Can you guess which is the most manipulated currency in Africa?
Before continuing, try to guess
which currency is most manipulated
how much your home currency is manipulated
I was curious so I found the black-market rate (that is, the real rate) for major African currencies. See below the spread (“manipulation”) between the official and black market exchange rate with USD:
Ethiopean Birr ETB: 119.6, 110% off the official rate
Egyptian Pound EGP: 64.4, 108%
Mozambican Metical MZN: 75.0, 18%
Tanzanian Shilling TZS: 2,766, 9.1%
Nigerian Naira NGN: 1,628, 7.3%
Rwandan Franc RWF: 1335, 5.2%
South African Rand ZAR: 19.6, 3.4%
Zambian Kwacha ZMW: 27.05, 3%
Ghanaian Cedi GHS: 12.6, 1.4%
Ugandan Shilling UGX: 3,899, 1%
Kenyan Shilling KES: 144.04, 0.4%
In layman’s terms, this means that if the Ethiopian government says your money will buy 2.1 bags of sugar it will only buy 1 bag.
This is a major problem and essentially an “own goal” by African governments. GSK, Bayer and Sanofi have exited Nigeria due to currency manipulation. This manipulation is clearly evident from the graph of the exchange rate; no natural market is flat for 5 years and then jumps suddenly:
This manipulation by African governments gained personal meaning for me last year. A funder who had spent 15 months saying they are going to invest $800,000 suddenly said they will disburse the $800,000 investment…in Mozambican Metical…At the “official” rate. $800k in MZN is worth only $630k at best. And even then we’d have to go through a cryptocurrency exchange which adds new risks. This “impact” funder is jeopardizing the project and the livelihoods of 1,800 smallholder farmers.
Don’t play games with farmers. It’s gross.
In April 2023 I asked, when will Africa get the Green Revolution? Well, this is part of the answer. The countries with the least currency manipulation are most likely to retain talent and capital.
Updated content here: https://x.com/thegrantdotco/status/1775097853653721338?s=20