Mrs Elsie Addo Awadzi, Second Deputy Governor of the Bank of Ghana (BoG), has expressed her reservation about the high spate of lending rates that commercial banks in the country continue to charge businesses in the country.
According to the Second Deputy Governor, commercial banks are impeding the sustainability of businesses in the country because of the overly high charges and interest rates heaped on their customers which deplete their profits.
“We remain concerned about the relatively high lending rates that banks continue to charge their customers. This spreads over and above the Ghana Reference rates and very high fees, commissions and other costs imposed on customers which excludes many small and medium-sized businesses out of the credit market and by extension impedes their survival and growth.”
Mrs Elsie Addo Awadzi
Mrs Elsie Addo Awadzi bemoaned the situation, noting that the nation is losing the opportunity to carve a niche to be able to compete with other countries.
“As a nation, we lose significant opportunities to grow strong viable brands that can compete with businesses across the African market and beyond, if we do not provide mechanisms for financing our small businesses on a consistent and sustainable basis.”
Mrs Elsie Addo Awadzi
To this end, the Second Deputy Governor said she expects banks to significantly increase credit to the private sector, and at reasonable and affordable interest rates.
“We expect banks to continue in their efforts to support a strong recovery of the Ghanaian economy. As a result, we expect banks to significantly increase credit to the private sector, and to reasonable and affordable interest rates.”
Mrs Elsie Addo Awadzi
Mrs Addo Awadzie noted that Ghana’s banking sector remains one of the most attractive on the continent for investors. She explained that the presence of pan-African banks like First Bank Nigeria and international banks in Ghana is a testimony to that.
Performance of the Banking Sector Amidst the Pandemic
The BoG Deputy Governor opined that the banking sector is stable, profitable, and resilient, supported by an enabling macroeconomic framework, regulatory and supervisory reforms that have promoted resilience, good corporate governance, effective risk management, and innovation in the industry.
“Thanks to necessary and difficult reforms undertaken by the Bank of Ghana in recent years, and policy and regulatory reliefs announced at the onset of the COVID-19 pandemic, our banking sector was well-positioned to withstand the economic shock fairly well.”
Mrs Elsie Addo Awadzi
Among other things, she added that banks have played a critical role of helping to mute the effects of the pandemic on the real sector by restructuring loans and suspending loan repayments for customers who were negatively impacted by the pandemic.
She disclosed that Banks provided new loans in the total amount of GHC 27,850,500,963.01 from March to December 2020 to sectors of the economy like the pharmaceuticals industry, the textiles and garments industry, that were critical in helping to fight the pandemic, and helped to accelerate the recovery of the economy from the initial downturn and to support corporates and households in a number of value chains.
“The banking sector’s performance in 2021 to date has remained strong with sustained growth in total assets, deposits, loans, investments, and income, although credit risk remains a concern which the Bank of Ghana continues to monitor closely as the pandemic rages on.”
Mrs Elsie Addo Awadzi
The Bank of Ghana’s call came on the back of an incessant complaints by customers of banks over the high interest rates and exorbitant charges, which is a turn off to many individuals and a blockade to businesses in the country. These actions by commercial banks, in the hindsight, is making many businesses to struggle for survival, and some folding up in the process.
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