The Bank of Ghana (BoG) has urged commercial banks to lower lending ratesthe performance of the country’s macroeconomic indicators, such as inflation, continues to improve in performance.
Elsie Addo Awadzi, BoG’s Second Deputy Governor, claims that from the year’s commencement, inflation has steadily decreased to 41.2%, signaling signs of progress in the economy.
The Deputy Governor was speaking at the launch of a collaboration between Absa Bank and Mastercard Foundation to provide loans to small-scale businesses at 10%.
Mrs. Awadzi, therefore, encouraged the banks to lend more to the private sector to boost growth as the sector has become more liquid and resilient to the storm of economic challenges.
“As the economy picks up and there is a signal of improvement in the macro economy, we expect things to get better. Moments ago before I got here, inflation has dropped to 41.2% for April [2023], from the about 50% some months ago.
“We as a regulator and at the Monetary Policy Committee project that things will improve. The inflation rate will drop further and lending rates will come down. I, therefore, encouraged you all as banks to emulate Absa Bank and bring the lending rates down further.”
Elsie Addo Awadzi
Furthermore, she noted that the Small and Micro Enterprises (SME’s) are the backbone of the economy, adding that “especially with the Africa Continental Free Trade Agreement onboard, I want to see more lending to the sector at lower rates so that these Ghanaian businesses can be very competitive”.
Rossy Fynn, the Mastercard Foundation’s country manager, took advantage of the occassion to announce plans by the foundation to launch innovative products to benefit small businesses, particularly those pursuing sustainable and green initiatives.
More so, the Managing Director for Absa Bank, Mrs. Abena Osei Opoku assured that the bank will remain the best choice for SME lending.
Mrs. Osei also indicated that the plan for the SME loan at 10% is to reach out to more than 5,000 small businesses and make them investor ready.
The Absa SME loan, she stated, is a low rate special offer at 10% for women-owned businesses and SMEs.
Inflation Declines in April 2023 to 41.2%
Year-on-year inflation has declined for the 4th month running to 41.2% in April 2023, from 45% in March 2023, extending the disinflation process since January 2023.
According to the Ghana Statistical Service, both food inflation and non-food inflation decreased last month.
This slump in inflation could compel the Bank of Ghana to keep its policy rate unchanged at 29.5% when the Monetary Policy Committee begins its 112th Meeting on May 17, 2023.
According to the figures, food inflation went down to 48.7% in April 2023, from 50.8% in March 2023, whilst non-food-inflation declined to 35.4% in April 2023, from 40.6% in March 2023.
Also, inflation for locally produced items stood at 38.2%, whereas inflation for imported items was 43.1%.
Inflation rates above the national average were reported by five groups. Housing, Water, Electricity, Gas, and Other Fuels made up 59.0% of this category, followed by Furniture, Household Equipment, and Routine Household Maintenance (56.3%), Food, and Non-Alcoholic Beverages (48.7%), Personal Care, Social Protections, and Other Goods and Services (48.5%), and Transportation (42.5%).
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