The cost of doing business in Ghana is getting increasingly high according the Ghana Employers Association (GEA). The major factor cited is the current high lending rates of the banks that make cost of credit very high and almost inaccessible. Another factor is the continuously depreciating rate of the Cedi against the US Dollar. This view was expressed by the former GEA Chief Executive Mr. Alex Frimpong in an interview during the 58th Annual General Meeting of the GEA.
The association pleaded with the government and the banks to consider further reduction of the policy rates to ease the cost of lending and access to finance.
It may be recalled that the policy rate has declined by 33.3% from 25.5% in January 2017 to 17% September 2018. This could have been enough to have accordingly reduced the lending rate of banks but lending rate have only reduced by 18.5% from 32% in January 2017 to 27% in September 2018. At a lending rate of 27% businesses would actually be borrowing at rates between 28% and 32% depending on how their risks are assessed. Coupled with the two other factors is the fact that fuel prices have skyrocketed in recent months.
However, Mr Carlos Ahenkora, Deputy Minister of Trade, assured the association that the government is looking at initiatives to ease the cost of doing business.