The President of the National House of Chiefs, Togbe Afede XIV, is blaming the collapse of indigenous companies on Ghana’s interest rates which have over the years, remained very high.

According to him, the high rates prevent Ghanaian companies from borrowing from the banks, which means they are not able to invest in their business and make profit.

The Monetary Policy Committee of the Bank of Ghana earlier this year reduced the Monetary Policy rate, which is the rate at which the Central Bank lends to commercial banks by 1.5 percent; from 16 to 14.5 percent.

Although some banks reduced interest rates on loans given to businesses or deferred interest payments due to the economic impact of the COVID-19 pandemic, the rate still remains a problem.

Togbe Afede XIV, speaking on Citi TV’s Point of View, said “I’ve never met anybody who disputed the fact that our interest rates have been too high. If you adjust the yields in our money markets for depreciation, the real return is still very high. Why are we doing this to ourselves? And we expect businesses to mobilize money and industrialize this country? We expect people to borrow money and risk in agriculture? It just would not happen.”

“We want to industrialize, talking about one, district, one factory, where would people get the desired capital from? Businessmen don’t come with a lot of money in their pockets that they invest. It’s a little bit of equity and a little bit of debt that goes to fund a company, but the interest rates that we have in this country make it almost impossible to do business profitably. That is why you look around and companies are collapsing. It’s hard to find Ghanaian companies that are 50 years old. But the foreign owned companies are able to borrow from abroad,” he added.

Source: Citibusinessnews.com