Ghana Has Highest Interest Rates Among Top 11 African Countries – Report
New data shows that Ghana currently has the highest interest rates among the top 11 African countries.
According to the Databank Weekly Fixed Income Update, the country’s rates of 18.23% and 19.26% for 91-day and 182-day Treasury bills respectively are the highest on the continent.
Treasury bill rates in the country, however, are below the inflation rate of 23.6%.
Indeed, the relentless pace of inflation pushed real yields on short-term securities even lower into negative territory. So, if you have been buying treasury bills lately, your investment returns are negative.
This situation will force the Bank of Ghana to further raise its policy rate, which is currently at 17%, to help mop up the excess liquidity in circulation and therefore halt the rise in the rate of inflation.
“Real fixed income yields are depressed with the high inflation profile, continuously undermining Treasury funding operations. We note that short-term interest rates are misaligned, leading to negative real yields, which could prompt the Monetary Policy Committee (MPC) to act in the coming week,” Databank Research.
“However, Ghana cedi liquidity levels are already tight in the interbank market, and further tightening of the MPR could stifle economic growth. So, while we maintain a further 200 basis point (2%) hike in the policy rate in 2022, we expect the MPC to exercise restraint in May 2022, postponing a potential 100 basis point hike ( 1%) of the MPR to July 2022.
Rising interest rates are expected to increase the cost of borrowing and the cost of production per unit for most businesses.
At the same time, the government will borrow at a higher cost on the financial markets.
Meanwhile, Egypt closely follows Ghana with a 91-day Treasury bill rate of 13.67%.
Its currency – the Egyptian pound – has recorded a rapid depreciation against the dollar.
Nigeria has the lowest interest rate of 1.74% among the top 11 African countries.
Countries with the lowest interest rates
|COUNTRIES||91 day treasury bills||182 day treasury bills||RANKINGS|