Rwanda ranks top in sub-Saharan Africa for access to credit financing, followed by Kenya and Zambia, according to a report by the Institute of Chartered Accountants in England and Wales (ICAEW) and Oxford Economics titled Economic Insight Africa.
According to the report, and insights from the World Bank’s Doing Business Rankings, Zambia came in second followed by Kenya, Ghana, Mauritius, Uganda, Namibia, Nigeria, South Africa, Botswana, Zimbabwe, Cote d’Ivoire, Tanzania, Ethiopia and Angola. Rwanda has implemented several reforms to improve access to credit in the past six years.
Interest rates caps
Kenya’s ranking is due to its law prohibiting banks from lending at rates higher than four percentage over the Central Bank Rate.
"The interest cap enacted in Kenya benefits customers by both keeping the rates regulated, as well as spurring greater competition among banks," said Michael Armstrong, ICAEW regional director for Middle East, Africa and South Asia.
As a whole, sub-Saharan Africa performed relatively poorly compared with other regions in terms of access to credit, with a regional average Distance to Frontier (DTF) score of 35.9.
The DTF score captures the gap between an economy’s performance and a measure of the best practice across the entire sample — with 100 being the frontier. The lower the DTF score achieved, the worse the access to credit.