Mr Carlos Kingsley Ahenkorah, Deputy Minister of Trade and Industry, has urged banks to reconsider and bring down their interest rates to improve interest in borrowing.
He said the current 26 - 30 per cent lending rate from banks was discouraging people for borrowing, which has brought about a lot of un-serviced loans in the financial sector.
"If you consider the fact that the Central Bank has a rate of 15 per cent or even less and banks are still lending at 26 percent, you wonder how Small and Medium-scale Enterprises (SME's) would even be able to develop.
"So if the banks want to support Ghana to develop, they should move in tandem with the Central Bank to restructure rates for industrial development," he said.
The Minister said this at the GEOP Business Forum in Accra organized by Christian Aid in partnership with National Board for Small Scale Industries (NBSSI) on the theme; "Formalising the informal sector- Practical steps to promote local economic development."
He said the birth of the informal sector in Ghana has been a blessing to economic development by contributing significantly to the Gross Domestic Product (GDP) basket of the country, and by also creating jobs for the teaming unemployed fraction of the population.
Mr Ahenkorah noted that the trajectory of growth of the informal sector was evident with the sector contributing GHC73.3 billion to the GDP of Ghana 2017 which represented 28.6 per cent of the country's total GDP.
"The influx of citizens into the informal sector can be attributed largely to the inability of both the government and private sector firms to generate the required number of jobs. Hence, the informal activities and businesses have become survival strategies for majority of Ghanaians," he added.
In a speech read on his behalf, Mr Ernest Okyere, Country Director of Christian Aid, said the SMEs were a major driving force for job creation, income generation and business development in the country.
He noted that with the dwindling employment opportunities in the public sector, the SME sector provided a unique opportunity to reduce the unemployment rate in the country.
"Access to credit, managerial challenges, poor record keeping of businesses, limited market opportunities among others have been some of the key challenges facing SMEs in the Ghanaian economy.
These challenges pose a great threat to the survivability of SMEs as well as affect their potential to contribute meaningfully to socio-economic development in Ghana," he said.
Mrs Kosi Yankey Ayeh, Executive Director of NBSSI, said it was important for SMEs to get access to low interest loans since it was the only means informal businesses could get enough funds to source raw materials, access larger markets and move their business to higher levels.
"Driving down the cost of credit is very critical to the development of SMEs in the country. It is really vital and important; SMEs need financing to get their business moving to the next level," she said.
"It is a work in progress, because the banks are private entities so there are going to be a lot of conversations around that; some banks have reduced their rates and some will have to drop their rates down further, based on conversations we've had," she added.