In Ghana, there is a growing push for the Bank of Ghana (BoG) to lower its policy rate, a move advocated by the Ghana National Chamber of Commerce and Industry (GNCCI). This action is seen as crucial for enhancing business growth in the country. The current policy rate, standing at 30%, has significantly impacted interest rates, averaging around 32%, making borrowing costs for businesses exorbitantly high. This situation is stifling the expansion and operational capabilities of many companies.
The GNCCI highlights the adverse effects of such high borrowing costs, which include a decline in production, business collapses, and the relocation of companies to other African countries. These factors have contributed to a notable slowdown in private sector growth and the overall economy, with GDP growth dropping from 6.1% in the fourth quarter of 2021 to 2.0% in the third quarter of 2023.
In response to these challenges, the GNCCI urges the BoG's Monetary Policy Committee to consider the detrimental impact of high policy rates on businesses. With the 116th MPC meeting in progress, there is an emphasis on the need for any policy rate adjustments to favour business growth, especially considering the relative stability in the forex market and the decline in domestic inflation.
This reduction in policy rates is seen as a pivotal step towards enhancing the competitiveness of Ghanaian businesses, particularly in the context of the African Continental Free Trade Area (AfCFTA). With Ghana having the highest interest rate in Africa, a decrease in the policy rate is deemed essential for fostering a more conducive business environment, delivering shared growth and prosperity for all.