In a bid to alleviate the mounting financial strain faced by Ghanaian businesses, the Ghana National Chamber of Commerce and Industry (GNCCI) has issued a fervent appeal to the Bank of Ghana, urging a reduction in the policy rate. Against the backdrop of escalating borrowing costs and an increasingly challenging economic landscape, the Chamber asserts that a lower policy rate is imperative to stimulate business growth and foster a more conducive environment for investment.
As Ghana grapples with one of the highest interest rates in Africa, the GNCCI’s call for a policy rate reduction comes as a timely intervention aimed at revitalizing the country’s business landscape. The Chamber’s proposal hinges on compelling factors, including the relative stability in the forex market and a significant decline in domestic inflation, which plummeted from 53.6% in January 2023 to 23.2% in recent months.
Central to the GNCCI’s advocacy is the belief that a reduced policy rate would catalyze a domino effect, prompting commercial banks to correspondingly lower their lending rates. This, in turn, would facilitate businesses’ access to much-needed capital for expansion and investment initiatives in the short to medium term.
Amidst deliberations of the Monetary Policy Committee (MPC), with an impending announcement on the policy rate anticipated by January 29, 2024, the GNCCI underscores the urgency of the matter. In a poignant release, the Chamber highlights the pervasive challenges confronting Ghanaian businesses, exacerbated by the onerous burden of elevated borrowing costs.
The adverse repercussions of exorbitant interest rates, coupled with high utility tariffs and excessive taxes, have precipitated a debilitating business environment in Ghana. The GNCCI emphasizes the far-reaching consequences, including a stark decline in production, business closures, increased non-performing loans, and a palpable downturn in both private sector and economic growth.
As Ghana positions itself to actively engage in the African Continental Free Trade Area (AfCFTA), the cost of borrowing assumes paramount significance in defining the country’s competitiveness on the global stage. Against this backdrop, the GNCCI implores the Monetary Policy Committee to heed its plea for a policy rate reduction, underscoring the imperative of aligning Ghana’s economic policies with the imperatives of sustainable growth and development.
In charting a path forward, anchored on the stability of the forex market, declining inflation rates, and a cautiously optimistic GDP growth projection, the GNCCI advocates for a substantive reduction of not less than two percent or 200 basis points in the policy rate. As Ghana stands at a crossroads, the Chamber’s appeal resonates as a clarion call for proactive measures to reinvigorate the nation’s economic vitality and pave the way for a more prosperous future.
