African countries with a limited money supply confront substantial issues that threaten their economic stability and growth prospects.
Particularly in Africa, where investment and development are vital to success, a low money supply can be a detrimental issue.
A low money supply frequently indicates a lack of liquidity in the economy, which might put off investors who see such countries as less stable and more vulnerable to financial disasters.
This inhibits long-term investments, such as foreign direct investment (FDI), which are critical to economic growth.
When a country’s money supply is low, governments are less able to enact successful policies.
For example, a limited money supply during economic downturns makes it difficult to implement stimulus measures such as increased public expenditure or looser monetary policy to boost borrowing and consumer spending.
Furthermore, it is frequently difficult for African nations with low money supply levels to keep their currencies robust.
A limited money supply might result in reduced demand for the local currency, further devaluing it and lowering its purchasing power.
Inflation, trade imbalances, and import prices can all be exacerbated by this currency volatility.
Top 10 African countries with the lowest money supply in 2024
| Rank | Country | Broad money (% of GDP) |
|---|---|---|
|
1. |
Côte d’Ivoire |
11.9 |
|
2. |
Zimbabwe |
14.2 |
|
3. |
São Tomé and Príncipe |
16.7 |
|
4. |
Niger |
17.1 |
|
5. |
Sierra Leone |
18.3 |
|
6. |
Equatorial Guinea |
19.0 |
|
7. |
Angola |
19.5 |
|
8. |
Ethiopia |
21.3 |
|
9. |
Uganda |
21.5 |
|
10. |
Chad |
21.6 |
