Queen Nwabueze
If you’ve been keeping abreast with latest lending rates around the African continent, then you are probably aware that the Central Bank of Nigeria (CBN) has just raised the Monetary Policy Rate (MPR) from 14% to 15.5% on Tuesday, September 27, 2022. Did you just say, “ oh no…! Sorry but it’s the reality now.
Phew! You already know the implications. For one, 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. So there’s nothing anyone can do about it.
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Okay. Back to today’s business, a recent report by the International Monetary Fund (IMF) has said, 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.
What about lending rates?
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 20 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 15.5%
- 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%
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