The government of Ghana should not cap interest rates for banks, the outgoing Managing Director of Cal Bank, Mr Frank Adu Jnr., has said.
He warned that such a move risked marring the Ghanaian economy.
Mr Adu Jr’s warning comes a day after President Nana Akufo-Addo tasked the Governor of the Bank of Ghana, Dr Ernest Addison, to deal with the issue of high-interest rates in the country.
Addressing the CEOs Executive Forum in Accra on Wednesday, 6 November 2019, the President said: “I have requested the Governor of the Bank of Ghana to interrogate the issue of high-interest rates in Ghana and how the problem can be addressed to enhance the competitiveness of the private sector.”
While speaking at Cal Bank’s ‘Facts Behind the Figures’ event, the MD said: “You cannot cap interest rates”, adding: “From a political perspective, you can attempt but you will pay the price”.
“If interest rates are high, it is not the doing of banks”, he explained, noting that: “Banks do not manage an economy”.
Interest rates, he said: “Reflect the economy that you have created”.
“We can attempt that…as they did in Kenya and see what happens”, he noted.
“We’ve seen it in this country before – credit ceilings, interest rate caps – we paid a price eventually; there was a blowout: interest rates went out to 42-46 per cent. Good management of the economy will drive what interest rates will do. High-interest rates are not the doing of the banks in any circumstance,” he said.