Stakeholders at the launch of a report assessing Ghana’s competitiveness and available opportunities for the country under the African Continental Free Trade Area (AfCFTA) have blamed the continued lending by some banks to government as well as the high treasury bill rates, for the low level of credit advanced by financial institutions to the private sector.

They thus advised authorities to ensure that the interest rates come down to enable private sector companies who may want to assess credit facilities to do so effortlessly to stay competitive.

The advice was given following a report commissioned by the Business Sector Advocacy Challenge Fund (BUSAC Fund) and conducted by consultants from research and advisory firm, Konfidants.

According to data from the report, domestic credit to the private sector as a share of Gross Domestic Product (GDP) in Ghana is amongst the three lowest (15%) frontier economies in Africa, with only Nigeria and Tanzania ranking behind Ghana.

Comparing Ghana to other frontier economies, the Managing Partner at international advisory firm Konfidants, Michael Kottoh, noted that more needs to be done to improve the share of credit to the private sector in Ghana to the levels of countries like South Africa and Morocco.

“In Ghana, the figure stands at around 15%. In South Africa and Morocco, all credit to the private sector as a share of GDP hovered around 146.5% and 63.6% respectively. We need to improve the situation, so the private sector in Ghana gets more access to credit to ensure they are competitive.”

On his part, the CEO of the Association of Ghana Industries (AGI), Seth Twum-Akwaboah, called on stakeholders to put in place policies that will direct banks especially ones with government influence not to lend to government.

“As long as treasury bill rates continue to be high and attractive to the banks they will lend to government because it has less risk. Going forward, government institutions or banks that are influenced by government such as the coming Development Bank should be mandated not be lending to government because you’ll be creating problems,” he said.

On the subject of interest rates, Mr. Kottoh, added his voice to calls for a drop in Ghana’s interest rates to a level that makes the cost of credit affordable.

“The analysis shows that the average policy rate across Africa is 7%. Ghana is currently doing double (14.5%). So we need to go as low as we can. We do recognize that the interest rate spread is always an issue. Reducing the policy rate is not enough, but it is a starting point.”