Ever heard of the currency Pula?
Well it’s one of the best performing and valuable currencies in Africa from the SADC of the south of Africa.
What makes an economy robust that is stable and reliable to operate a business and others frail, not being reliable and unstable?
Well the ordinary man on the street of any economy will suggest that it’s the ability of a government or central bank to ensure an economy enjoys a low level of interest and inflation rate.
These two indicators have the ability to help the private sector businesses to grow to enhance development in any economy.
Maintaining such low level of both interest rate and inflation puts more value in a countries currency as low inflation rates makes a currency more valuable.
Botswana has been able to implicate such turn of low inflation to interest rate in its economy making the country one of the best performing economies in Africa with its currency Pula ranked as the 3rd best performing currencies in Africa.
Ghana on the other hand has had a bumpy ride in maintaining stable inflation rate and interest rate. The country’s currency was ranked as the worst performing in some months ago and currently ranked 7th in Africa. These two variables are always on a high and have never seen a single digit.
Inflation in Ghana as at August, 2016 sits at 16.9% compared to that of Botswana of only 2.60% in the same period. Such stableness and low key inflation from Botswana gives an edge to the country in making the country’s currency (Pula) more valuable to that of Ghana’s and most African countries.
Prime/Interest rate from Central banks always impacts on the economic sustenance of business in an economy. The higher the interest cost on loans has a direct correlation to crippling private businesses as they will not be able to access funds to expand their businesses. Lack of expansion or private business set ups stuns growth of a country as unemployment rate increases.
Botswana as an empirical evidence of a robust economy has its interest rate as at August, 2016 pegged at 5.5% as compared to Ghana’s prime rate as at same period at 25%.
The economic situation in Ghana is just like tightening a donkey by a tree. From such comparisons between these two African countries, Ghana seems to be going nowhere now in terms of economic growth (reducing unemployment, expansion of the private sector, valuable currency etc.)
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