Some businesses fear the continuous hike in lending rates and moves by the Bank of Ghana to mop up what it calls excess Ghana cedis in circulation will lead to their collapse. 

The Bank of Ghana as part of its measures to check inflation, is mopping up some Ghana cedis in circulation.

The situation affected the amount of funds available to lend to businesses especially at a time deposits are also declining.

According to figures from the Bank of Ghana on monetary conditions, annual demand growth of savings and time deposits declined from 26 percent in June to 22 percent in July.

Foreign deposits also reduced from 68 percent to 23 percent in the month of July.

The annual credit growth of credit to businesses has also reduced substantially to 24 percent.

Also, average lending rate is currently hanging around 28 percent.

Speaking on Business Trends on JOY FM with host George Wiafe, Director Corporate Affairs of FINATRADE John Awuni said the Bank of Ghana must review this strategy if they really want to save industries.  

He maintained that the current liquidity squeeze is putting a lot of pressure on businesses.

“The current [environment] has resulted in layoffs, serious downsizing; this is what most businesses are doing to stay in operation”.

He remarked: “I am worried that if the current environment doesn’t improve anytime soon, then most of these firms might collapse very soon.”

Speaking on the same program, financial consult, Charles Mensah said there are other strategies firms can adopt to stay in business despite these challenging times.  

He cited small businesses lending and trading among themselves as one of the ways out.  

“It is time that companies use their reputation as a currency to trade among themselves.”