Countries such as Ghana, Egypt, Nigeria, and Malawi are leading the pack as among 10 countries with the highest interest rates in Africa as soaring inflation rates and rapidly declining currencies necessitate a hawkish stance from African central banks.
Ghana is facing arguably its worst economic crisis in modern history. Thus, in January 2024, the Bank of Ghana cut its interest rate by 100 bps to 29.00%.
The country’s inflation eased to 23.5% in January 2024 from 52.8% recorded in February 2023. However, in March 2024, Ghana’s inflation rate climbed back to 25.8%.
Egypt currently possesses the second highest interest rate in Africa, after hiking its MPR by 600 bps to 27.25% in March 2024. The move by the Egyptian central bank became necessary to drive investment to the North African country, as the country was battling a foreign currency crisis.
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The move was also necessitated by persisting inflationary pressures in Egypt, as the country’s inflation rate hit 33.7% in March 2024, down from 35.7% in February 2024.
In February 2024, Malawi’s central bank hiked its benchmark interest rate by 200 bps to 26.00%, citing persistent inflationary pressures as the reason.
As of February 2024, Malawi’s inflation rate hit 33.5%, marking a decline from the 35% posted in January 2024.
In 2024, the Central Bank of Nigeria has hiked the MPR twice, from 18.75% to 22.75% in February 2024, and by another 200 bps in March to 24.75%.
According to the CBN, the MPR had to be hiked considering persistent inflationary pressures and the need to sustain exchange rate stability in Nigeria.
In March 2024, the Angolan Central Bank hiked the benchmark interest rate to 19.00%, from 18.00%.
The bank resumed the monetary tightening cycle due to its 24% inflation rate in February 2024. However, the rise in inflation was linked to currency depreciation and increase in fuel prices due to the removal of subsidies.
The Central Bank of the Gambia maintained its monetary rate at 17.00% during its meeting in February 2024. The country’s inflation rate in January 2024 hit 16.2%, down from 17.3% posted in December 2023.
After witnessing a gradual decline in inflation from 9.9% in February 2023 to 4.0% in February 2024, the Mozambican Central Bank took a decision to cut interest rates in January 2024.
The Banco de Mocambique cut its interest rate from 17.25% to 16.50%.
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The Central Bank of Kenya maintained its interest rate at 13.00% during its meeting on April 3, 2024. Interest rate in Kenya was raised from 12.5% to 13% in February 2024.
The country’s inflation rate for March 2024 hit 5.7%, down from 6.31% posted in February 2024.
During its Monetary Policy Committee in February 2024, the Bank of Zambia hiked the country’s MPR by 150 bps to 12.5%. According to the bank, the move was geared towards steering the country towards a 6-8% inflation rate target.
Zambia’s inflation rate is currently on an upward trajectory, hitting 13.5% in February 2024 from 13.2% in January.
On April 9, 2024, the Bank of Uganda raised its interest rate by 25 bps to 10.25%, even as the country’s inflation rate has continued to see a marginal decline from 3.4% in February 2024 to 3.3% in March 2024.
Uganda has a core inflation target of 5%.