By Maxwell Ofori .
The President, Nana Addo Dankwa Akufo-Addo, has directed banks in the country to reduce their lending rates to complement efforts being made by the government to sanitise the sector.
According to President Akufo-Addo, the decline in inflation, the monetary policy rate and others were good reasons for lending rates to be reduced.
President Akufo-Addo was speaking at the official opening of the new head office complex for the Standard Chartered Bank, situated in Accra.
Before concluding his speech, President Akufo-Addo said: “I want to make an appeal, not only to Standard Chartered Bank, but also to all banks in the country.
“These last 21 months have witnessed a decline in inflation, from 15.4% in 2016 to 11.8% in December 2017, and, now, at the end of August 2018, to 9.9%. The Monetary Policy Rate has also fallen from 25.5% in 2016, and now stands at 17%. The 91-day Treasury Bill rate has come down from 17% in 2016, and now stands at 13.3%. Nevertheless, bank lending rates still remain high.
“The gap between declining inflation rates and the Bank of Ghana’s Monetary Policy Rate, and the lending rates being charged by commercial banks, is a gap we have to bridge. If we are to give substantial complement to the vision that we all share of a Ghana with a globally competitive economy, my challenge to banks in the country is to complement the efforts of government to maintain fiscal discipline, by bringing down lending rates.
“Though private sector lending has improved from GH¢28.9 billion as of November 2016 to GH¢34.4 billion as of June 2018, the current average banking lending rate of 27.5% is strangulating our private sector. As Mr. President’s bank, it would be great if Standard Chartered would take the lead in rate reductions,” he remarked.
President Akufo-Addo, juxtaposing the recent consolidation of same banks to the strengthening of the economic sector, said the rationalisation and clean-up were necessary to safeguard the health and strength of the economy.
He further reiterated that those responsible for the sequence of activities that led to the “crisis” will face the full brunt of the law, if they are found to have broken the law, and suffer all the consequences prescribed by law.
The President is optimistic the financial sector development project embarked upon will help ensure the creation of a more robust financial and banking architecture to mitigate abuses by industry players.
Under the project, the government, the President said, would, in the next three years, undertake intensive consumer education and strengthen consumer protection guidelines.
The government would also establish a Financial Stability Council, which will create a robust crisis preparedness framework to deal with failing financial institutions.
Again, the government would work with regulators to institute a Financial Services Data Centre to support the work of the Stability Council, “and strengthen regulation for the operation of microfinance institutions and rural and community banks,” the President asserted.
Over the last 21 months, the period of stay of the Akufo-Addo government in office, it has made it clear that a vibrant financial and banking sector was at the heart of efforts to ensure growth of the economy, and the delivery of good-paying jobs for the citizenry.
“If we are to put this country onto a path of progress and prosperity, and, thereby, guarantee our future, the private sector and, indeed, citizens, will have to own the economy and be its main driving force.”
However, President Akufo-Addo believed the role of banks, to this end, was critical.
According to him, when banks do not become mere profit-making enterprises, but see themselves as active partners with government to build a healthy and stronger economy, then both would be making significant progress.
“If Ghana’s economy is to thrive and work for every citizen, then it should be relatively straight-forward, for example, for anyone who has an innovative and viable idea to be able to access lines of credit and bring that idea into fruition.”