You are here: HomeBusiness2022 05 23Article 1544459

Business News of Monday, 23 May 2022


Ghana is 1st among top 11 African countries with highest interest rates – Report

Treasury bill rates highest in Africa Treasury bill rates highest in Africa

Inflation stands at 23.6%

Monetary policy rate revised to 19%

Negative returns on Treasury bills recorded, Report

Ghana currently has the highest interest rates among top 11 African countries according to DataBank's Weekly Fixed Income Update.

The 91-day and 182-day treasury bills with interest rates of 18.23% and 19.26% rates respectively are the highest on the continent.

Despite the high-interest rates, the Treasury bill rates in the country are lower than the inflation rate of 23.6%.

The inflation rate has however had a negative effect on returns made by investors.

The situation has however compelled the Bank of Ghana to increase its Monetary Policy Rate from 17% to 19%.

This is to help mop up excess liquidity in circulation and eventually reduce the rate of inflation.

“Real returns on fixed-income securities are depressed with the high inflation profile, continually undermining the Treasury’s financing operations. We note that short-term interest rates are misaligned, resulting in negative real yields, which could prompt the Monetary Policy Committee (MPC) to act in the week ahead”, the Databank Research report.

“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," it added.

Rising interest rates will mean that the cost of borrowing and the cost of production for businesses will increase.

The government will also have to borrow at a higher cost from the financial market.

Egypt follows Ghana with a 91-day Treasury bill rate of 13.67%.

The Egyptian Pound has also been recording a rapid depreciation of the dollar.

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

Here is a list of countries with the 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

Watch the latest edition of BizTech below: