Reduce lending rates – President urges banks, financial institutions

President Akufo-Addo at the unveiling ceremony of the new Standard Chartered HQ

President Akufo-Addo at the unveiling ceremony of the new Standard Chartered HQ

President Nana Addo Dankwa Akufo-Addo has made an urgent call on banks and financial institutions to reduce their lending rates to businesses and individuals.

 

According to the President, despite sustained efforts by the government to create a conducive environment for the financial sector to thrive, banks were still charging exorbitant interest rates.

 

President Akufo-Addo said the last 21 months had witnessed a decline in inflation, from 15.4 per cent in 2016 to 11.8 per cent in December 2017, and, now, at the end of August 2018, to 9.9 per cent.

 

The Monetary Policy Rate, he added, had also fallen from 25.5 per cent in 2016 and now stood at 17 per cent, with the 91-day Treasury Bill rate also dropping significantly.

 

That, notwithstanding, he said bank lending rates remained high and stressed the need for banks to respond to the government’s fiscal and monetary policy interventions by lowering their rates to businesses.

 

“If we are ready to give an impetus to the private sector to lead the socio-economic transformation of our country, lending rates must come down, and they must come down urgently” he said at the inauguration of Standard Chartered Bank Head Office building at Ring Road Central in Accra yesterday.

 

He said though private sector lending had improved from GH¢28.9 billion as of November 2016 to GH¢34.4 billion as of June 2018, the current average banking lending rate of 27.5 per cent was strangulating the private sector.

 

 

“The gap between declining inflation rates, and the Bank of Ghana’s Monetary Policy Rate, and the lending rates being charged by commercial banks, is a gap we have to bridge.

 

“If we are to give substantial complement to the vision that we all share of a Ghana with a globally competitive economy, my challenge to banks in the country is to complement the efforts of Government to maintain fiscal discipline, by bringing down lending rates.”

 

“When banks do not become mere profit-making enterprises, but see themselves as active partners with government to build a healthy and stronger economy, then we would be making significant progress.”

 

“If Ghana’s economy is to thrive and work for every citizen, then it should be relatively straight-forward, for example, for anyone, who has an innovative and viable idea, to be able to access lines of credit and bring that idea into fruition” he said.

 

 

President Akufo-Addo said Cabinet was working on a National Financial Inclusion and Development Strategy (NFIDS) which, when implemented, would help increase the penetration of financial services from 58 per cent in 2013 to 85 per cent by 2023.

 

“Government is working with financial institutions and regulators to promote digital finance, mobile money usage, and formalise the Ghanaian economy.”

 

 

“Already, mobile money penetration in Ghana is the second in Africa, and, with reforms to our payment system, we anticipate that Ghana will have a strong competitive edge in the region for financial innovation and access to credit” he said.

 

 

The President added that the introduction of the mobile money interoperability platform, launched in May this year, resulted in GH¢12.5 million worth of transactions within the first month alone.

 

 

Currently, he said mobile money transactions were worth GH¢155.8 billion, up from GH¢78.5 billion in December 2016, representing an increase of 98.5 per cent.

 

 

He said the government’s goal was to move the country’s payment systems from being a pre-dominantly cash-based to an electronic system.

BY YAW KYEI

 

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