The state of the external reserve for African countries affects the stability and growth of their economies. The drawbacks, should Federal Reserves be low, are numerous, including lower foreign direct investment, greater borrowing costs, slowed economic development prospects, and increased financial market volatility.
Low growth or stagnation in the Federal Reserve frequently indicates larger economic uncertainty. This might cause heightened volatility in global financial markets, influencing investment flows and currency rates.
For African countries that rely heavily on foreign finance and commerce, such volatility can result in unanticipated currency fluctuations and financial instability. This uncertainty can discourage foreign investment and complicate financial planning for enterprises and governments.
The report also revealed that in 2023, Africa’s foreign exchange assets increased by an estimated 2.6% year on year, reaching US$411.9 billion, compared to a 2.3% decline to US$401.3 billion in 2022.
This improvement is attributed to investments in greenfield projects, support from international and regional development financing organizations, bilateral partnerships, and increased tourism and remittances.
With that said, here are the 10 countries that recorded the lowest growth in its external reserves in 2023, according to Afreximbank’s trade report.
PS: This list shows the smallest overall growth in federal reserves within a one year span and not the countries with the lowest overall federal reserves.
Top 10 African countries with the lowest federal reserve growth
| Rank | Country | Reserve growth in 2023 (%) |
|---|---|---|
|
1. |
Zimbabwe |
-63.5 |
|
2. |
Niger |
-55.0 |
|
3. |
Burundi |
-51.2 |
|
4. |
Sudan |
-50.0 |
|
5. |
Burkina Faso |
-45.5 |
|
6. |
Ethiopia |
30.3 |
|
7. |
Nigeria |
-26.5 |
|
8. |
Gabon |
-23.0 |
|
9. |
Sierra Leone |
-11.8 |
|
10. |
Ghana |
-10.8 |
