Banking consultant, Nana Otuo Acheampong, has criticized the Bank of Ghana over the country’s high average lending rate which is hovering around 33 percent.
According to him, it is imperative for the central bank to roll out measures to help ease pressures on the economy and businesses.
Speaking to Citi Business News, , Nana Otuo Acheampong who is also the Head of the Osei Tutu II Centre for Executive Education and Research said the situation is disturbing to businesses since it contrains their expansion
“This calls for some form of intervention from the managers of the economy because we haven’t got it right at the moment,” he said.
He stated that “the more people get employed then government can have its revenues increase in the form of taxes”.
“If businesses are doing well they will definitely pay taxes on their income but if they are not doing well and they are closing down then the country will lose and reduce its income from taxes,” he said.
His comments comes after the Governor of the Bank of Ghana, Dr. Abdul Nashir Issahaku described as worrying the country’s current average lending rate which is hovering around 33 percent.
Dr. Issahaku explained that the country must take the bitter pill now to help stabilize the economy.
But responding to the governor’s view, Nana Otuo Acheampong described the assertion as not good enough.
“We have been swallowing the pill for far too long and sometimes if you keep swallowing the same bitter pill at the end you may not survive. Right now the situation is so dire such that some intervention is required to ease the pressure on businesses so that they can create employment,” he stressed.
He argued that the high unemployment rate in the country can only be linked to the difficult conditions that businesses are reeling under.
“I think we need to look at things again see how we can bring in some interventions which will cause businesses to be able to create employment in the system” he stressed.
The Monetary Policy Committee of the Bank of Ghana on Monday, kept the policy rate unchanged for the fifth consecutive time since it was last increased in November 2015.
Addressing the media at the 72nd meeting of the MPC, Dr. Issahaku attributed the decision to the stability in inflation for the period.
BoG data on lending rates
Latest macroeconomic and financial data from the BoG showed that the average lending rates in the country reached an all time high of 33 percent as at the end of August 2016 compared to the 27.9 percent recorded in the same period in August 2015.
Most banks are now cutting back on lending to customers due to the rise in Non Performing Loans (NPL).
NPL on the books of these banks is currently at 19.2 percent as at July 2016 compared to year on year which is 13.0 percent at the same period in 2015.
Total loans which were given out by banks in the month of July 2016 was also 17.2 (32.2 billion cedis) percent dropping hugely from the 25.6 percent record in July 2015 (29.1 billion cedis).
By: Norvan Acquah – Hayford/citibusinessnews.com/Ghana