Nations in Africa have some of the highest interest rates in the world, with some even reaching as high as 23 percent.
Central banks are the national banking institutions that provide financial and banking services for countries’ governing and commercial banking system, including lending money.
For this reason the central bank decides on the country’s interest rate as part of monetary policy, effectively deciding the rate at which loans need to be repaid.
African rates are far higher than most global counterparts. By way of comparison, the U.S. Federal Reserve recently revised the country’s interest rate to 1 percent, while most of Europe’s central banks have their interest rates at between 0.25 percent and 2 percent.
We take a look at 13 African countries with the highest central bank interest rates.
While neighbours Botswana offer an interest rate of 5.5 percent, the South Africans have a 7 percent interest rate, which was last adjusted this time last year as the South African reserve bank increased the rate by 0.25 percent.
South Africa’s neighbours Namibia have the same rate of 7 percent at the moment. Known as the repurchase rate, the Namibians monitor South African monetary policy closely, and after they increased their rate in March last year, the Namibians followed suit a month later.
The Monetary Policy Committee (MPC) of the Central Bank of Lesotho held its most recent meeting in February, 2017, deciding to maintain the bank’s interest rate at 7 percent for the time being, in line with that of South Africa and Namibia.
After South Africa and Namibia, the rate begins to move quickly, with Kenya’s central bank making money available for government at a rate of 10 percent. This rate was actually cut by half a percentage point in September last year in an effort to provide some relief for consumers.
Kenya’s fellow East Africans Uganda have a higher interest rate than the Kenyans, with the Ugandan central bank rate set at 11.5 percent after a decrease of half a percent in February this year.
The Nigerian economy has been in a recession, and the central bank in the West African country has not helped matters with a 2 percent increase to the monetary policy rate in July last year raising the interest rate to 14 percent.
The interest rate in Zambia was 15.5 percent until recently, when it was reduced to 14 percent in order to bring some relief to those in debt in the country. The Zambians have the same policy rate as the Nigerians.
The Central Bank of Egypt has another of the highest interest rates on the continent, moving above the Nigerians in November 2016 when they decided to hike the rate by three percentage points to 14.75 percent.
At 16 percent, Angola has the fifth highest central bank interest rate on the continent at the moment, with borrowers expected to pay back their debt with the rate as a guideline, while banks will often add a few percent on to that original central bank rate.
In recent days the Reserve Bank of Malawi reduced bank rates from 24-to-22 percent in an effort to attract investment for the country. The previous rate would have made it Africa’s second highest central bank interest rate, but the move has seen them fall to fourth highest in Africa.
The Central Bank of Gambia has set their interest rate at a staggering 23 percent, which is 46 times higher than that of Canada. The last change that occurred to the Gambian interest rate took place in 2015.
Towards the end of 2016 the Mozambican central bank authorities decided on a drastic action, raising the interest rate by six percent to 23.25 percent. The change to the benchmark rate in the former Portuguese colony was the biggest of any central bank in recent memory by some margin, with most countries adjusting the rate by less than a percentage point at a time.
Slightly higher than Mozambique’s rate, the Bank of Ghana reduced their monetary policy rate to 23.5 percent this week, decreasing the rate by 2 percent due to a drop in inflation at the start of the year. Despite the change, Ghana still has the highest central bank interest rate in Africa.