Business In Ghana
Business In Ghana

On April 4th 2020 the Bankers Association of Ghana announced that all of its members that have a license conduct business in the country of Ghana would be reducing their rates of lending to their customers by 2%.

Banks are receiving questions from concerned customers who want to know how this move is going to work. These customers want to renegotiate with the banks so they can reach an understanding of how they are going to be paying their loans, which are still outstanding.


Mostly customers are urging the banks to reconsider their time of loan repayment; they are asking the banks if they can be allowed to restructure their schedules of repayment. The president had announced earlier that six months be granted on the repayment of loans to the health sector and the airline transportation because these two were hit hard by the rise of the Corona Pandemic, which has greatly shaken the economy of Ghana.


It was during the president address that the 2% reduction bill was brought to the limelight. However, the statements signed by the banks association CEO by the name Daniel Ato does not agree with the moratorium but instead are asking for renegotiation with their customers and discuss how they will pay the debts they owe to the banks.


The 2% reduction, which is applied to interests, will apply on loans that are outstanding and also the new loans that are to be processed currently. This 2% reduction will effectively reduce the reference rate of Ghana that serves as a lending base for the banks to a percentage of 13.12%.


Since GRR was introduced in Ghana, the lower that lending rate has gone is 16.10%, which happened in the year 2018 April. From there, the rate is reviewed every month and has upped to 16.18% from the initial 16.10% that happened in June 2019. Before the 2% reduction, 15.12% was the lowest rate that was effective from the first date of the month.


The rate cut by 2% is shaking the base rates of the banks, below coupon yields that are on all cedi government instruments that provide debts domestically. Lower yield being that of 91 days a bill that was put in place by the treasury, which offers 14% per year though it does not have risks at all.


One banker warned that banks would not take the risk to lend money to their customers when, in the end, they are earning nothing totally, and also they will not consider investing with the government in investment that was risk-free.

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