BoG instructs commercial banks to increase credit base and lend to private sector
Economic news for Monday, November 1, 2021
â¢ Loans to the private sector are essential to stimulate economic growth
â¢ The cost of credit has been high
â¢ Ghana’s banking sector remained strong in 2021
The Bank of Ghana’s second deputy governor, Elsie Addo Awadzi, has instructed banks to dramatically increase their credit base to lend to the private sector.
According to her, banks must ensure that they offer affordable interest rates to their customers.
Speaking at the 25th First National Bank Gala Dinner, the Second Vice Governor said: âWe [Bank of Ghana] remain concerned about the relatively high loan rates that banks continue to charge their customers, with spreads above the Ghana benchmark rate and very high fees, commissions and other costs being imposed on customers, resulting in the exclusion of many small and medium enterprises in the credit market and, by extension, hinders their survival and growth.
âAs a nation, we are losing important opportunities to develop strong and viable brands that can compete with businesses in the African market and beyond if we do not provide mechanisms to fund our small businesses on a consistent basis and sustainable, âshe added.
Elsie Addo Awadzi reiterated that Ghana’s banking sector in 2021 has remained strong to date with sustained growth in total assets, deposits, loans, investments and income, although credit risk remains a concern.
The central bank said, however, that it was continuing to closely monitor the raging pandemic.
“We expect banks to continue their efforts to support a strong recovery in the Ghanaian economy,” she added.