Ghana retains top spot for highest interest rates in Africa despite decline in treasury yields
In 2023, Ghana solidified its standing as Africa’s leader in high interest rates, even as the country observed a dip in Treasury bill yields. Notable reports from the Fixed Income Update by various investment firms highlight the sustained rates of approximately 29.24% and 31.88% for the 91-day and 182-day treasury bills, respectively, emphasizing the elevated borrowing costs for the government on the domestic front.
While 2023 witnessed a marginal reduction in yields by 6.12% for the 91-day and 4.10% for the 182-day bills, these rates remain considerably elevated. A significant decline was observed in March 2023, attributable to the Domestic Debt Exchange Programme; however, this downturn proved transient, with rates stabilizing subsequently.
Further amplifying Ghana’s position, the nation’s average lending rates persist around 32%, positioning it amongst the continent’s frontrunners in interest rate metrics. Despite this, financial analysts harbor optimism for 2024, anticipating a potential decline in treasury yields, contingent on improving investor sentiment.
However, this optimistic outlook is not without caveats. Analysts caution against election-induced fiscal uncertainties and potential inflationary repercussions, underscoring the risks that could influence yield trajectories.
In a regional context, Egypt closely trails Ghana with formidable interest rates, recording 25.68% for the 91-day bill and 25.95% for the 182-day bill. In contrast, Cape Verde and Seychelles emerge with the most competitive interest rates on the continent, marking a divergence in regional fiscal policies and economic landscapes.
