TWO bankers have expressed concern about the rising trend of the Bank of Ghana prime rate which serves as the benchmark for interest rates, saying it will negatively affect their credit creation and profitability. The Managing Directors of Stanbic Bank, Mr Alhassan Andani and the Zenith Bank, Mr Andy Ojei, said anything that threatened the ability of their customers to repay their loans was equally a concern for them. Speaking at a Business Forum on Financing the Private Sector in Accra on Wednesday, Mr Andani stated that interest rate upsurge was a worry to banks because it would also affect their profitability. The forum was organised by the Ghanaian-German Economic Association (GGEA) to sensitise its members and other business concerns to reliable and convenient ways of obtaining financing for their businesses. The prime rate remained stable at 12.5 per cent between January 2006 and November 2007, before inching up in that month to 14.25 per cent. Last week, the BoG, having sensed inflationary pressures fuelled mainly by rising crude oil and food prices, again increased its prime rate, which is the rate at which it lends to the commercial banks, to a new high of 17 per cent. Mr Andani said once the prime rate would increase interest rates which would intend increase the cost of borrowing which would not be in the interest of banks. For his part, Mr Ojei stated that banks were not also happy with the turn of events with interest rates. "We are not happy with anything that will jeopardise our customers' ability to repay the loans," he stated. The two bankers also outlined what they looked for before financing a business, saying businesses "should have a clear and compelling vision for their businesses." The managing director of Stanbic said the vision so outlined should be institutionalised and structures put in place to push the vision so as to attract funding from bankers. He said debt financing was doing well in the country already but it was time regulators made available equity financing for banks to leverage and help businesses with. ''What this market needs is equity and what we get from institutions like the Export Development and Investment Fund (EDIF) should not be loans but equity,' he stated. Mr Andani therefore suggested a merger between EDIF and the Venture Capital Trust Fund to boost the flow of equity financing in the financial system. The acting Chief Executive of EDIF, Mr Kwabena M. Nkrumah, said the fund had between June 2002 and last month disbursed a total of GH¢73.89 million, with about 75 per cent going to small- and medium-scale exporters. He said EDIF had the capacity to do short, medium and long term financing and called on exporters who needed funding to speak to designated financial institutions which were part of the implementation. Other presentation on financing the private sector also came from the German development bank, DEG and the Venture capital Trust Fund of Ghana. Source: Daily Graphic