13 African Countries With The Lowest Central Bank Interest Rates

13 African Countries With The Lowest Central Bank Interest Rates

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Many countries in Africa have extremely high central bank interest rates compared to most of the world, but there are some who boast lower rates that compare favourably on a global scale.

Central banks decide on the country’s interest rate as part of monetary policy, effectively deciding the rate at which loans need to be repaid.

Lower interest rates allow the people of that country to be able to afford loans and pay them back at more favourable rates versus countries where the interest rates are much higher.

In comparison, the United States federal reserve has an interest rate of 1 percent, while the United Kingdom’s rate is currently set at 0.25 percent.

We take a look at 13 African countries with the lowest central bank interest rates.

Sources: Global-Rates, CBRates, TradeEconomics, Macauhub, WeekendPost, Bloomberg.

Currency in Burundi. Photo: Moneyoftheworld
The Burundi franc. Photo: Moneyoftheworld

Burundi – 6.95 percent

At only 0.05 percent lower than the interest rates of South Africa, Lesotho and Namibia, the Bank of Burundi interest rate is approaching its lowest ever level, which was recorded as 6.5 percent.

The Rwandan currency is controlled by the central bank. Photo: rdisrwanda.org

Rwanda – 6.25 percent

The Rwandan central bank offers an interest rate of 6.25 percent, which was last adjusted in December 2016. The country enjoys a relatively low interest rate compared to many African nations, and is comparable with the interest rates offered by central banks in Armenia, Bangladesh, India and Vietnam.

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A Botswana pula note. Image: realbanknotes.com

Botswana – 5.5 percent

Botswana’s central bank has continued to keep their interest rates fairly low compared to most African counterparts, with a rate of 5.5 percent at the moment. Inflation is within an expected range in Botswana, ensuring that the rate will remain stable.

Eleni Gabre-Madhin, Ethiopian economist and former CEO of the Ethiopia Commodity Exchange. Photo: Wikicommons

Ethiopia – 5 percent

Known as the savings rate, the National Bank of Ethiopia sets the interest rate through their monetary committee, and at 5 percent, the current interest rate is low, though the bank’s record low remains a figure of 3 percent in 2002.

The Central Bank of West African States (BCEAO). Photo: African Markets
The Central Bank of West African States (BCEAO). Photo: African Markets

The Central Bank of West African States – 4.5 percent

Members of the Economic and Monetary Community of West Africa (UEMOA) entrust interest rate decisions to the Central Bank of West African States, which currently offers an interest rate of 4.5 percent. Members include Senegal, Benin, Burkina Faso, Guinea Bissau, Ivory Coast, Mali, Niger and Togo.

The Tunisia Dinar is used in the North African country. (arabiangazette.com)

Tunisia – 4.25 percent

Many North African countries enjoy a fairly low interest rate, and one of those in Tunisia, with a rate of 4.25 percent. Algeria, Libya and Morocco have lower rates at the moment, but compared to other countries in Africa, Tunisia enjoys a lower interest rate.

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Borrowing money in Mauritius is not as costly as it is in other parts of Africa. Photo: travelvista.net

Mauritius – 4 percent

One of the economic success stories within Africa at the moment, Mauritius’ economic achievements are reflected in a low interest rate of 4 percent. In the wake of Brexit, the island nation’s central bank cut the rate by 0.4 percent in July 2016.

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Mindelo, a port city on São Vicente, an island in the volcanic archipelago of Cape Verde. Photo: JP De Manne/Getty

Cape Verde – 3.5 percent

The Bank of Cape Verde reduced its benchmark interest rate by 25 basis points, from 3.75 percent to 3.5 percent in 2015, based on good inflation data. The rate has since remained the same, making it one of the lowest on the continent.

Abderrahmane Benkhalfa is a member of the Finance and Credit Council at the Bank of Algeria (Image: tsa-algerie.com)

Algeria – 3.5 percent

Another of the North African nations on this list is Algeria, with a central bank interest rate of 3.5 percent. The rate was dropped from a previous level of 4 percent during the course of 2016.

Libya’s interest rate is currently set at three percent. Photo: Wikimedia.org

Libya – 3 percent

Coming in at fourth on the list of lowest African central bank interest rates at the moment is Libya with an incredibly low 3 percent rate. That is comparable with the interest rates of Malaysia, Philippines and Chile.

Interest rates in Africa
The Bank of Central African States has numerous members. Photo: Thinkstock

The Bank of Central African States – 2.45 percent

Members of the Economic and Monetary Community of Central Africa (CEMAC) are represented in terms of interest rate decisions by the Central Bank of Central African States, with an interest rate of 2.45 percent currently in play. Currently the group of countries represented by this regional bank includes Congo, Gabon, Equatorial Guinea, Chad, Central African Republic and Cameroon.

Moroccans enjoy a low central bank interest rate. Photo: Wikimedia.org

Morocco – 2.25 percent

The second lowest interest rate in Africa belongs to Morocco, with the North African monetary policy decision-makers settling on 2.25 percent as the current interest rate. Morocco’s central bank kept its benchmark interest rate on hold at 2.25 percent at its March 2017 meeting, due to an inflation outlook that is consistent with their target.

The Comorian Franc is the currency used in the Comoros. Photo: Flagsoftheworld
The Comorian Franc is the currency used in the Comoros. Photo: Flagsoftheworld

Comoros – 1.15 percent

The lowest benchmark interest rate in Africa comes from the Comoros, with an incredibly low 1.15 percent rate offered. This compares very favourably with the rest of the world when considering that the United States’ rate is currently set at 1 percent.