April 2024 Macro Outlook: African central banks will remain hawkish in the short term

In the last six weeks, interest rate movements in key African economies have varied. Nigeria and Egypt increased rates by 600 basis points each, while Ghana, Kenya, and South Africa left rates unchanged at 29%, 13%, and 8.25%, respectively. 

Nigeria and Egypt are on the path of reform, primarily to subdue inflation and stabilise exchange rates. In the past year, the Nigerian naira and Egyptian pound were devalued by 71.5% and 37.5%, respectively. Still, since the tightening of the monetary policy, both currencies have witnessed some respite, gaining by 41% and 3%. At the same time, Kenya, South Africa, and Ghana aim to stabilise economic productivity and support output growth through adequate access to credit at steady lending rates. The divergence in policy dispels investors’ monolithic view of African markets. 

African countries are garnering favourable yields to investors, and Stears expects this trend to continue in the near term, barring