1. Which Policies Can Reduce the Cost of Capital in Southern Africa?
- Author:
- Martin Grandes and Nicolas Pinaud
- Publication Date:
- 09-2004
- Content Type:
- Policy Brief
- Institution:
- The Organisation for Economic Co-operation and Development
- Abstract:
- Lowering interest rates and, thus, the cost of borrowing in the rand zone (Lesotho, Namibia, Swaziland and South Africa) is a priority to promote investment and economic growth. Local-currency interest rates in these countries are driven by those on rand-denominated transactions. Reducing the level and volatility of the rand premium would help reduce financing costs in the region. Policies should promote: enhancing financial-market liquidity; easier access to South African financial markets for African entities; domestic saving capacity; and the improvement of international perception of the rand. Johannesburg could become a financial "hub" for the region, channelling cheap resources to its neighbours.
- Topic:
- Economics, Government, and International Trade and Finance
- Political Geography:
- Africa, South Africa, Swaziland, and Namibia