Interest rates are a funny thing. To some, they’re just another number on a bank statement or a credit card bill. Central banks see it as a tool for controlling inflation or promoting economic growth. But for others, they’re a matter of life and death — the difference between affording basic needs or going hungry. And nowhere is this more true than in Africa, where interest rates have been a source of opportunity and struggle for many.

Of course, rising interest rates are not always bad news. Higher rates can sometimes reflect growing confidence in Africa’s economic potential, encouraging foreign investment and stimulating local businesses. But that’s not what happens in many cases. Let’s explore the ten African countries where borrowing is the most expensive.

Zimbabwe

Zimbabwe doesn’t only lead Africa in interest rates. At 150%, it’s the world’s most expensive country to borrow money in. Notably, this current rate is an improvement from the 200% it held on to for the entire second half of 2022. And the reason is that inflation has been on a downtrend, with a recent plunge to 92.3% from 229.8%.

The Zimbabwean dollar was one of the worst-performing currencies in 2022, losing more than 80 per cent of its value against the US dollar. It also isn’t eligible to receive any new lines of credit from the IMF because of “unsustainable debt.” The country owed $13.2 billion to various international financial institutions at the end of June, according to Treasury data.

Ghana

While Ghana’s rate of 29.5% might seem tame compared to Zimbabwe’s, it’s still the highest in West Africa. Like Zimbabwe, Ghana has been grappling with inflation. So its central bank has been hiking interest rates to curb it. Ghana’s consumer inflation slowed to 52.8% year on year in February from 53.6% in January, the highest rate in more than two years. The country has also been struggling to stabilize the cedi after Bloomberg rated it the world’s worst-performing currency. However, runaway inflation and rising interest rates have been causing worries for Ghana’s investors.

Sudan

The benchmark interest rate in Sudan was last recorded at 27.30 per cent. In Sudan, there is no official central bank interest rate in order to ensure the compatibility of financial practices with Islamic principles. Yet, the Murabaha Profits Margin Rate controlled by the Central Bank of Sudan is widely used by the Sudanese banks. The high interest rate in Sudan could be attributed to several factors. The country has been facing macroeconomic imbalances, structural deficiencies, political instability, and the impact of COVID-19. Inflation more than doubled from 163.3% in 2020 to 358.9% in 2021, owing to currency depreciation and the removal of fuel subsidies.

Sierra Leone

At 18.25%, Sierra Leone’s interest rate is still higher than the global average. The country has been working to recover from a decade-long civil war that ended in 2002, but progress has been slow. The economy remains largely dependent on mining and agriculture, with high levels of poverty and unemployment.

Malawi

Malawi’s interest rate of 18% reflects the country’s struggle to attract foreign investment and reduce poverty. While Malawi has made progress in recent years, including reducing its dependence on tobacco exports, it remains one of the poorest countries in the world, with high levels of unemployment and inequality.

The Reserve Bank of Malawi raised its benchmark policy rate by 400bps to 18 per cent in its October 2022 meeting, the highest since November 2017. The Monetary Policy Committee stated that the sharp increase in borrowing costs was necessary to restore price stability, noting that the absence of such measures would frustrate the country’s economic recovery and erode households’ purchasing power. Inflation rose to a near 9-year high of 25.9% in September of 2022, largely due to soaring food costs.

Angola

The National Bank of Angola cut its benchmark policy rate by 150 bps to 18% during its January 2023 meeting. On May 24th 2018, the central bank unified the marginal lending facility rate and the basic interest rate, creating the BNA Rate (Taxa BNA) which became the new benchmark interest rate.

It was the steepest rate cut since July 2018, based on the reduction in inflation observed throughout 2022 and on inflationary pressures, as well as on the alignment of monetary conditions with the medium and long-term inflation objectives. Inflation has been easing since February, reaching an over seven-year low of 13.86% in December of 2022, largely due to the appreciation of the kwanza, as well as the increase and regularity of the supply of goods, especially food products.

Nigeria

The Central Bank of Nigeria unanimously decided to lift its monetary policy rate by 50 bps to 18% at its March 2023 meeting, following a 100 bps hike in January, citing price and exchange rate pressures and expectations of a removal of a petrol subsidy.

The annual inflation rate in Nigeria accelerated for the second month to a near 17-1/2-year high of 21.91% in February 2023, from 21.82% in the prior month, surpassing market expectations of 21.85%.

Mozambique

The central bank of Mozambique left its key MIMO rate steady at 17.25% in the first monetary policy meeting of 2023. Policymakers said the decision takes into account upside risks and uncertainties related to inflation although it is expected to slow to single-digit in the medium term. The annual inflation rate fell to 10.29% in December from 10.62% in November. At the same time, the central bank revised its growth projections lower, citing more restrictive global financing conditions and a slowdown expected for major trading partners.

Mozambique’s official interest rate is the interbank money market rate (taxa do mercado interbancário moçambicano, MIMO). It was first introduced on April 10th 2017 and replaced the standing lending facility rate (taxa de juro da facilidade permanente de cedência).

Egypt

The Central Bank of Egypt held its key overnight deposit rate unchanged at 16.25% in its February 2023 meeting, surprising market expectations of a 100bps increase after the 800bps in interest rate hikes since the start of the bank’s tightening cycle in March 2022. The meeting followed a larger-than-expected 300bps hike in December and announced a new inflation target of 5%-9% by the fourth quarter of 2024. The move extended pressure on the Egyptian pound, which sank to a record low of 30.2 pounds/$ after the central bank mandated a more flexible exchange rate regime earlier in the month to meet terms of a $3 billion IMF support package

Liberia

Liberia’s interest rate of 15% is another reflection of the country’s economic challenges, including high levels of poverty and unemployment, a lack of infrastructure, and a history of conflict. The Central Bank of Liberia does not use the interest rate as a monetary policy tool. The interest rate is currently the standing deposit facility rate.