourceJoy Business

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