Ghana: President Urges Financial Institutions to Provide Affordable Long-Term Credit

President Nana Akufo-Addo has called on banks and financial institutions to collaborate with the government in supporting the local economy and businesses by offering affordable long-term credit. Speaking at the GCB Bank PLC’s Platinum Anniversary Gala and Awards Night in Accra, the President emphasized the need for banks to play a pivotal role in providing accessible financing to businesses, addressing the challenges posed by high-interest rates.

Highlighting the primary obstacle faced by local businesses, President Akufo-Addo underscored the importance of affordable long-term capital for sustained investments that contribute to economic sustainability. He urged banks to explore innovative strategies to reduce lending costs, ensuring that businesses can access credit on terms comparable to neighboring countries and other continental competitors.

Acknowledging the economic challenges businesses currently face, including limited cash flow, increased operational costs, and constrained access to capital, the President urged financial institutions to actively contribute to overcoming these hurdles. By providing cost-effective credit solutions tailored to the unique financial circumstances of businesses, banks can play a crucial role in fostering a conducive environment for economic growth.

While reiterating the government’s commitment to creating an enabling business environment, President Akufo-Addo emphasized that affordable credit access empowers the private sector to drive economic growth. He expressed concern about borrowing costs exceeding 30%, comparing unfavorably with regional peers such as Ivory Coast, Nigeria, South Africa, Rwanda, and Togo. The President asserted that the current lending rates act as a disincentive to businesses.

Recognizing the essential role played by small and medium-scale enterprises (SMEs) and large enterprises in nation-building, the President reiterated the government’s dedication to fostering an enabling environment for businesses to thrive. He emphasized the pivotal role financial institutions play in achieving this objective and envisioned a collaborative effort between the government and banks to nurture a resilient business ecosystem, promoting economic growth for a prosperous future.

In response to the President’s plea, Kofi Adomakoh, the Managing Director of GCB Bank, acknowledged Ghana’s high lending rates on the continent. However, he explained that lending rates are influenced by various factors beyond the banks’ control. Adomakoh expressed confidence that with the government addressing external factors, lower lending rates could be achieved in the future. He affirmed the bank’s commitment to lending to businesses at lower rates as macroeconomic factors evolve.

Affordable credit options are expected to empower businesses, enabling them to invest in infrastructure, research and development, human resources, and technology, thereby driving economic growth and creating employment opportunities.