Average lending rates of commercial banks hit 31.40% per annum as of the end of October 2022, the Bank of Ghana’s November 2022 Summary of Economic and Financial Data has revealed.

This is equivalent to 2.16% interest rate on loans per month.

According to the report, average cost of borrowing has been going up sharply from May 2022 (22.53%) to 31.40% in October 2022.

It stood at 24.27% in June 2022 and then surged to 26.46% in July 2022. It again went up to 27.96% in August 2022 and later to 29.81% in September 2022..

This is as a result of the rising inflation rate and other factors.

However, the average lending rate varies among the banks and the respective sectors that they lend to.

Some banks will offer loans equivalent to the Ghana Reference Rate of 27.44%, whilst others will charge rates as high as 40%.

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.

According to data from the Bank of Ghana, cost of loans rose marginally from the beginning of this year due to increasing inflation rate and other factors.

Cost of loans in Ghana among highest in Africa

Presently, cost of credit in Ghana is one of the highest in Sub Saharan Africa.

Businesses and households will therefore have to pay more on loans to finance their operations and personnel expenses.  This will consequently increase the cost of doing business and living.