BoG now in competition with banks for profit - Togbe Afede

The Bank of Ghana has been accused of losing focus in contributing to the macro-economic objectives of stability, growth and employment creation, instead, they are competing with the commercial banks for profit through high lending rates.

Togbe Afede XIV

This view was expressed by business mogol, Togbe Afede XIV.

Speaking during a call on him by Speaker of Parliament Alban Bagbin and a delegation of MPs recently in the Volta Region, the Agbogbomefia of the Asogli State observed: “We have always been in a high-inflation and high-interest rate environment”.

“Mr Speaker, you spoke quite rightly about the need for the private sector to lead the development of this country. But how can the private sector do it if it has to borrow at very atrocious rates, even in a pandemic environment, of between 25 and 30%?” he wondered.

The traditional leader, who is also a businessman, said the COVID-19 pandemic led to a fall in demand and incomes across the board, and “many countries relaxed monetary policy in order to stimulate their economies”.

In Ghana, he said “we appeared to have done the opposite”.

“Private entrepreneurs or enterprises don’t have stacks of money that they just go and dip into to fund their businesses. They have to depend on the banking system. So, no amount of your hard work would bring the development that we need when borrowing rates are so high. We want the youth to go into private business but with what kind of capital? Expensive, highly-priced 25% or 30%? Those cannot do it, and we have been victims of this over the years”, he noted.

The investment banker, who founded the SAS Group of companies, said “the scapegoat has always been government borrowing, the high indebtedness of government” but added: “I don’t think that is where all the problem is”.

“I will give a few statistics to show that there is something wrong with our interest rates: UK’s debt to GDP ratio is about 104%. Ghana’s is 81%. Relatively, we are better. The per capita indebtedness of the UK is $42,000, ours is $1,400. Compared to income per capita, we are much better. Our income per capita is $2,300, that of the UK is $40,000. So, UK’s debt per capita, $42,000, is higher than income per capita, $40,000. Our debt per capita $1,400, is much less than our income per capita, $2,300."

“So, relatively, the UK is more indebted than Ghana, yet the rate at which the Bank of England lends to banks currently is 0.1%, while Bank of Ghana lends to our banks at 13.5%. That is a whopping one hundred and thirty-five times the Bank of England rate! Astonishing!” he noted.

He pointed out that UK’s GDP, “which reflects the size of the economy, is $2.7trillion, almost 40 times the size of our economy, which is $72billion (GDP). But guess what? Bank of England made a profit of £57million ($76million) in 2020/21, down from £72million ($96million) in 2019/20. Bank of Ghana, on the other hand, made a profit of GHS1.57billion ($270million) in 2020, down from GHS1.8billion ($310million) in 2019. The question is, doing what?”

Yes, that is the benefit from their 13.5% lending rate. Mr Speaker, this is where the problem has been but we don’t seem to know,” he complained.


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