A lecturer from the Business School of the Kwame Nkrumah University of Science and Technology, Mr. Gordon Newlove Asamoah, has reinforced appeals by the President, John Evans Mills for banks to reduce interest rates.
Mr. Asamoah said some bank rates which could be as high as 30% will prevent investors from coming into the country. He cited an example of desired rates such as that of neighbouring Cote d’Ivoire that has as low as 9% agricultural loans in contrast to that of Ghana.
The lecturer who was speaking to Atta Kusi Adusei, the host of ‘Community Watch’ on Focus FM in an interview Thursday, declared that “as inflation comes down the central bank keeps reducing the prime rate so it should reflect in the interest rates that banks charge. However this is not the case and that is not helping the industries in the country”. He spoke on factors affecting prime rates and how banks can achieve the proposal of the president.
“There is no government policy to compel banks to reduce rates so the only option is competition. This is also not working because numerous banks have decided to keep rates at a certain level. Government can only appeal to their conscience,” he said. Mr Gordon Newlove Asamoah thought banks were charging too high in relation to the prime rate which has fallen to 13.5%. Bank rates of 30% will make borrowing very expensive,” he lamented.
Answering a question on how low he thinks rates should be reduced, he responded by saying as low as 20% because with the prime rate at 13.5%, banks can still have a margin of approximately 7%.
He advised banks to find more innovative ways of generating income for their services and not necessarily charge high interest rates.
It was earlier reported Tuesday July 20 that President Mills has called on commercial banks to reduce current high rates to reflect current economic trends in the country.
Source: David Apinga/Focus FM