OUR BANKS MUST LISTEN (JULY 22, 2010)

ONE often cited factor that is said to contribute to the high cost of doing business in the country is high interest rates.
Many players in the manufacturing sector have found reason to complain about the rather repulsive interest rates that sometimes tend to stifle the growth of businesses.
In the past, there have been concerns that although there has been some commendable decline in the base rate of the Bank of Ghana, there had not been corresponding reductions in the interest rates.
There is usually the temptation to lash out at the banks for putting profit considerations above all others, ultimately contributing to the slow growth of the industrial sector over the years.
Thus, in a situation where the banks evidently record good profits while industries suffer, the natural inclination is to blame the financial sector for the woes of the former.
Yet, the banks have usually rebutted such claims and cited the huge risks associated with the granting of loans as a justifiable basis for the retention of what has been described as high interest rates.
In that regard, there is usually reference to the fact that many people who go for loans do not have fixed addresses and are very difficult to locate once they have been granted the loans.
It appears that as far as the banks are concerned, the business climate is a competitive one and all businesses, including the banks are out to optimise their profit margins. But that may not serve as a positive way to address the difficulties other businesses continue to encounter in their bid to facilitate their growth and ultimately provide more jobs for the people.
During a visit of a delegation of the Ghana Employers Association to the Castle last Tuesday, the issue of high interest rates came up for discussion and President John Evans Atta Mills urged financial institutions to reduce their lending rates in response to the drop in the inflation and base rates.
There is very little argument about the fact that the industrial and manufacturing sectors play a very important role in the growth of an economy, hence any situation that tends to stifle the growth of that sector needs to be effectively addressed.
Aside serving as an important development indicator, the growth of the industrial sector provides more jobs, and the resulting taxes paid by those in the sector are vital to growth of the economy.
The DAILY GRAPHIC believes that the call by the President is not only justifiable but must be urgently heeded to in order to salvage the manufacturing sector that is witnessing continuous dwindling fortunes in the face of cheap imports.
Indeed, loan repayments made quite arduous by the high interests on them continue to be an albatross around the necks of some manufacturing concerns, and others having to fold up with loans they had contracted still unpaid.
While the DAILY GRAPHIC shares the view that one of the main objectives of businesses is to make profit, it is also reasonable to argue that the success of any business endeavour and in this particular instance, the financial institutions, should not only be expressed in the profits made but also the impact made on other businesses.
Thus, we also urge the financial sector to review their lending rates by providing more effective advisory units to ensure that businesses that borrow from them make prudent investments to ensure that both the lender and the borrower benefit from such transactions.
The banking sector can do more than it is doing at the moment. We also believe that it is not enough to just dole out money to businesses that make requests for loans without ensuring that such businesses have viable business plans to ensure that money given out do not go down the drain.