Ghana's Cedi: World's best-performing currency rises 50%

Author

Isaac Osei-Kissi
August 14, 2025

 

Weekly African Market Insights

14th August 2025

Executive Summary

Africa's economic growth is projected to accelerate from 3.3% in 2024 to 3.9% in 2025, with twenty-one countries expected to exceed 5% growth rates[1] . Foreign direct investment patterns show mixed signals with regional variations, while Ghana's currency emerges as the world's best-performing currency in 2025 with nearly 50% appreciation against the US dollar[21] . Stock markets across the continent continue their robust performance, led by Nigeria, Ghana, and Malawi, signaling renewed investor confidence in African equities.

Economic Indicators and Growth Trajectories

African economies are demonstrating notable resilience despite mounting geopolitical uncertainties and trade tensions. The African Development Bank's flagship 2025 African Economic Outlook projects economic growth acceleration to 3.9% in 2025 and 4% in 2026, surpassing global averages and outpacing most regions except emerging and developing Asia[1] . This growth trajectory reflects effective domestic reforms and improved macroeconomic management across the continent.

Regional growth patterns reveal significant variations in economic performance. East Africa leads continental growth projections with an anticipated 5.9% expansion in 2025-2026, driven primarily by resilience in Ethiopia, Rwanda, and Tanzania[1] . West Africa maintains solid momentum with 4.3% projected growth, supported by new oil and gas production coming onstream in Senegal and Niger[1] . Ethiopia's economy specifically is projected to grow by 7.2% in 2025, supported by Ethiopian Airlines fleet expansion, agricultural output increases, and the launch of the Tulu Kapi gold and copper mine in Oromia[4] .

Inflation dynamics across the continent present a mixed picture. South Africa's annual inflation rate rose to 3% in June 2025, representing the highest level in four months, driven primarily by higher food and beverage prices[17] . The South African Reserve Bank responded by reducing its key interest rate by 25 basis points to 7% in July 2025, the lowest level since November 2022, amid concerns over global trade tensions and to support the fragile economy[28] . Conversely, Ghana's inflation fell to 12.1% in July, contributing to the Bank of Ghana's 300 basis point rate cut and supporting the currency's exceptional performance[7] .

Foreign Direct Investment Dynamics

Foreign direct investment flows to Africa present a complex picture of challenges and opportunities. The continent experienced its sharpest FDI decline in years during Q1 2025, with Africa's global share of opened greenfield FDI projects falling from 3.8% in 2024 to 3%[2] . Global capital expenditure invested in open greenfield FDI projects in Africa dropped significantly from $17 billion in 2021 to $6 billion in 2025[2] .

Despite these challenges, specific countries continue to attract substantial investment. Egypt leads continental FDI inflows with approximately $9.8 billion, leveraging its strategic position bridging Africa and Asia, along with significant economic reforms including infrastructure modernization and special economic zone development[5] . South Africa follows with $5.2 billion in FDI, benefiting from its diversified economic base, sophisticated financial sector, and recent government initiatives to streamline business processes[5] .

The implementation of the African Continental Free Trade Area (AfCFTA) continues to progress, with nearly 50 nations ratifying the agreement in January 2025, moving closer to establishing a single market for all 54 African countries[2] . The AfCFTA Investment Protocol, adopted in 2023, is expected to reignite investor interest by promoting intra-African investment, streamlining regulations, and advancing regional economic integration[5] .

Currency and Financial Markets Performance

African currency markets have witnessed remarkable developments, particularly Ghana's extraordinary performance. The Ghanaian Cedi has appreciated nearly 50% against the US dollar in 2025, becoming the world's best-performing currency this year[21] . This exceptional performance reflects successful monetary policy implementation and improved macroeconomic fundamentals.

Stock market performance across Africa continues to demonstrate strong momentum. Nigeria's NGX All-Share Index advanced 3.18% weekly, maintaining year-to-date gains of 41.61%, driven by insurance companies and major conglomerates including BUA Foods and Dangote Cement[7] . Ghana's GSE-CI surged 5.60%, extending its year-to-date lead to 51.10% in local currency and 94.55% in USD terms[7] . Malawi's MSE ASI leads global performance with an exceptional 147.35% year-to-date gain[7] .

The broader African market landscape shows sustained investor interest. Kenya's NSE advanced 1.41% with year-to-date gains of 30.54%, while Egypt rose 4.71% with 20.41% year-to-date returns[7] . These performances reflect improving economic fundamentals, corporate earnings growth, and increasing foreign investor participation in African capital markets.

Sectoral Innovation and Investment Opportunities

The financial technology sector continues to demonstrate African innovation leadership on the global stage. Ten African fintech companies have been included in the 2025 list of the world's 300 leading fintech firms compiled by CNBC and Statista[11] . This recognition comes despite a 20% global decline in fintech investments to $95.6 billion in 2024. Notable performers include OPay from Nigeria, serving over 60 million users and recently valued close to $3 billion[11] .

African fintech innovation spans multiple categories including digital payments, digital assets, enterprise fintech, insurtech, wealth technology, neobanking, and alternative financing[11] . Companies like M-Kopa, serving 5 million underbanked Africans through flexible digital micropayments for smartphones and productive assets, demonstrate the sector's capacity to address fundamental market needs[13] . The mobility fintech Moove, valued at $750 million with $115 million in annual revenue, provides vehicle financing to over 20,000 ride-hailing and delivery drivers across four continents[13] .

Renewable energy development presents substantial opportunities across the continent. The International Renewable Energy Agency (IRENA) has issued an open call for African renewable energy project proposals, with submissions required by August 31, 2025[12] . This initiative, anticipating the 2nd African Project and Renewable Energy Access Investment Forum in Freetown, Sierra Leone, seeks to connect high-impact clean energy projects with prospective funders[12] .

Mining sector investments continue to attract significant attention, particularly in critical minerals essential for global energy transition. Zambia has launched strategic initiatives in 2025 to accelerate copper drilling and meet its target of producing 3.1 million tons per annum by 2031[10] . The country introduced the Zambia Integrated Mining Information System in February 2025 and recorded a 79% increase in mining licenses granted in 2024 compared to 2023[10] .

Infrastructure Development and Regional Integration

Infrastructure financing remains a critical continental priority, with Africa facing an annual infrastructure financing gap exceeding $100 billion[27] . The upcoming Luanda Infrastructure Financing Summit, scheduled for October 28-31, 2025, under the African Union chairmanship of Angola, aims to unlock investments supporting the African Union's Agenda 2063 infrastructure aspirations[27] . The Programme for Infrastructure Development in Africa (PIDA) alone requires $16 billion annually to deliver transformative, cross-border projects by 2030[27] .

The Continental Power Systems Master Plan requires $1.3 trillion to implement an African Single Electricity Market by 2040[27] . Strategic corridors including the Lobito Corridor, LAPSSET, and the Dakar-Bamako-Djibouti route will feature as integrated models combining infrastructure, trade, and industrial development[27] . These initiatives target universal energy access for the more than 600 million Africans currently without electricity[27] .

Regional economic integration continues to advance through the AfCFTA implementation. Economic Commission for Africa projections indicate that meticulous AfCFTA implementation by 2045 could enable the continent to increase GDP by $141 billion and intra-African trade by $276 billion (+45%)[8] . Key recommendations include full tariff reduction implementation, elimination of non-tariff barriers, development of robust regional value chains in agro-processing, automotive, pharmaceuticals, and renewable energy sectors[8] .

Investment Opportunity Spotlight

Critical Minerals and Energy Transition Materials: The Democratic Republic of Congo's cobalt market presents exceptional opportunities given the country's 70% global cobalt dominance and rising demand from electric vehicle production[25] . World Bank projections indicate global cobalt consumption could increase to 344,000 tons in 2030, representing 9.6% annual growth[25] . NIU Invest SE's recent acquisition of a 60.34% controlling stake in Critical Metals PLC, which holds a 70% interest in the Molulu Project in DRC, exemplifies strategic positioning in this sector[24] .

Digital Financial Services Expansion: African fintech companies continue demonstrating exceptional growth potential and global competitiveness. The sector claimed nearly half of all startup investments in Africa in 2024 and welcomed two new unicorns: Moniepoint and TymeBank[13] . Companies focusing on cross-border payments, digital lending, and financial inclusion represent particularly attractive investment opportunities given Africa's large unbanked population and rapid mobile adoption rates.

Forward-Looking Perspective

Short-term market dynamics suggest continued positive momentum across multiple African markets, supported by improving macroeconomic fundamentals and policy reforms. The implementation of various regional integration initiatives, particularly AfCFTA protocols, is expected to enhance intra-African trade and investment flows throughout 2025. Currency stability improvements, particularly in Ghana, and interest rate adjustments in major economies like South Africa should support continued foreign investment attraction.

Infrastructure financing initiatives, particularly the Luanda Summit outcomes, may catalyze significant capital commitments for continental development projects. The renewable energy sector presents substantial growth opportunities, supported by international climate financing commitments and technological advancement. Mining sector expansion, particularly in critical minerals essential for global energy transition, offers strategic investment opportunities for long-term portfolio positioning.

Potential risks include global economic uncertainties, geopolitical tensions affecting commodity prices, and implementation challenges for regional integration initiatives. However, Africa's demographic dividend, natural resource endowments, and improving governance frameworks position the continent favorably for sustained economic growth and investment attraction throughout the remainder of 2025 and beyond.

Sources & References

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Disclaimer: This report is for informational purposes only. Always conduct independent research and consult financial advisors before making investment decisions.