Out of 12 African countries and two sub regional groups surveyed by Ecobank Research, Ghana recorded the second highest interest rates ranging between 25.4 and 26.2 percent respectively for the 91-Day and 182-Day Treasury bills.
Rising inflation, the weak Ghana Cedi and challenges in the macro economy compelled the Bank of Ghana (BoG) in previous years to adjust interest rates on short term securities to reduce money supply.
However, it is believed that the recent $918 million International Monetary Fund (IMF) support to the economy will bring some stability in the short to medium term.
Malawi was ranked first recording interest rates of 25.83 and 26.41 percent respectively for the 3-months and 182-day short term instruments.
With a single digit inflation for a very long time, Nigeria, Africa’s largest economy recorded a yield of 11.52 and 15.27 percent respectively for the short term securities.
Africa’s second largest economy, South Africa also had yields of 5.91 and 5.92 percent respectively for the 91-Day and 182-day Treasury bill, while Kenya, one of Africa’s power houses also recorded interest rates of 8.64 and 10.28 percent respectively for the money market instruments.
Other countries surveyed were The Gambia, Sierra Leone, Tanzania, Uganda, Democratic Republic of Congo, Rwanda and Zambia.
UEMOA which comprises of Francophone West African countries and the Central African Economic and Monetary Community (CEMAC) which were the two regional groups surveyed had interest rates of 4.92 and 5.36 percent as well as 1.30 and 1.62 percent respectively.
The countries under UEMOA are Benin, Burkina Faso, Cote d'Ivoire, Guinea-Bissau, Mali, Niger, Senegal, and Togo.
Ecobank Research said the BoG’s strategy of maintaining a tight monetary policy to slow inflation and underpin the Ghana Cedi will only have limited success.
However, it added that “with the IMF reform programme in place, market confidence will grow”.
Interest rates generally trended up on the money market during the year 2014. The rate on the 91-day instrument increased to 25.8percent from 19.2 percent.
Similarly, the rate on the 182-day instrument increased to 26.4 percent from 18.7 percent.
The rate on the 1-year note also rose to 22.5 percent from 17 percent, and the 2-year rate increased to 23 percent from 16.8 percent.
The 3-year bond rate rose to 25.5 percent from 19.2 percent. The weighted average interbank rate increased to 23.7 percent from 16.3 percent in
December 2013.
Average lending rates of the banks rose to 29 percent from 25.6 percent in December 2013. The average rate on 3-month term deposits increased to 13.9 percent from 12.5 percent.
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