GEA urges government to bring down high cost of borrowing

Iddi Yire, GNA

Accra, Dec. 3, GNA –
Mr Adu Sarkodie, First Vice President, Ghana Employers Association (GEA), has
appealed to government to take steps to bring down the high cost of borrowing
from banks in the country.

He said currently
Ghana’s lending rate was among the highest on the African continent.

“In Nigeria the
lending rate was 15.4 per cent, Tanzania 16.3 per cent, Kenya 13 per cent,
Senegal 8.5 per cent, South Africa 13 per cent, Botswana 6.5 per cent and our
is still hovering around 24, 25 and 26 per cent. And yet we are going to open
up our borders for free trade,” he said.

“We also noted that
the lending rate is not responsive to effective monetary policy. Indeed, year
in, year out, or month after month, the Bank of Ghana will come out with the
monetary policy rate, but this is not reflected in the lending rates at all.
Indeed, we wanted to see what the budget will do to correct the anomaly.”

Mr Sarkodie said
this on Monday in Accra at Trade Union (TUC), GEA and the Association of Ghana
Industries’ (AGI) Forum on the 2020 Budget and Economic Policy Statement of the

The event was
organised by the trio organisations in collaboration with the Rosa Luxemburg
Foundation-West Africa Office-Senegal.

Mr Sarkodie urged
the government to implement strategic policies to bring down the lending rates
and ensure that the rate responds significantly to changes in the monetary
policy regime.

He said the 2020
Budget Statement did indicate a clear path to reducing the lending rates in the
short to medium-term

Quoting the Minister
of Finance during the presentation of the 2020 budget before Parliament, he
said: “Average bank lending rate” has fallen significantly from 31.7 per cent
in 2016 to 24 per cent in 2019 but we have more to do”.

Mr Sarkodie said
they have been even more worried because the records show that election year
suffers a lot of fiscal slippages, which in the end, ends up with higher
interest rates for all of them to pay.

“We are confident
that at the setting up of the Fiscal Council, we should be able stem this tide
and once and for all have thing checked,”

On the Special
Import Levy (Act 861), which was introduced in 2013 to impose a one to two per
cent levy to raise funds to stabilize the economy up to 2015, he said, “We need
to say that the tax has duly served its purpose and it has to be abolished but
to our surprise it has been renewed for another five years”.

This, he said,
implies that employers would have to contend with these tax elements for yet
another five fiscal years.

Mr Sarkodie said the
cost of electricity in Ghana was high, which translates into the high cost of
doing business in the country; stating that “Ghana does not compare favourably
with neighbouring Cote d’Ivoire and Nigeria who charge $0.13 and $0.17 cents per
kilowatt-hour, respectively for commercial consumers”.

He said the GEA
proposed that the 2020 budget implement a price discrimination policy in favour
of industrial consumers of electricity to augment production; however, the
budget did not consider this proposal.

Dr Anthony Yaw Baah,
General Secretary, TUC-Ghana, said the main goal of the current pension scheme
reform was to improve pensions; however, if there are challenges in its
implementation, then stakeholders must take a second look at it.

Dr Yaw Adu-Gyamfi,
President, AGI, urged organised labour to adopt a united front in their
dealings with government.

Mr Eugene Abraham,
an Economist, GEA, in his presentation, said the 2020 budget has created a
large degree of certainty in the economy; adding that this is good for private
sector growth and business development.

Mrs Mary Karimu,
Deputy Director, Labour Research and Policy Institute, TUC –Ghana, said the TUC
has plans underway for the establishment of a labour bank to safeguard the
welfare of the worker.


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