10 African Countries With The Slowest External Reserve Growth

The state of African countries’ external reserves influences their economic stability and growth. If the Federal Reserve keeps interest rates low, there will be fewer foreign direct investments, higher borrowing costs, slower economic growth, and increased financial market volatility.

Low growth or stagnation in the Federal Reserve sometimes suggests greater economic uncertainty. This might increase volatility in global financial markets, affecting investment flows and currency rates.

For African countries that rely largely on foreign money and trade, such volatility can lead to unexpected currency changes and financial instability. This uncertainty may deter foreign investment and complicate financial planning for businesses and governments.

Afreximbank’s African Trade Report 2024, which studies the climate implications of AfCFTA implementation, finds that commodity prices have a substantial impact on currency rates and foreign reserves.

According to the research, Africa’s foreign exchange assets are expected to climb by 2.6% year on year in 2023, reaching US$411.9 billion, up from a 2.3% decrease to US$401.3 billion in 2022.

This improvement is due to investments in greenfield projects, assistance from international and regional development funding institutions, bilateral collaborations, and increasing tourism and remittances.

Having said that, below are the ten countries with the slowest growth in foreign reserves in 2023, according to Afreximbank’s trade report.