The Ghana National Chamber of Commerce (GNCCI) has called on government and the Central Bank to undertake an arrangement with banks in the country that will see members of the Chamber offered interest rates significantly below the banking industry’s average interest rate.
The Chamber’s call follows concerns of members being uncompetitive in conducting business under the African Continental Free Trade Area (AfCFTA) as a result of high cost of credit in the country.
“A different interest rate should be applied to Ghanaian industries to be able to produce for the AfCFTA market and still remain competitive, becuase if the cost of funding is not good enough we won’t be able to compete, so we think government and the Bank of Ghana (BoG) can come together with the banks to come out with a way of giving some support in the form of lower interest rates for businesses going to trade under the AfCFTA,” stated president of the Chamber, Frederick Amoako.
“As business entities, when we are doing well it’s the banks that benefit the most, and of course if our businesses are not doing well then their existence will not be necessary. So if they invest in us by way of giving us lower interest rates, it’s a way of telling us that they are protecting their business into the future and I think that’s key for us to look at,” he added.
Presently, the Central Bank’s policy rate which serves as the benchmark for lending in the country stands at 14.5 percent. However, the policy rate is not reflective in the interest rates charged by banks in the country.
The industry’s average lending rate as at March this year, stood at 21 percent, 6.5 percentage points higher than the benchmark policy rate.
Speaking to the media, Mr Amoako further called for the provision of stimulus packages from government for businesses that will be trading under the agreement.
According to him, this is because their counterparts in the francophone countries have been provided with stimulus packages by their governments to help them trade and remain competitive under AfCFTA.
“Government should look at giving businesses a stimulus package, because we are talking about a situation where by francophone countries are supporting their indigenous companies with some funding and form of stimulus package, which is of immense help to them” he averred.
The African Continental Free Trade Area (AfCFTA) agreement which commenced in January this year, makes the African continent the largest trade bloc in the world measured by the number of countries participating.
The pact connects 1.3 billion people across 55 countries with a combined gross domestic product (GDP) valued at $3.4 trillion. AfCFTA is expected to significantly boost African trade, particularly intra-regional trade in manufacturing, with intra-trade between member countries rising from the present 15 percent to 81 percent by 2035.
According to the World Bank, member countries of the trade pact stand to gain almost $450 billion in real income by 2035.
