Answering questions as part of a panel discussion on the theme “Maintaining a stable macro-economy for sustained and inclusive development” at the Ghana Economic Forum, Mr Henry Oroh, the Managing Director of Zenith Bank Ghana Limited, said interest rates in the banking sector were still high mainly because the cost of credit for banks remained high.

He said although the Bank of Ghana had significantly reduced the Monetary Policy Rate, which determined banks’ lending rates, it had not reflected in the sector yet because funds were still expensive, with cost of deposits at around 20 per cent.

Mr Oroh, who is also the Chief Executive Officer of the Bank, noted that a reflection of the reduced MPR would not happen if owners of funds continued to ask for higher returns on their deposits.

He explained that banks and owners of funds had to align with the Government’s agenda to bring cost of funds down and ensure lower interest rates. Mrs Patience Akyianu, the Managing Director of Barclays Bank Ghana Limited, lead sponsors of the Ghana Economic Forum, also noted that the high non-performing loan ratio in the sector; about 20 per cent, was a contributing factor to the prevailing high interest rates in spite of the reduction in MPR rate.

Cost of doing business in Ghana was also high, which were all factored into pricing, she said. She said the lack of a proper rating system to separate good companies from weak ones compelled banks to generalise in the decisions on who to lend to at what rates, in light of the high NPL ratio.  “Till we sustain the macroeconomic gains we have made and find a way to rate companies to separate good ones from bad ones, till our NPLs reduce, we will not see the MPR rate translate into interest rates,” she stated.

She added that companies also had a responsibility to improve their governance structures and their efficiency. The panel also discussed other factors in maintaining a stable macro-economy. Dr Osei Assibey, a Senior Lecturer at the Department of Economics of the University of Ghana, who was also on the panel, however, noted that although macroeconomic stability was important, it was not enough in itself.

He said there was also the need for increased structural transformation and productivity to go alongside the macroeconomic gains. Dr Kofi Amoah, the Chief Executive of Progeny Ventures, also reiterated the need to fully interrogate the strength and viability of the private sector as a lot of emphasis for was on that sector for macroeconomic growth.

He urged the Government to look at measures such as subsidies, appropriate taxes and accessibility and affordability of credit, to enable the private sector to thrive and contribute to sustained macroeconomic growth.

Other panelists were Mr Michael Cobblah-Director C-nergy Global, Mr Hitesh Makhija-Chief Finance Officer Olam Ghana, and Mr Ridle Markus, Africa Strategist, Research Barclay Africa.  The two-day Ghana Economic Forum (GEF) 2017, is on the: “Building A Ghanaian Owned Economy, 60 Years After Independence”.

It is being organised by the Business and Financial Times newspaper and has been running since 2012. The Ghana News Agency and other partners are supporting the event.  More than 500 participants, including economic experts and industry captains are dialoguing to chart a better part for substantially growing Ghana’s economy using mainly local expertise and resources.