The President of the Ghana Chamber of Commerce & Industry, Seth Adjei Baah, has said the Bank of Ghana has failed in its role as a regulator to check the soaring and exorbitant interest rates in the country.

In an interview with B&FT, the head of the chamber said that the high interest rates in the country should be attributed to the central bank’s failure to live up to businesses expectations.

He said that unwillingness on the part of banks to release loans to private businesses results from persistent borrowing by government.

“Government is borrowing from banks at a comfortable rate without risks, so the banks will want to lend to government and sell the reserves to the savings and loans companies -- because the bank is also a business entity and would like to make profit,” he said.

The comments by the Chamber of Commerce president come in the wake of persistent advocacy by the Trade Ministry to force down interest rates in the country, which currently hover around 35 percent.

Mr. Adjei Baah said the situation has stifled growth of Small and Medium Scale Enterprises (SMEs) in the country.

“The savings and loans companies are providing credit at 5 or 6 percent monthly, taking you to 60 or 72 percent per annum respectively. About 85 percent of our business population are operating within the SMEs, and most of those are taking money from the savings and loans companies. How do they develop their businesses, make profit and become a giant business with these rates?” he asked.

He further stated that the private sector creates about 95 percent of jobs in the country, and if measures are not taken to curb the perennial situation prospects of private investors will be shattered.

“We are told that government employs 600,000 people in the country. This means the rest of the working population is employed by the private sector. So it is important to develop the private sector to be able to do more for this country. Ghana is among the countries with the highest interest rates,” he added.

The president of the chamber further stated that the ‘Made in Ghana’ campaign, being promoted by government to encourage the production and consumption of locally made products, will not work unless due attention is given to the situation.

“Industries cannot thrive under this condition where cost of borrowing has become too high. Because of the high cost of borrowing, you cannot produce and sell at competitive prices to get your share of the market. That is why a lot of people just do buying and selling. So with a system like this in the country, how do we talk about buy made in Ghana goods? Where are the goods?

“So if we are talking about made in Ghana goods and we are not able to get the goods out there to the market, then what is the essence of it? We need to get the goods out there in the right quantity and at the right price. We can only get it this way when we are borrowing at the right rates,” he said.

Meanwhile Economist and investment consultant Kwame Pianim says the Ministry of Trade and Industry’s campaign against high cost of credit will fail as long as it is not directed at the key factors, such as weak management of the economy.

The renowned economist, speaking at a forum organised by the Trade Ministry and the Institute of Economic Affairs (IEA) on the implications of high cost of credit on the country’s economy, said the high interest rates reflect a multiplicity of factors.

“The elephant in the room is the bad macroeconomic management that we have had for so long…High cost of credit is bad economic management, it’s bad for growth; it leads to exchange rate depreciation,” he said

“Get steady macroeconomic management, good fiscals, so that government can contribute to domestic savings; so that the cost of credit can come down,” Mr. Pianim told the Forum, which was attended by bankers, businessmen, policymakers among others.