Banks in Ghana must reduce their lending rates as part of their support for Small and Medium-scale Enterprises (SMEs), Deputy Trade and Industry Minister, Carlos Kingsley Ahenkorah, has said.

According to him, high lending rates are scaring SMEs from going for loans to expand their businesses, a situation he said is affecting the economy.

Speaking at the GEOP Business Forum jointly organised by the National Board for Small Scale Industries (NBSSI), the European Union (EU) and Christian Aid in Accra, he said the cost of credit—despite the significant drop in the policy rate of the central bank—is impeding the growth of informal sector businesses.

“Today, we find a lot of people looking for work rather than venturing into entrepreneurship; it is because people will not want to go and borrow at 25 percent when they cannot make even 15 percent profit on whatever business they used the money for.

“If you consider the fact that the central bank has a rate of 15 percent and banks are still lending at around 26 percent, you wonder how SMEs can manage their business and make profits or increase their revenue commitments to government.

“It stands to reason that if the banks want to assist and support the local economy, then they need to think through and see how they can bring down lending rates to make them affordable for SMEs,” he told journalists.