The Ministry of Trade and Industry in collaboration with the Institute of Economic Affairs (IEA) will host a stakeholders’ forum in Accra to deliberate on the high cost of financial services in Ghana.
The forum which will be held today May 5, is under the theme: “The high cost of credit: implications for Ghana and the way forward” will provide a platform for the relevant stakeholders to deliberate on the causes and effects of high cost of credit in Ghana and come up with recommendations as well as effective solutions to deal with the problem.
According to the Minister of Trade and Industry, Dr. Ekwow Spio-Garbrah, the situation where between 30 – 50 percent of some companies revenues go into interest payments and bank charges is killing businesses. “There must be a way out of this if industries in Ghana are to survive to allow Ghana’s industrialization policy and national export drive to succeed,” he stressed.
“Ghana is trying to become one of the lowest cost centres in Africa for business, especially for manufacturing and industry. We also want to be ranked high as an attractive destination with regards to the cost of doing business as compared to other African countries. But these cannot be achieved if the cost of credit, whether for domestic manufacturing or for foreign businesses operating in Ghana is very high,” the Minister said.
The cost of credit in Ghana has been persistently high for the past two decades. Even as most of the world is experiencing historical low interest rates, Ghana’s rates have been very high. Interest rates in most parts of Europe and North America are currently between 0 – 5%.
The high cost of credit in Ghana is a major problem as it stifles investment and economic growth. It also increases the cost of production, which is passed on to consumers in the form of high prices of goods and services. In fact, the high cost of credit in Ghana has been consistently cited in the World Competitive Index Reports and Surveys by the Institute of Economic Affairs and Association of Ghana Industries as one of the most important obstacles to doing business in Ghana.
Some stakeholders expected to participate in this forum includes officials from the government, as both policymakers and users of credit; the banks as suppliers of credit; the Bank of Ghana as both a policy maker and regulator; representatives of industries and the business community, and civil society organizations, all as users of credit.