Amid rising inflation, employment pressures, and ongoing fiscal and monetary reforms, central banks across Africa have responded in 2025 with decisive policy adjustments, most notably through interest rate changes.
In its April 2025 edition of the *World Economic Outlook*, the International Monetary Fund (IMF) slashed economic growth projections for nearly all African economies, sparing only Eswatini.
The IMF attributed the downgrades to “lower external demand, subdued commodity prices, and tighter financial conditions,” particularly affecting countries reliant on exports and those closely linked to U.S. trade.
Several nations, including Egypt, South Africa, Kenya, Mozambique, Eswatini, and Lesotho, have reacted to declining inflation trends by reducing interest rates. Meanwhile, others—such as Nigeria, Zambia, Angola, and Ghana—have kept rates unchanged but may begin loosening policy later in the year as inflation moderates.
Elsewhere in the world, interest rate environments differ sharply. In Eastern Europe, Ukraine holds a 15.5% rate, Russia sits at 21%, and Turkey is at a staggering 46%. By contrast, developed economies remain relatively conservative: the U.S. maintains a benchmark between 4.25% and 4.5%, and Canada’s sits at 2.75%.
Nigeria’s Central Bank, following its 300th Monetary Policy Committee (MPC) meeting in May 2025, opted to keep its benchmark rate at 27.5%, placing the country third among African nations with the highest interest rates.
Here’s an overview of the ten African countries currently leading the continent in benchmark interest rates:
10. Gambia – 17%
The Central Bank of The Gambia (CBG) has consistently upheld its 17% policy rate since September 2023 as it strives to bring down inflation. This stance was reiterated during its MPC meeting in February 2025, reflecting the institution’s ongoing commitment to stabilising the economy.
9. Liberia – 17.25%
On January 24, 2025, the Central Bank of Liberia (CBL) decided to retain its MPR at 17.25%, noting concerns about rising consumer prices and declining GDP growth. Reserve requirements were left unchanged—25% for Liberian dollar deposits and 10% for U.S. dollar deposits.
The CBL reported that gross international reserves rose 10.4% to $526 million, extending import coverage to 3.6 months. Furthermore, the banking sector’s capital adequacy ratio surged to 31.5%, far above the 10% regulatory threshold.
8. Angola – 19.5%
In January 2025, Angola’s central bank, Banco Nacional de Angola (BNA), held its main interest rate steady at 19.5%. Simultaneously, it reduced its liquidity absorption rate to 17.5% and trimmed the reserve requirement ratio to 20%.
Though annual inflation fell slightly to 27.5% in December 2024 amid a stabilising kwanza, BNA Governor Manuel Tiago Dias stressed the need for cautious policy measures to ensure sustainable growth and inflation control.
7. Sierra Leone – 24.75%
To rein in inflation, the Bank of Sierra Leone raised its key interest rate to 24.75% in October 2024, adding 50 basis points. Inflation had dropped to 25.49% in August 2024—a nearly 30% reduction in ten months—due to falling prices in both food and non-food sectors.
6. Democratic Republic of the Congo – 25%
The Central Bank of the Congo (BCC) maintained its benchmark rate at 25% from November 2024 onward, aiming to keep inflation in check and stabilize the Congolese franc amidst regional instability. Despite impressive GDP growth of 8.4% in 2023, the country faced 23.8% inflation by December of that year due to fiscal stress and imported costs.
5. Egypt – 25.5%
In a significant move, the Central Bank of Egypt cut its interest rate by 225 basis points in April 2025—its first rate reduction since 2020—bringing the benchmark to 25.5%. The bank credited the decline in inflation, with headline inflation falling to 13.6% and core inflation to 9.4%, to earlier monetary tightening.
“The sharp decline in annual headline inflation” in 1Q 2025 created “ample room for commencing the easing cycle,” the MPC said, noting that inflation during the quarter dropped by nearly 9 percentage points.
4. Malawi – 26%
On May 8, 2025, Malawi’s central bank chose to maintain its policy rate at 26%, responding to persistently high inflation still exceeding 30%. Inflationary pressure stemmed from foreign exchange shortages and underwhelming agricultural output.
According to Mark Lungu, RBM’s Director of Economic Policy and Research: “The policy rate and other monetary policy variables have been maintained but will be under observation going forward. This means the cost of borrowing remains the same, which is to the advantage of ordinary citizens,” Lungu said.
Lungu also highlighted substantial improvement in inflation figures: “We are seeing deceleration in maize prices, which strengthens the positive inflation outlook and contributes to overall price stability in the third quarter,” Lungu said, while urging the government to enhance domestic revenue generation and curtail public spending.
3. Nigeria – 27.5%
At its milestone 300th MPC session in May 2025, Nigeria’s Central Bank retained its benchmark rate at 27.5%, aiming to consolidate earlier anti-inflation gains.
Key monetary settings include:
* Asymmetric Corridor: +500/-100 basis points
* Cash Reserve Ratio (CRR): 50% for deposit banks, 16% for merchant banks
* Liquidity Ratio: 30%
All twelve committee members voted unanimously to hold the rate steady. This followed news that inflation had eased to 23.71% in April 2025, down from 24.23% in March, per the National Bureau of Statistics (NBS).
2. Ghana – 28%
The Bank of Ghana, led by new Governor Dr. Johnson Asiama, raised the benchmark rate by 100 basis points to 28% in March 2025. Though inflation has been on a downward trend, the central bank signalled that risks to price stability remain substantial.
1. Zimbabwe – 35%
Zimbabwe currently leads the continent with the highest interest rate at 35%. The Reserve Bank of Zimbabwe (RBZ) kept the benchmark unchanged in March 2025 to support its gold-backed currency, the ZiG, and anchor inflation expectations.
Despite weak demand, the RBZ prioritised currency and price stability, particularly after a sharp 43% depreciation of the ZiG in late 2024, highlighting the country’s ongoing structural and financial vulnerabilities.
As many African nations contend with inflationary pressures, currency instability, and global headwinds, central banks have resorted to aggressive interest rate policies. While these high rates aim to tame inflation and protect domestic currencies, they also bring challenges, particularly for businesses and consumers reliant on credit. Nigeria’s 27.5% policy rate illustrates a cautious but firm approach to striking a balance between economic growth and inflation control.
