The Ghana National Chamber of Commerce and Industry (GNCCI) is advocating for a reduction in the policy rate to alleviate the challenges faced by businesses grappling with high borrowing costs. As the Monetary Policy Committee (MPC) of the Bank of Ghana convenes to evaluate economic developments, the GNCCI emphasizes the need for a policy rate adjustment to foster business growth.
In an official statement, the GNCCI highlighted the substantial surge in borrowing expenses for Ghanaian businesses, attributing it primarily to the elevated Monetary Policy rate. With commercial loan interest rates averaging 32.0% in 2023, the GNCCI expressed concern over the added burden of high utility tariffs and excessive taxes, creating an excessively costly business environment in Ghana.
This challenging business landscape, as per the GNCCI, has led to a notable decline in production, business closures, increased non-performing loans, business relocations to other African nations, and an overall significant contraction in the private sector and the economy. The GDP growth rate has dwindled from 6.1% in Q4 2021 to 2.0% in Q3 2023.
As the representative body of the business community in the country, the GNCCI urges the MPC to consider the cost-push impact of a high policy rate during its ongoing 116th meeting. Citing the stability in the forex market and a 30.4% decline in domestic inflation, the GNCCI proposes a reduction of not less than 2 percent or 200 basis points in the policy rate. The chamber believes that such a reduction would encourage commercial banks to lower lending rates, facilitating business access to funds for expansion in the short to medium term.
Emphasizing the significance of borrowing costs in the context of Ghana’s active participation in the AfCFTA, the GNCCI appeals to the Monetary Policy Committee to align the policy rate with the country’s stable forex market, declining inflation, and the projected GDP growth rate of 2.7%. The GNCCI pledges to continue engaging stakeholders in both the public and private sectors to promote a thriving business environment that fosters shared growth and prosperity.