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Ghana News

Bank of Ghana calls for reduced lending rates as inflation drops

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The Bank of Ghana (BoG) has called on commercial banks in the country to reduce lending rates. According to Elsie Addo Awadzi, the Second Deputy Governor of the Bank, the country’s macro economy, particularly inflation, has shown significant improvements since the beginning of the year. Speaking at the launch of a loan collaboration between Absa Bank and the Mastercard Foundation, Awadzi encouraged banks to lend more to the private sector to support growth. She stated that the sector has become more liquid and can withstand economic challenges.

The BoG’s appeal comes as inflation drops from approximately 50% to 41.2% in April 2023. Awadzi noted that the bank’s projection is that things will improve further, and as a result, lending rates will reduce. She urged banks to emulate Absa Bank, which has already lowered its lending rates, to foster competition among lenders. The Deputy Governor stressed that small and micro enterprises (SMEs) are the backbone of the economy and need to be supported with low-interest loans.

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The Country Manager for Mastercard Foundation, Rossy Fynn, revealed plans by the foundation to introduce innovative products to support small businesses, particularly those on sustainable and green initiatives. Managing Director for Absa Bank, Abena Osei Opoku, pledged the bank’s commitment to supporting SMEs, particularly women-owned businesses. She also revealed that the bank’s SME loan offer, which stands at 10%, will support over 5,000 small businesses, making them investor-ready.

In a nutshell, the BoG is optimistic that inflation will continue to drop, and the economy will improve. The bank, therefore, calls on commercial banks to reduce lending rates to support economic growth. The partnership between Absa Bank and the Mastercard Foundation to offer low-interest loans to SMEs is a step in the right direction. The move will enable more small businesses to access credit facilities at lower interest rates, thus boosting their competitiveness in the market.

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