Ghana’s lending rates have been found to be inimical and detrimental to the growth and development of the private sector in the country.
This is according to the latest report on the State of the Ghanaian Economy and review of the Third Quarter Performance launched by the Institute of Statistical Social and Economic Research (ISSER) of the University of Ghana. The report reveals that lending rates in Ghana sit on the top as one of the highest in the Sub Region.
The Bank of Ghana at its last Monetary Policy Committee sitting announced a 200 basis points reduction in the policy rate leading to a reduction from 29% to 27%. Despite this reduction which is expected to lead to a reduction in lending rates, ISSER says the current rates are a major hindrance to the private sector.
Although the government has touted the private sector as the engine of growth, the sector due to the high cost of credit and limited access is not competitive in the sub-region.
More importantly, Small and Medium Enterprises (SMEs) with the potential to grow and expand, due to the situation, are faced with challenges and hence cannot drive economic growth to their full potential.
“Lending rates remain highest across the sub-region and do not support private sector development,” ISSER mentioned in its report.
It is, therefore, the recommendation of ISSER to the government to address this challenge so that the private sector can realise its potential to drive economic growth and development.
Much attention, ISSER says should be given to the implementation of the SME Go Initiative which seeks to partly address the lending rate challenges with easy and affordable credit.
However, the bigger goal is to ensure that policies are implemented leading to the drastic reduction in the rates in the long-term to make it competitive in the region.
