Despite concerns that the cost of loans is very high, average lending rate fell by 0.11% from June 2021 to 20.51% in August 2021.

This is equivalent to 1.71% interest on loans per month.

As always, the average lending rate varies among the banks and the risk associated in lending to the respective sectors.

For example, some banks will offer loans as low as 16% per annum, whilst others will lend as high as 27%. But overall, it will depend on the risk profile of the customers.

Also, lending to the agriculture sector is considered riskier than the manufacturing sector, and therefore credit to the agriculture sector will be higher.

According to data from the Bank of Ghana, average lending rate has been falling albeit slightly, since April 2021.

In January 2021, average lending rate was pegged at 20.97%, but shot up marginally to 21.02% in February 2021, and then retreated to 20.96% in March 2021.

It has since then been falling from 20.93% in April 2021 to 20.85% in May 2021 and then to 20.61% in June 2021.

It fell further to 20.51% in August 2021.

The Central Bank led by Governor Dr. Ernest Addison, have been credited for the implementation of key policies that have helped ease the cost of credit in the country.

Policy rate to remain at 13.5% but high-lending problem to persist – IEA

The Institute of Economic Affairs has projected an unchanged Policy Rate of 13.5% by the Bank of Ghana for at least the next two and half months.

According to the economic and policy think tank, the Monetary Policy Committee is faced with pressure from President Akufo-Addo to cut the key base lending rate –the rate at which it lends to commercial bank, though there are other demands to increase it because of rising inflation and other factors.

In a statement, the IEA said “the MPC, in fact, is faced with a very challenging decision at this juncture, given these competing demands or interests. In the circumstance, our expectation is that the Committee will go for the safest option, that is STAY PUT!—implying that it will keep the PR [Policy Rate] unchanged at 13.5%.”

“Choosing this option, however, will not make the problem of high lending rates go away. The BoG will only be postponing the solution; the problem will continue to haunt us!”, it pointed out.