Ghana: Soaring interest rates sparks alarm

By Dasmani Laary
Posted on Wednesday, 6 May 2015 15:18

Ghana is said to have one of the highest lending rates in the world, a development, which has been identified, as a disincentive for the business community.

government, borrowers, banks, regulators are all partly to be blamed

Analysts project lending rate of banks in the West African country to be around 30 per cent, but that of microfinance institutions are pegged at about 70 per cent.
Ghanaian policy think tank, Institute of Economic Affairs (IEA) on Tuesday blamed commercial banks, the central bank, government as well as borrowers for the sky-rocking rates in a country desperate for investors.

According to the policy think tank, its research on the country’s high interest rates showed that that all parties involved in the sector were liable for the hikes.

But speaking at a high powered forum on high cost of credit, jointly organised by the Ghana’s Trade Ministry and the IEA, John Kwakye, an economist said all players in the industry were guilty of the development.

“I am not leaving anybody out, government, borrowers, banks, regulators are all partly to be blamed for the high rates,” he said.

“Monetary policy also contributes to the high cost of credit, interest rates are usually related to inflation so with our double digit inflation it should not surprise us that we have high interest rates.”

An economist, Kwame Pianim, faulted government, citing bad macroeconomic management over the years, as well excessive demands on governments, ahead of elections, forcing the government to overspend.

“The most important thing is to get the macroeconomic right, the rest will be put in the right direction, it is you and I who make demand on government, during election time they come to promise us, should we say no to the promises,” he asked.

Poor regulatory mechanisms instituted by Ghana’s central bank was also cited as one of the reasons for the woes, which in addition to the current power crisis in the country has forced many businesses to dismiss scores of workers.

Ghana’s Trades and Industry Ministry, in an attempt to deal with the situation, last year started a campaign to push down the rates. Elektros generatoriai ir vandens siurbliai – kataloge.

Sector minister, Ekow Spio Gabrah appealed to business operators in the country to hit the streets to get banks to trim down the soaring interest rates, but the approach was sharply criticised by bankers.

Rather, they said government needed to deal with the many causal factors, including inflation, monetary policy rate, and cut down its borrowing from local banks.

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