Senior Presidential Advisor, Yaw Osafo-Maafo
• Yaw Osafo-Maafo is advocating for a gap reduction in the central bank’s policy rate and lending rate of commercial banks
• He believes there is still a huge gap despite the various banking sector reforms
• The current policy rate of the Bank of Ghana is at 13.5 percent
Senior Advisor to the President, Yaw Osafo-Maafo, has called for the gap disparity between the central bank’s policy rate and that of commercial banks’ lending rate to be narrowed to allow businesses to borrow.
Osafo-Maafo addressing a gathering at the 2021 Ghana Industrial Summit in Accra said despite the reforms following the banking sector clean-up, such as risk elements for banks, there is still a gap disparity between the central bank’s rate and the commercial bank’s lending rate.
“If Bank of Ghana is lending to banks at 13.5 percent; what reason do banks have for lending in the 20s? What should be the margin, the spread between the bank rate and the lending rate? We have not been able, as a country, to do justice to this,” he said.
“Government spent billions undertaking these reforms, so why should the spread between the bank’s rate and lending remain at this level?” he asked, adding: “This is a problem that we must collectively look at,” the senior advisor stressed.
He further indicated that the argument of some commercial banks attributing the huge disparity to inherent risks, which have considerably been reduced following the reforms is still yet to be evident as the cost of lending remains on a high.
He, however, pointed though certain factors such as the policy rate, inflation and exchange rate has often impacted on the cost of lending rates, there has been a positive trend due to these banking sectors reforms by the Bank of Ghana hence commercial banks must critically look at addressing the disparity and lend reasonably to businesses.