Average lending rates shot up marginally to 36.64% in February 2023, from 35.58% recorded in December 2022, data from the Bank of Ghana has revealed.

This is equivalent to 3.02% interest rate on loans per month.

In January 2023, the average cost of borrowing stood at 35.85%.

With the Monetary Policy Committee of the Bank of Ghana expected to announce developments in the Ghanaian economy today March 27, 2023, particularly its key lending rate – Policy rate, it is expected that the policy rate will remain unchanged for the next two and half months.

This will keep lending rates still at high.

According to the BoG January 2023 Summary of Economic and Financial Data, average lending rates have been increasing sharply for the past one year.

In actual fact, it has gone up by 16.48% since January 2022.

It stood at 20.16% in January 2022, but shot up sharply to 24.27% in June 2022 and then to 26.46% in July 2022. It again went up to 27.96% in August 2022 and later to 29.81% in September 2022. It continued its rising trend reaching 33.87% in November 2022 and 35.58% in December 2022 respectively.

The higher lending rates have been caused by a record inflation rate and significant exchange rate depreciation.

This has consequently increased the cost of doing business in the country.

Average lending rates vary among banks

The average lending rates, however, vary among the banks and the respective sectors they lend to.

Some banks will offer loans equivalent to the Ghana Reference Rate of 33.25%, whilst others will charge rates as high as 43%.

Overall, it will also depend on the risk profile of the customers.

Again, some perceive lending to the agriculture and construction sectors as riskier, and therefore credit to these sectors are expensive.