The Omanhene of the New Juaben Traditional Area, Daasebre Professor Emeritus Nana Oti Boateng, has called for a stakeholder meeting between the Ministry of Finance and Economic Planning (MOFEP), the Bank of Ghana and the business community to look for ways of bringing down lending rates.

As banks lend at an average interest rate of almost 30 percent, businesses, especially SMEs, are increasingly being excluded from accessing capital to boost their operations.

“Interest rates should be reduced. Many businessmen are thinking that they are sweating just for the financial institutions and Government. After paying the interest rate, what remains? Nothing! So if you reduce the interest rate and the return to capital, and the multiplier effect is more; then of course it will be a win-win situation. So the interest rate must come down now,” he said.

“The Minister of Finance, Government and the BOG should do whatever they can to reduce interest rates so that businessmen and women in the country can readily borrow money, work with the money and get a decent return,” he added.

Nana Oti Boateng was speaking at the official opening of the Koforidua branch of First Capital Plus, FCSL, one of the largest savings and loans companies in the country.

“Any country on the developmental trend must engage and embrace banking and financial institutions. We will support FCSL in all of its lawful endeavours,” he said.

A 2013 Ghana Banking Survey by PricewaterhouseCoopers (PwC) revealed that apart from high cost of credit, banks set up to predominantly serve SMEs are now skewed toward the corporate sector.

The BoG had been on course to lower interest rates until the cedi plunged perniciously in 2012, causing the Central Bank to raise interest rates to cool off demand and stem capital flight. Since 2012, the BoG’s policy rate has been boosted by 350 basis points to 16 percent to support the cedi and control inflation.

Now, the main reason for tight interest rate policies seems to be the fiscal imbalances as a result of the large budget deficit of 12 percent of GDP last year. Because of Government’s overspending, the BoG has tried not to stoke the fires by keeping its policies tight.

Expensive credit and energy supply challenges could hold back economic growth, which remained robust at 7.9 percent in 2012, investment bank Databank has said.

The Finance Ministry is targetting a reduction in the deficit to 9 percent this year, and 6 percent in the medium-term.