High interest rate is hurting our operations – Association of Savings & Loans Companies

High interest rates are negatively affecting the operations of savings and loans companies Their customers are demanding very high interest on their deposits.

TV3’s Nana Akua Mensah Aborampah continues her investigations into how soaring interest rate is impacting the economy and has filed this report.

Ghana is experiencing one of its worst moments of rising interest rates.

The Ghana reference rate, which is the benchmark for calculating interest rates for banks, has gone up by almost 75 percent in the past 8 months.

Rising inflation and depreciation of the cedi are key reasons for the rising interest rates.

Executive secretary of the Ghana association of savings and loans companies Tweneboah Kodua Boakye says the high interest rate regime is hurting their operations.

He explains that depositors are demanding interest higher than the current rate of inflation of 31.7 percent from the previous average rate of 16 percent.

The Bank of Ghana’s continuous increase of the policy rate, currently at 22 percent, is also having a negative impact on savings and loans companies.

Mr. Tweneboah Kodua explains that it is affecting the treasury of the industry due to market pressures. He says If caution is not taken some companies may even fold up,

Savings and loans companies play a crucial role in providing funds for micro, small and medium scale enterprises.

If they are unable to mobilse enough deposit to on-lend, then these enterprises will suffer at a time that the economic situation is already harsh.

Source: 3news