Akufo-Addo denounces high interest rates

News of the Wednesday, July 31, 2019

Source: Myjoyonline.com

2019-07-31

The president, Nana Addo Dankwa Akufo-Addo, wants measures to be put in place to reduce single-digit interest rates.

He added that, despite the many advances and changes made in strengthening the banking sector, high bank lending rates remain a major problem.

For the President, however, these changes have not been sufficient at the moment "so that we can say that we have created a situation in which the financial sector can be truly autonomous and independent.

"There is a need for people involved to find out how to overcome this hurdle, because with the changes that have been made … interest rates in Ghana are still relatively high," said President Akufo-Addo.

He was speaking to a delegation from the International Finance Corporation, a division of the World Bank, who visited him at Jubilee House.

On 19 July, the Monetary Policy Committee (MPC) of the Bank of Ghana (BoG) kept its key rate unchanged at 16.00%, its lowest level in five years. This decision marks the third consecutive deduction after the unexpected cut in January.

Many companies and individuals had hoped that this would translate into the interest rates charged by banks. But that was not the case.

The summary of the economic and financial data of the central bank shows that the average loan rate of banks is currently set at 27.8% in February this year, after falling to 26.9% last December from 29, 3% recorded in February 2018.

This double-digit rate for President Akufo-Addo is not appropriate for the private sector.

He believes that World Bank and BoG officials can work together to solve the problem.

"The capacity and entrepreneurial capabilities of Ghanaians are no longer a problem, but where does the entrepreneur go for initial support of $ 50, $ 100, $ 200,000 from the bank?" Is he questioned?

In his opinion, microfinance institutions are no longer viable alternatives because they "take not only one arm and one leg, but also their arms and legs in terms of the interest rates that they impose.

"Sitting back and observing what is happening in the economy, I think it 's the most important breakthrough we can make, it' s to bring the rates down. interest at accessible levels. "