Reports By Business Insider Africa: 20 African countries with the highest benchmark lending rates.
Benchmark lending rates are set by central banks and they determine the cost of loan for borrowers as well as the rate of returns for lenders.
Do note that we used World Bank stats to compile this list of 20 African countries with highest benchmark lending rates.
If you’ve been keeping abreast with latest business developments around the African continent, then you are probably aware of the fact that many countries are at risk of debt distress.
According to a recent report by the International Monetary Fund (IMF), public debt ratios across Sub-Saharan Africa have risen to a 20-year high. Over the years, many countries borrowed heavily to finance their developmental needs. And now, quite a number of them are struggling to pay back the loans. Some of them are already exposed to debt distress, amid growing concerns of debt sustainability.
And there is more to worry about.
Focus on Africa’s fiscal crises
Unable to service their debts or at least restructure them in order to be able to borrow more, many countries are also grappling with fiscal crises. A good example of such a country is Ghana which recently had to swallow its pride and approach the IMF for help.
The fiscal crises across many African countries have been exacerbated by the ongoing war in Ukraine, as well as other internal macroeconomic factors such as high inflation, soaring food and energy costs, etc.
Recall that a few months ago, a significant number of African Central banks were forced to hike their benchmark lending interest rates due to the aforementioned macroeconomic challenges. With their Monetary Policy Committee members set to meet again soon, there are already speculations of further rate hikes to come.
We shall now focus on 20 African countries with the highest lending interest rates, according to available stats obtained from The World Bank.
What is lending interest rate?
Investopedia defines lending interest rate as “the cost of debt for the borrower and the rate of return for the lender.” In other words, it has to do with how much commercial banks charge borrowers on the amount or principle sum they borrowed.
Lending rates are determined by central banks. The higher the rate, the more expensive the cost of loan. And the more expensive the cost of loan, the more borrowers are discouraged from borrowing.
Below are 10 African countries with the highest lending interest rates, according to The World Bank
- Zimbabwe: Has lending rate of 45.5%
- Madagascar: Has lending rate of 43.3%
- Malawi: Has lending rate of 24.2%
- Democratic Republic of Congo: Has lending rate of 23.1%
- Uganda: Has lending rate of 19.8%
- The Gambia: Has lending rate of 19.5%
- Angola: Has lending rate of 19.4%
- Sao Tome $ Principe: Has lending rate of 19.1%
- Sierra Leone: Has lending rate of 18.9%
- Mozambique: Has lending rate of 18.2%
- Ghana: Has lending rate of 17%
- Mauritania: Has lending rate of 17%
- Tanzania: Has lending rate of 16.7%
- Rwanda: Has lending rate of 16.2%
- South Sudan: Has lending rate of 16.1%
- Nigeria: Has lending rate of 14%
- Liberia: Has lending rate of 13.3%
- Guinea: Has lending rate of 12.9%
- Burundi: Has lending rate of 12.6%
- Kenya: Has lending rate of 12.2%