Businesses lament that lending rates not responsive to monetary policy rates

The Ghana Employers’ Association (GEA) says the country’s lending rate is not responsive to the Monetary Policy Rate (MPR).

The Association notes that, comparatively, Ghana’s lending rate is among the highest on the African continent; and consequently has urged Government to implement strategic policies to bring down the lending rates and ensure the rate responds significantly to changes in the MPR.

The GEA, however, observed that the recent 2020 Budget Statement did indicate a clear path to reducing the lending rates in the short to medium-term, and quotes the Minister of Finance during the presentation of the 2020 budget before Parliament: “average bank lending rate has fallen significantly from 31.7 percent in 2016 to 24 percent in 2019, but we have more to do”.

The Association also proposed that the 2020 budget implement a price discrimination policy in favour of industrial consumers of electricity to augment production, but the recent 2020 budget did not consider this proposal.

GEA in addition proposed that government outline strict policies to empower key regulatory bodies such as the Ghana Standard Authority (GSA), Food and Drugs Authority (FDA), etc. The 2020 Budget also did not consider this proposal, it lamented.

This is because over the past years the industry sector has suffered sluggish growth rates, with the growth rate in the sector decreasing substantially from 15.7% in 2017 to 10.6% in 2018.

It further declined to 8.4% as at the first quarter of 2019. The unbridled influx of substandard goods onto the Ghanaian market is one of the major reasons for this trend, the Association posits.

This in part summed up the position of the GEA at a TUC/AGI/GEA Forum on the 2020 budget and economic policy statement held this week in Accra.

Dr. Yaw Baah, TUC Secretary General, observed that budgets affect workers and employers differently, so the idea is to develop a bi-partite committee to be able to make presentations jointly by seeing if they can identify common positions; and based upon that, they can engage government within the social partnership framework.

Then their technical teams will go through and sieve-out the common factors for an engagement with government.  Basically, the TUC lauds the 2020 budget for two main reasons: one, because we are entering an election year; and secondly, this is the first budget statement after Ghana exited the IMF programme.

The TUC expressed joy that the Minister of Finance says there will be no vote-winning projects – and they will hold government accountable on that score. They also called for government to address the weak link between macroeconomic stability and the cost of living, which remains high.

The TUC is against the policy of sending nurses to Barbados, since the rural settings are in short supply of medical staff and they should be rather deployed in rural areas where medical services are inadequate.

Dr. Yaw Adu-Gyamfi, President of Association of Ghana Industries (AGI), also expressed hope that struggling manufacturing companies must be assisted to break-even. He compared China, where electricity cost is 4 cents per kilowatt/hour while in Ghana it is 15 cents. “How can they compete?” he queried.

He said industry is laying-off workers to break even, and this runs counter to creating more jobs. For instance, the set-up at the Ministry of Business Development is rather focusing on start-ups when there are struggling companies that need a capital injection. He therefore questioned the priority, even though the idea behind the ministry is a laudable one.

He lamented that there has been no expansion of local companies in the last ten years.

After concerns of the bi-partite partners have been assessed, it will eventually lead to the formation of a Social Partnership Council that represents the concerns of both workers and employers in fashioning-out budget and economic policy.

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